SURJITSINGH SEVAKSINGH BAGGA,PUNE vs. INCOME-TAX OFFICER, WARD - 6(1), PUNE

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the order of 1. Commissioner of Income Tax (A)-4, Pune, dated 30.06.2016 for the assessment year 2013-14.

Assessee is an individual and is having income from house property, business, capital gains and other sources. Assessee filed his return of income for A.Y. 2013-14 on 30.11.2013 declaring total income of Rs.14,26,073/-. The case was selected for scrutiny and

thereafter, assessment was framed u/s 143(3) of the Act vide order

dt.28.03.2016 determining the total income at Rs.85,05,116/- inter-

alia by making addition of Rs.70,79,043/- on account of long term

capital gains and Rs.91,153/- on account of capital gains. On the

aforesaid additions, AO vide order dt.30.09.2016 levied penalty of

Rs.14,58,282/- u/s 271(1)(c) of the Act. Aggrieved by the penalty

order of AO, assessee carried the matter before Ld.CIT(A), who vide

order dt.30.06.2016 (in appeal No.PN/CIT(A)-4/DCIT, Circle-6,

Pune/595/2016-17) dismissed the appeal of the assessee. Aggrieved

by the order of Ld.CIT(A), assessee is now in appeal before us and has

raised the following grounds :

“1. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in levying a penalty u/s 271 (1)(C) of the Income Act, 1961 without recording any satisfaction regarding furnishing of accurate particulars of income or concealment of income in the show use notice, rather penalty is levied for both the alleged defaults. 2. Without prejudice to Ground No.1 the authorities below erred in facts and circumstances of the case and in concluding that the assessee has furnished inaccurate particulars of income and hence it is a fit case for levy of penalty u/s 271(1)(c) thereby levying and confirming penalty of Rs. 145&.282/-. Again the addition made in the assessment order in itself is for wrong assessment year. Hence penalty so levied be cancelled and just and proper relief be granted to the assessee in this respect.

together.

assessee had shown long term capital gains with respect to two

properties. One situated at Mangalvar Peth at Flat No.407 and the

other at Kumar Corner Co-operative Housing Society. With respect to

sale of property at Mangalvar Peth, it was noticed that the property

was bequeathed by the assessee on the demise of his father and it was

sold for Rs.90 lakhs on 05.02.2013. Assessee had claimed expenses of

Rs.1,80,000/- and the net sale consideration was shown at

Rs.88,20,000/-. Assessee had indexed the cost and cost of

improvement and worked out the capital gains at Rs.70,79,043/-.

Assessee had claimed amount of Rs.49,68,975/- as exempt income on

account of re-investment for purchase of residential property for

Rs.61,91,000/-. Assessee had also claimed deduction of

Rs.21,10,068/- on account of deposits of Rs.26,50,000/- in a

specified bank account. The assessee was asked to prove the claim of

construction of residential house. Assessee furnished necessary

details and on its perusal, AO noticed that the claim of construction of

residential house was not supported by any documentary evidences of

PMC for local authority. AO concluded that assessee had purchased

an open plot but had not constructed any residential house and

claimed to have renovate the old structure. According to AO, the claim

of assessee was not justifiable as only a compound wall was

constructed and one small watchmen’s cabin was situated on the said

plot. AO therefore concluded that assessee had not invested the

capital gains and therefore rejected the claim. On account of the

aforesaid rejection of claim, AO levied penalty u/s 271(1)(c) of

Rs.14,58,282/-. Aggrieved by the order of AO, assessee carried the

matter before Ld.CIT(A), who dismissed the appeal of assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now before us.

and Ld.CIT(A) and further submitted that assessee has not furnished

any inaccurate particulars which is incorrect or inaccurate in the

return of income and the additions have been made only on account

of difference of opinion and it is not a case of concealment of income or

furnishing of inaccurate particulars of income. Ld.A.R. further

submitted that assessee has made a bonafide claim u/s 54 of the Act

as assessee had purchased plot for construction of the residential

house property. Assessee has invested Rs.26,50,000/- by assessment

year of Kamadhenu Deposits with Canara Bank and it was utilized by

the assessee for construction activity as and when required. He

further submitted that even if the assessee could not substantiate the

deposits made by him for the construction activity, the long term

capital gains could have been taxed in A.Y. 2016-17 and not in A.Y.

2013-14. He therefore submitted that AO had made addition in the

wrong assessment year and had levied the penalty. However, on

merits, he submitted that all the required details were furnished by the

assessee and merely because the additions have been upheld, it is not

necessary penalty on such amounts be levied and in view of the fact

that penalty and assessment proceedings are distinct and separate.

He therefore submitted that the penalty levied be deleted. Ld. D.R. on

the other hand, supported the order of AO.

on record. The issue in the present ground is with respect to levy of

penalty u/s 271(1)(c) of the Act on the denial of claim of deduction u/s

54 of the Act. Before us, assessee has submitted that he had

purchased land for construction of the house and also utilized the

capital gains which was deposited in the bank account for the purpose

of construction. It is assessee’s submission that he had furnished all

the required details in the return of income and no information given

in the return of income is incorrect or inaccurate. The aforesaid

contentions of the assessee have not been found to be false. He

therefore submitted that the penalty be deleted. Ld. D.R. on the other

hand, supported the order of AO and Ld.CIT(A).

Section 271(1)(c) are that: (i) the person fails to offer the explanation,

or (ii) he offers the explanation which is found by the AO or the

ld.CIT(A) or the ld.CIT to be false, or (iii) the person offers explanation

which he is not able to substantiate and fails to prove that such

explanation is bona fide and that all the facts relating to the same have

been disclosed by him. If the case of any assessee falls in any of these

three categories, then according to the deeming provision provided in

Explanation-1 to Section 271(1)(c) the amount added or disallowed in

computing the total income shall be considered as the income in

respect of which particulars have been concealed, for the purposes of

clause (c) of Section 271(1), and the penalty follows. On the other

hand, if the assessee is able to offer an explanation, which is not found

by the authorities to be false, and assessee has been able to prove that

such explanation is bona fide and that all the facts relating to the

same have been disclosed by him, then in that case penalty shall not

be imposed.

evaluated in terms of provisions of Explanation 1 to Section 271(1)(c),

as per which if in relation to any addition in the assessment, the

assessee offers no explanation or offers explanation which is found to

be false or is not able to substitute the explanation and is also not able

to prove that the explanation is bonafide, the additions made would

amount to concealment of particulars, of income. It is well settled that

the parameters of judging the justification for addition made in the

assessment case of the assessee is different from the penalty imposed

on account of concealment of income or filing inaccurate particulars of

income and that certain disallowance/addition could legally be made

in the assessment proceedings on the preponderance of probabilities

but no penalty could be imposed u/s. 271(1)(c) of the Act on the

preponderance of probabilities and Revenue has to prove that the

claim of expenses by the assessee was not genuine or was inflated to

reduce its tax liability. Further merely because additions have

confirmed in appeal or no appeal has been filed by assessee against

additions made, it cannot be the sole ground for coming to the

conclusion that assessee has concealed any income. Before us,

Ld.A.R. has given the reasons and the facts which had resulted into

additions. He has also submitted that the addition if at all was to be

made, it would have been made in A.Y. 2016-17 and not in A.Y. 2013-

Further, there is nothing on record to demonstrate that assessee had

filed inaccurate particulars of income or had concealed the particulars

of income. We further find that Hon’ble Supreme Court in the case of

CIT vs. Reliance Petro Products Pvt. Ltd. reported at (2010) 322 ITR

158 (SC) held that a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars.

Order pronounced on 16th day of October, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 16th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-4, Pune. 4. Pr.CIT-3, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी”/ DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.