TaxTMI 
TaxTMI 
2022 (2) TMI 392
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....ng inaccurate particulars of income. 3. On the facts and circumstances of the case, Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored." 3. Brief facts of the case are that the assessee submitted his return of income for the impugned year on 23.09.2014. The assessment was completed at a total income of Rs. 1,90,64,868/- as against the returned income of Rs. 48,000/-. While completing assessment, the Ld. AO made an addition of Rs. 1,90,16,868/- on account of sale of agricultural lands. The Ld. AO observed that the agricultural lands sold by the assessee were part of stock-in-trade and therefore the exemption claimed by the assessee treating the lands as not being capital assets as per section 2(14) of the Act was not available. Thereafter, vide order dated 16.06.2017, the Ld. AO also imposed penalty u/s 271(1)(c) of Income-tax Act, 1961 treating the addition of Rs. 1,90,16,868/-as representing the income in respect of which inaccurate particulars have been furnished. 4. Being aggrieved by the aforesaid penalty-order dated 16.06.2017, the asse....
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....on ground that in penalty proceedings, it was stated that assesses has wrong impression about the nature of transaction which proves that different stand is taken by appellant. However, this contention cannot be accepted because though return of income is prepared by accountant, it was signed by appellant himself hence it might have happened that both persons due to inadvertence has shown profit on sale of agricultural land treated as stock in trade as exempt. It is observed that appellant has consistently shown land sold during the year as stock in trade in spite of the fact that it was agricultural land and has obtained tax audit report considering the fact that turnover being sale of lands has increased prescribed limit u/s 44AB of the Act. Normally, agricultural land is classified as exempt asset u/s 2(14) of the Act and any gain arising on sale of investment in such land is exempt hence due to inadvertence, appellant might have shown such profit as exempt ignoring the fact that land sold during the year was stock in trade. 2.5 The AO has not denied the fact that land sold during the year in agricultural land hence due to inadvertence, such gain was claimed as exempt. This mi....
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....sessment proceedings have already started, appellant has submitted partial details but offer made in assessment proceedings was not on account of specific detection pointed out by AO. These facts also support the contention of appellant that there was no intention to conceal any income and mistake was unintentional as various legal complexity was involved in above transactions as discussed herein above and even on this ground penalty u/s 271(1)(c) cannot be levied. Reliance is placed on decision of Hon:ble Bombay High court in the case of CIT VsBennet Coleman & Co Ltd 215 Taxman 93 wherein it is held as under: "Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income [Bona fide claim, disallowance of] - Assessment year 1999-2000 - Assessee claimed deduction of interest on tax free bonds - Assessing Officer asked assessee to give details of interest on tax free bonds - While preparing said details, assessee noticed that 6 per cent Government of India Capital Index Bonds purchased during year had been categorized as tax free bonds and, therefore, interest earned on such bonds had escaped tax - Thereupon Assessing Officer levied penalty under section 271(1....
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....he Revenue in this case. The Supreme Court had further explained the decision in CIT v. Atul Mohan Bindal [2009] 317 ITR 1 / 183 Taxman 444 pointing out that Dharamendra Textile Processors' case (supra) has been explained in Rajasthan Spg. &Wvg. Mills' case (supra) and concluded in line with this decision that penalty under section 11 AC of the Central Excise Act could not be levied in every case of non-payment or short payment of duty and that penalty in respect of section 271(1)(c) of the Income-tax Act would be leviable, subject only to the conditions thereunder. It required the matter to be considered not solely with reference to Dharamendra Textile Processors' case (supra) but along with the decision of Rajasthan Spg. &Wvg. Mills' case (supra). In the case of Reliance Petroproducts (P.) Ltd. (supra) the Supreme Court further explained the matter and finally settled the controversy created in Dharamendra Textile Processors' case (supra). The Supreme Court in this case has analysed the facts in Dilip N. Shroff's case (supra) and found from the facts, that the explanation given by the assessee was bona fide nor did not assessee furnish any inaccurate parti....
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....uld arise as held in CIT v. Shahabad Co-op. Sugar Mills Ltd. [2010] 322 ITR 73 (Punj. &Har.). In the case of CIT v. Sidhartha Enterprises [2010] 322 ITR 80 /[2009] 184 Tax/nan 460 (Punj. &Har.) it was held that "a wrong claim as business income of what should be treated as short term capital gains on the advice of the assessee's Counsel, could not be treated as an instance of deliberate default. In the case of Chandra Pal Bagga (supra) the Hon'ble Rajasthan High Court has held that when the assessee has disclosed the transaction which is the basis for capital gains tax and though wrongly claimed exemption from the capital gains tax, but that cannot be a case of penalty under section 271(1)(c) of the Act. It if has claimed any exemption after disclosing the relevant basic facts and under ignorance of the provisions of the Act, and not offered that amount for tax, in such cases, penalty should not be imposed. In such cases rather it is the duty of the A.O. to ask for further details and tax the income if it is liable to tax. In the case under consideration, we noticed that during the assessment proceedings, the assessee has offered the tax as and when the mistake has come to ....
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....and he should substantiate that explanation by some evidence with him. If he fails to do so, his explanation may be treated as untenable. But when the assessee is able to offer a reasonable explanation based on some evidence, the A.O. cannot invoke Part-B of the explanation unless he has given finding based on some contrary evidence to disapprove that explanation offered by the assessee which the assessee is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. 15. In the light of above discussion, if we consider the facts of the case under consideration, we find that the assessee has furnished complete facts regarding computation of capital gain, total sale consideration, calculation of long term capital gain, investment in residential house and others. The mistake on the part of the assessee is that the assessee invested a part amount of sale consideration/ capital gain in residential house instead of gross sale consideration and claimed deduction under section 54F. It is relevant to note that for claiming deduction under section 54....
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....s been said long back by their Lordships of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, that merely because taxing provisions provide for a power to impose penalty that does not entitle the authorities to impose a penalty for every breach howsoever venial or technical it may be. In order to impose penalty the authorities must see the conduct and deliberate intention on the part of the assessee in concealing his true income. In our view no such case seems to have been made out. We thus concur with the view so recorded by the Tribunal and hold that this does not involve any substantial question of law. The appeal is accordingly dismissed, as being devoid of any substance." Further, reliance is also placed on ratio of decision of Hon'ble Ahmedabad ITAT in the case of SmtIndiraben H Patel v/s ACIT ITA no 3286/Ahd/2015 dated 27/02/2018 wherein it is held as under: "4. We have heard rival submissions. Case file perused. Both the parties reiterate their respective stands against and in support of the impugned penalty imposed by the Assessing Officer as upheld in lower appellate proceedings. We revert back to the relevant facts once again. We have....
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....ct. Rather, the A.O had only dislodged the computation of LTCG by the assessee, on the basis of facts and figures disclosed by the assessee, only for the reason that as the same was liable to be computed as per the proviso to Sec. 112 of the Act, therefore, the assessee would not be entitled towards indexation of the cost of acquisition of the same. We may herein observe that the bonafides of the assessee can safely be gathered from the fact that the moment he learnt about his mistake in computing the LTCG, he by his letter dated 26/02/2013 submitted before the A.O that he had no objection to the reworking of the LTCG as per Sec. 112 of the Act. We have given a thoughtful consideration to the issue before us and are of the considered view that admittedly, as the "particulars" furnished by the assessee as regards the 0% debentures of Deutsche Investments India Pvt. Ltd, sold by him during the year under consideration were not found to be inaccurate, but however, there was an inadvertent mistake in computation of LTCG by him, therefore, it can safely be concluded that the assessee cannot besubjected to penalty under Sec. 271(1)(c) for furnishing of inaccurate particulars of income. W....
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....income only after the issue of incorrect particulars in Return of Income was detected by Ld. AO. He further argued that the assessee is regularly doing business of sale/purchase of land and also having professional guidance, therefore the assessee cannot claim that he was under an impression that the sale of the rural agricultural lands held as stock-in-trade were exempt u/s 2(14) of the Act. He further submitted that the revenue was able to tax the impugned income of Rs. 1,90,16,868/-only because of scrutiny and had there been no scrutiny, this income would have escaped taxation. With these submissions, the Ld. D/R claimed that it's a clear case wherein the assessee has furnished inaccurate particulars of income and therefore the Ld. AO has rightly imposed penalty. He, therefore, prayed that the order of Ld. CIT(A) be set aside and that of the Assessing Officer be restored. 7. Per contra, the Ld. A/R drew our attention to the various documents placed in the Paper-Book filed by him. Referring to them, the Ld. A/R demonstrated the chronological events of scrutiny-proceedings conducted by Ld. AO as under: Date Proceeding 01.09.2015 Notice u/s 143(2) issued by CASS for Limited ....
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....offer was made in the letter dated16.11.2016, which was even before 28.11.2016 i.e. the day on which the Ld. AO converted the assessee's case into Complete Scrutiny. In fact, the case was converted into complete scrutiny only after the assessee himself has offered the impugned income to the Ld. AO vide letter dated 16.11.2016. The Ld. A/R further argued that having converted case into Complete Scrutiny on the basis of offer made by the assessee, it is thereafter on 02.12.2016 that the Ld. AO issued notice u/s 142(1) requiring the assessee as under: "You are requested to furnish as under: 10. Justification for claiming Profits and Gains of Business or Profession of Rs. 1,90,16,868/- as exempt u/s 2(14) in Computation of Income." 11. In view of this, the Ld. A/R argued that it is the suomoto offer made by the assessee in his letter dated 16.11.2016 that prompted the Ld. AO firstly to convert the case into Complete Scrutiny on 28.11.2016 and secondly to confront the assessee in respect of impugned income on 02.12.2016. Thus, the Ld. A/R established that it was a voluntary offer made by the assessee on 16.11.2016, much prior to detection by Ld. AO. 12. Thereafter, the Ld. A/R arg....
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....e have also gone through the orders of the authorities below. 16. Penalty u/s 271(1)(c) of the Act in the present case was levied on the assessee for failure to return income from sale of agricultural land, held as stock in trade, to tax. The charge of the Revenue being that the assessee had furnished inaccurate particulars of income to this effect. We do not find any infirmity in the order of Ld. CIT(A) who has, we find, after a careful consideration of the facts, which have remained uncontroverted and correct application of law, held that there was no furnishing of inaccurate particulars of income by the assessee so as to attract penalty u/s 271(1)(c) of the Act. 17. The finding of fact of the Ld.CIT(A) that the said transaction of sale of agricultural land was reflected in the audited profit and loss account of the assessee and the income therefrom disclosed in the return of income filed, though claimed as exempt u/s 2(14) of the Act, remains uncontroverted before us. 18. The explanation of the assessee for failing to return the said income to tax for the reason that it was under a false impression that the said lands constituted investments of the assessee and did not qualif....