TaxTMI 
TaxTMI 
2017 (11) TMI 108
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....t of Rs. 1,25,00,000/- on account of sale proceeds of flats whereas no loss / gain was shown in the computation of income. It was also observed that assessee has made investment of Rs. 1,24,87,759/- in residential property at Bangalore. On perusal of the details filed during the course of assessment proceeding, it was observed by the AO from the agreementfor sale of property entered between assessee and his father Mr. Vinod S. Vaid with Chetan Shah and Mr. Dharmesh Shah for sale of Apartment no.6 on the 5th and 6th floor with exclusive right to terrace including garage no.11 and three parking spaces in BhagwatiBhuvanCondominum that Mr. Vinod S. Vaid, father of the assessee was the owner of the property and assessee has been included as a confirming party. Consequently, in the original assessment order u/s.143(3) of the Act it was held by the AO that amount credited to capital account was not treated as Long Term Capital Gain hence same was not eligible for deduction section 54 of the Act and taxability of the amount of Rs. 1,25,00,000/- it was held that same has to be considered in the hands of father ShriVinod S. Vaid. 4. Subsequently, an order u/s.263 of the Act was passed by CI....
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....red an amount of Rs. 1,25,00,000/- as capital gain being consideration received for sale of his share in Mumbai flat and then deduction of amount invested in purchase another flat at Bangalore for Rs. 1,24,87,759/- u/s. 54 of the Act. The AO has passed the assessment order u/s.143(3) and held that the amount is not taxable in hand of assessee but it is taxable in hands of his father. The AO also observed that if the amount of Rs. 1,25,00,000/- to be assessed in hands of the assessee in terms of capital gain the assessee was not entitled to any deduction u/s.54 of the Act. The said assessment order was reviewed u/s.263 of the Act and under the 263 proceeding matter travelled to Tribunal, the Tribunal has clarified that assessee would be at liberty to contest before CIT(A) or the head of income which is liable to be taxed. The assessee filed appeal before Hon'ble Bombay High Court in which appeal has been admitted by the Hon'ble Bombay High Court inIncome Tax Appeal No.1986 of 2013 the copy of Hon'ble Bombay High Court order admitted an appeal is at page 76 to 77 of the paper book. After 263 order the assessee was assessee and the compensation of amount of Rs. 1,25,00,000/- was asses....
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.... in case of Reliance Petroproducts Ltd. 322 ITR 158 has taken a view that in order to expose the assessee to the penalty unless the case is strictly covered by the provisions. A mere making the claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding income of the assessee such claim made in the return cannot amount to an inaccurate particulars. Assessee has furnished all the details of expenditure as well income in his returns which in detail themselves were not found to be inaccurate or to be viewed as concealment of income in part. The learned AR lastly relied upon the decision of Bombay High Court in case of CIT Vs. Bennett Coleman & Co. Ltd. 259 CTR 383 and submitted that no penalty can be levied merely on the change of head of income. Lastly learned AR submitted that when no penalty can be levied the matter is debatable and pending before Hon'bleHigh Court. 7. The learned DR relied upon the order of CIT. The assessee has attempted to give a color of difference of opinion to his transaction as whether same should be income. Assessee had no right in the said flat being sold and he got the money simply to remove the lock....
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....uing the notice has to come to conclusion that whether it is case of concealment of income or it is a case of furnishing of inaccurate particulars. The Karnataka High Court has held that notice u/s.274 of the Act should specifically state as to whether the penalty is being proposed to be imposed for concealment of particulars of income or furnishing inaccurate particulars. The High Court has held that certain printed form where all the grounds given in the section 271 are given would not satisfy the requirement of law. The Karnataka High Court has held that in printed form, the AO has not struck out the relevant part in standard proforma of show cause notice, therefore does not spell out whether the penalty proceedings are sought to be levied for furnishing inaccurate particulars of income or concealing particulars of such income. AO has simply inserted the words wrong claim u/s.54. Thus the penalty notice is ambiguous and penalty proceeding u/s.271 (1)(c) are quashed. The decision of Karnataka High Court was upheld by Hon'ble Supreme Court by dismissing SLP No.13898/2014. 9. The Jurisdictional High Court in the case of Shri Samson Perinchery 392 ITR Bombay 4 wherein the Jurisdict....
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.... on part of Assessing Officer. The vagueness and ambiguity in the notice has also prejudice to the right of reasonable opportunity of the assessee since he did not know what exactly he has to face. In the instant case AO has issued a notice that to incorrect one, in our routine manner. Further, the notice did not specify the charge for which the penalty was received hence we delete the penalty. 12. The third angle of the penalty here the dispute is whether the receipt of Rs. 1,25,00,000/- is taxable under the head income from other sources or income from capital gain. In other words in this appeal the main dispute between revenue and the assessee is whether consideration of Rs. 1,25,00,000/- received by the assessee in consideration of relinquished his rights with regards to the said property is assessable under the head income from other sources instead of under the head capital gain as claimed by the assessee. In the instant case in the original assessment order u/s.143(3) of the Act AO has examined the issue from all the angles and came to conclusion that amount is received by assessee is not taxable as long term capital gain but it is taxable in hands of the father of the asse....
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....ct the penalty under section 271(1)(c) of the Act.This view is also supported by various High Courts including Tribunals. The Hon'ble Gujarat High Court 386 ITR 304 in the case of Narayan C. Shah has also held that merely submitting an incorrect claim in law for the expenditure would not amount to furnishing inaccurate particulars of income. The Third Member Bench of Mumbai Tribunal reported in 137 ITD 53 Delhi has also taken an identical view in the case of Narangs International Hotels (P) Ltd. wherein the assessee's claim for deduction of expenditure was rejected on the ground that it was a capital expenditure. It was held that since the assessee had made proper disclosure of facts material to claim in question, there was no concealment of particulars of income or furnishing of inaccurate particulars of income so as to attract penalty u/s.271(1)(c) of the Act.In the case of S.M. Construction 233 Taxman 263, the assessee entered into a development agreement with the owner of land at Pune after paying consideration of 54 lakhs. When the owner of the land cancelled the agreement, he paid the assessee a sum of Rs. 1.65 crores including amount of Rs. 54 lakhs originally paid by th....