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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SUDHANSHU SRIVASTAVA & SHRI VIKRAM SINGH YADAV
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE: SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 500/SRT/2016 Assessment Year :2011-12 Salahuddin H. Baig, Vs. ACIT 51, Bhagyoday Society, Bharuch Circle, Station Road, Ankleshwar, Bharuch Bharuch 393002 PAN/GIR No.: ADEPB1484G Appellant Respondent Assessee by : Shri Rasesh Shah (CA) Revenue by : Shri B.P.K. Panda (Sr. DR) Date of Hearing : 10/05/2019 Date of Pronouncement: 26/06/2019 ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-3, Vadodara dated 23.12.2015 wherein the sole grievance of the assessee is that the ld CIT(A) has erred in confirming the levy of penalty u/s 271(1)(c) on disallowance of exemption claimed amounting to Rs. 59,28,419/- u/s 54F of the Act
At the outset, the ld. AR submitted that the Assessing Officer has erred in initiating and levying penalty u/s 271(1)(c) on both the limbs i.e. concealment of income and furnishing of inaccurate particulars of income. It was submitted that in light of the jurisdictional High Court decision in case of of CIT vs Manu Engineering Works reported in 122 ITR 306, while imposing penalty, the Assessing Officer has to record a categorical finding whether such penalty is being imposed for concealment of income or for furnishing of
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli inaccurate particulars of income. Further, reliance was placed on the Hon’ble Supreme Court decision in case of Reliance Petroproducts 322 ITR 158 (SC) and Hon’ble Rajasthan High Court decision in case of Chandra Pal Bagga vs ITAT 261 ITR 67 (Raj) for the proposition that mere denial of a legal claim cannot be held as furnishing inaccurate particulars of income. It was accordingly submitted that the penalty order so passed by the AO u/s 271(1)(c) is not sustainable in law and the penalty so levied may be directed to be deleted.
The ld. Sr. DR is heard who has relied on the findings of the lower authorities.
In order to appreciate the rival contentions, we refer to the assessment order which has been passed for AY 2011-12 u/s 143(3) of the Act. During the year under consideration, the assessee has sold a piece of land and while determining capital gains have claimed deduction 54F of the Act with the belief and assumption that the amount shall be invested in plot of residential land and construction shall be completed as per the provisions of section 54F of the Act. However, the Assessing Officer, on perusal of the computation of income and from the submission made by the assessee, held that the claim u/s 54F was not available to the assessee and therefore, the claim u/s 54F was disallowed and capital gain on sale of said plot of land of Rs. 59,28,419/- was brought to the tax. Separately, the penalty proceedings u/s 271(1)(c) were initiated for concealment of income and furnishing of inaccurate particulars of income.
Now, we refer to the penalty order dated 27.08.2014 wherein the Assessing Officer has again stated that the assessee has not complied with any of the conditions in order to eligible for claim of deduction u/s 54 of the Act and 2
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli therefore, this clearly amounts to furnishing inaccurate particulars and concealment of particulars income by the assessee. The findings of the AO at Para No. 5 of the penalty order reads as under:- “5. The explanation of the assessee is duly considered. However, it is found unacceptable looking at the facts and circumstances of the case. In the return of income, the assessee had claimed deduction u/s 54F amounting to Rs. 59,28,419/- for capital gain on sale of land. During the course of assessment proceedings, the Assessing Officer asked the assessee to extend proof of having invested the sale proceeds in the purchase/construction of new residential property. In the circumstances the same had not been invested, the assessee was asked to submit evidence of the same being deposited in a ‘Capital Gain Account Scheme 1988, in view of Sub-section (4) of Section 54F. From the submission filed by the assessee, it was very clear that the claim of deduction u/s 54F. From the submission filed by the assessee, it was very clear that the claim of deduction u/s 54F was not available to the assessee. The assessee was given adequate opportunity during the assessment proceedings as well as penalty proceedings to submit necessary documentary evidences for claim of deduction u/s 54F. However, the assessee has failed to submit any documentary evidences to substantiate his claim of deduction u/s 54F in the return of income. Assessee’s contention that he could not construct the house as planned because there was no approval for new projects granted by the newly-formed common Urban Development Authority on merger of Bharuch and Ankleshwar is not tenable at all. At the time of filing of return of income, the assessee had not complied with any of the conditions in order to be eligible for claim of deduction u/s 54F. This clearly amounts to furnishing inaccurate particulars and concealment of particulars income by the assessee.” 3
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli
Thereafter, at Para 7 and then at Para 10 where the AO has given his final findings has held as under: “10. In view of the above discussions, I am satisfied that the assessee has deliberately furnished inaccurate particulars of income and concealed the particulars of his income. Hence, it is a fit case for levy of penalty. I therefore levy a penalty of Rs 18,90,560 u/s 271(1)(c) of the I.T Act, 1961 as the maximum penalty leviable at Rs 56,71,680.”
We therefore find that it is the claim of deduction 54F which was denied by the Assessing Officer while computing the capital gains in the hands of the assessee. The transaction of the sale has been duly reported in the return of income and even the claim u/s 54F has been made with the specific disclosure that the amount shall be invested in plot of land as per the provisions of section 54F of the Act. Therefore, the same cannot be a case of concealment of income. Further, the Hon’ble Supreme Court in case of CIT vs. Reliance Petroproducts (supra) has held that mere denial of a claim made by the assessee cannot be held as furnishing inaccurate particulars of income. We therefore find that in the facts of the present case, where the claim of deduction u/s 54F has been denied, the same cannot be basis for levy of penalty u/s 271(1)(c) of the Act. In light of the same, the penalty so levied cannot be sustained in the eyes of law and the same is directed to be deleted.
In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 26/06/2019.
Sd/- Sd/- (Sudhanshu Srivastava) (Vikram Singh Yadav) Judicial Member Accountant Member 4
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli
Dated:- 26/06/2019 Copy of the order forwarded to: The Appellant- Salahuddin H. Baig, Bharuch 1. 2. The Respondent- ACIT, Bharuch Circle, Bharuch 3. CIT 4. CIT(A) 5. DR, ITAT, Surat. 6. Guard File {ITA No. 500/SRT/2016} By order, / / TRUE COPY / / Asst. Registrar