AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 1521
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....laimed by the assessee was of Rs. 5,75,700/- including legal and transfer fees. Against the long term capital gain liability, the assessee had shown following investment in order to claim exemption. SN Investment made Benefit claimed 1 Invested Rs. 20,65,100/- for purchase of agricultural land at Sargasan, sale deed no.21445 dated 29.12.2010. Exemption u/s. 54B 2 Invested Rs. 1,85,33,000/- for purchase of land for construction of house, sale deed no.1382 dated 15.02.2012. Exemption u/s. 54F 3 Invested Rs. 1,26,90,000/- for purchase of Flat (only booking amount, no sale deed executed) Exemption u/s. 54F 4 Cost of construction or residential house Rs. 23,00,471/- Exemption u/s. 54F The benefit of Section 54B since available where the capital gain is arising to an assessee for the transfer of any agricultural land, prima facie the Learned AO was of the opinion that the assessee was not entitled to such claim u/s 54B for the specific reason that the land so sold was not agricultural one, the same was converted into a nonagricultural land before transferring it on 30.11.2010 by the assessee. The assessee in reply to the show-cause failed to submit that agricultural activ....
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....ed even after the provisions of Section 139(4). Assessee filed late return, in the return of income, the assessee neither claimed any exemption u/s 54F, 54B rather he has shown only net capital gain. Such benefits were also denied to him. Further that, while calculating the capital gain, the assessee shown to have incurred expenditure of Rs. 3,66,249/- towards cost of improvement of the old asset which has been sold. In the absence of any supporting evidence regarding payment details or copy of cash book, etc. the same was rejected. In the result, Rs. 3,59,54,820/- was added to the total income of the assessee as long term capital gain under penalty proceeding u/s 271(1)(c) of the Act, has been initiated on the premise for concealment of particulars of his income leading to furnishing of inaccurate particulars of income. 3. In appeal, the Learned CIT(A) confirmed the disallowance of claim of exemption u/s 54B and 54F and/or the addition made by the Learned AO. 4. The Learned AO in the penalty proceeding issued a show-cause notice on 28.01.2014 as to why penalty u/s 271(1)(c) should not be imposed upon him for concealment of income. The Learned AO observed that none has attended n....
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....ve facts and circumstances of the case, it is clear that the assessee had concealed his income, within the meaning of section 271(1)(c). I hereby levy the penalty u/s. 271(1)(c) of the income Tax Act. The computation of penalty is as under: (a) Amount of income on which tax is sought to be evaded. Rs. 1,70,55,571/- (b) Amount of tax evaded. Rs. 35,13,448/- (c) Penalty levied u/s.271(1)(c) for concealment of income at the rate of 100% of tax evaded. Rs. 35,13,448/- (d) Penalty u/s.271(1)(c) at the rate of 300% of tax evaded. Rs. 1,05,40,344/- 8. Therefore, considering the facts and circumstances of the case a lump sum penalty of Rs. 36,00,0007- (Rs. thirty six lacs only) imposed as against maximum penalty leviable of Rs. 1,05,40,344/- at the rate, 300% of tax sought to be evaded. 5. In appeal the order of imposing penalty was confirmed with the following observation: "5.1 appellant was argued that AO has wrongly observed that appellant has not furnished any explanation to justify levy of penalty u/s 271(1)(c) of the Act which renders entire penalty under order invalid. The appellant has furnished following written submission during the course of penalty proc....
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....of S.H.R. Trading Pvt Limited V/s DOT 150 ITD 383 has held as under: "Section 271(l)(c), read with section 54, of the Income-tax Act, 1961 - Penalty - For concealment of income (Disallowance of claim, effect of) - Assessment year 2009-10 - Assessee-company filed its return claiming deduction under section 54 in respect of long term capital gain arising from sale of residential house property * Assessing Officer rejected assessee's claim holding that assessee, being a company, was not entitled to claim deduction under section 54 - He also passed a penalty order under section 271(1)(c) for raising a patently false claim of deduction - Whether, on facts, Impugned penalty order did not require any interference - Held, yes [Para 5] [In favour of revenue] " The Hon'ble Mumbai ITAT after considering the decision of Reliance Petrochemicals relied upon by appellant has further held as under: "In our opinion there is a basic and fundamental difference between a debatable claim and an inadmissible claim i.e. a patently wrong or false claim, in the case of first kind of claim there can be two opinion as to whether or not the assessee could make such a claim on the basis of certai....
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....her. Penalty levied by the AO was confirmed by the first appellate authority, but was deleted by the Tribunal deciding the issue in favour of the assessee, Hon'ble Court held as under- "The assessee had failed to offer any explanation in respect of the addition of Rs. 1,83,078 and it could be deemed to have concealed the particulars of income or furnished inaccurate particulars thereof, by virtue of this explanation. The Tribunal was not justified in deleting the penalty imposed by the income-tax Officer under section 271(1)(c) of the Act. The findings given in assessment proceedings are relevant and have probative value. Where the assessee produces no fresh evidence or presents any additional or fresh circumstance in penalty proceedings, he would be deemed to have failed to discharge the onus placed on him and the levy of penalty could be justified." It is said that the Explanations appended to section 271(1)(c) of the Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. Courts have held that the object behind enactment of section 271(1)(c) read with the Explanations indicate that th....
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.... fact, when the same fact was brought to the notice of the Learned CIT(A), he did not give any consideration on the same neither the same was dealt by him in the order impugned. On that score, the penalty order is liable to be quashed for violation of principle of natural justice. Apart from that factually there was no concealment of income by the assessee. Neither the explanation rendered by the assessee before the Assessing Officer during the assessment proceedings found to be false. The assessee with bonafide belief submitted the entire documents relating to his claim of exemption u/s 54B and 54F before the Learned Assessing Officer. Since there is no concealment of income, according to the Learned AR, the provision of Section 271(1)(c) cannot be applied for concealment of income as alleged or at all. The Learned AO also relied upon the judgment passed by the Hon'ble Apex Court in the matter of Learned CIT-vs-Reliance Petro Products, reported in 322 ITR 158. Reliance were also placed upon the order passed by the Learned Tribunal, Delhi Bench in ITA No.1457/Del/2010 and the Co-ordinate Bench passed a judgment in ITA No.164/Ahd/2010 for A.Y. 2004-05. On the contrary, the Learned ....
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....'ble Gujarat High Court we are of the view that the penalty order was passed in violation of principles of natural justice and therefore the order levying penalty cannot be upheld. Even on merits the factual position that emerges is that the assessee has losses to be carried forward to the extent of Rs. 3.73 lacs after giving effect to CIT (A)'s order. In such a case following the decision of Hon'ble Karnataka High Court in the case of SLN Traders (supra), we are of the view that the assessee cannot be considered to have concealed income so as to justify the levy of penalty. In view of this matter, the order levying penalty is deleted. Assessee's appeal is allowed." In that case the order impugned is a product of arbitrariness in the decision making process and the discretion cannot be said to be exercised jurisdictionally as held in the case of CIT-Vs-Scientific Chemicals (2005) 198 CTR 665 (Guj) as passed by the Jurisdictional High Court is also applicable to the instant case of the assessee. 8. Apart from that the provision of Section 271(1)(c) reads as follows: "271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or ....
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....his claim. Merely because the claim was made on bonafide belief of the appellant, the same cannot be held that the income was concealed or inaccurate particulars were furnished. Since, the claim was rejected as not tenable does not empower the revenue authorities to levy the penalty. We repeat that the appellant had furnished all the details, information and explanation regarding his claim of exemption during assessment. No information or details were withheld from the acknowledgement of the Assessing officer. It can be a wrong claim, but according to us, cannot be said to be false. Merely because the claim was made on bonafide interpretation and belief of the appellant it cannot be held that income was concealed or inaccurate particulars furnished. The judgments relied upon on this ratio has laid down by the Hon'ble Supreme Court in the case of Reliance Petro Product Pvt. Ltd. reported in 322 ITR 158 (supra) squarely covered in the instant case of the assessee. Further that, the appellant being basically an agriculturist had filed its return based on the assistance of the tax practitioner since all income and sales values were duly disclosed, there cannot be said to have any conc....