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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 589/JP/2018
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 589/JP/2018 fu/kZkj.k o"kZ@Assessment Year :2011-12 cuke Shri Avnish Bansal, Income Tax Officer, Vs. C-110, Garud Marg, Vaishali Ward 3(1), Nagar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGHPB1510B vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 603/JP/2018 fu/kZkj.k o"kZ@Assessment Year :2011-12 cuke Shri Ashutosh Bansal, Income Tax Officer, Vs. C-110, Garud Marg, Vaishali Ward 2(3), Nagar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGQPB7405E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mukesh Soni (CA) jktLo dh vksj ls@ Revenue by : Shri J. C. Kulhari (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 26/11/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 17/12/2018 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. These are two appeals filed by the respective assessees against two separate orders of ld. CIT(A)-1, Jaipur dated 15.02.2018 upholding the levy of penalty u/s 271(1)(c) of the Act. Both the appeals involving
2 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur
common issue were heard together and disposed off by this consolidated order.
Briefly stated, the facts of the case are that both the assessees jointly own a property situated at plot No. 1, Geejgarh Vihar, Hawa Sarak, Jaipur which was sold during the year and gainsarising therefrom was disclosed in their respective return of income. In their respective return of income, they also claimed deduction u/s 54 of the Act in respect of investment made towards purchase of individual residential house. The Assessing Officer however held that what has been sold was not a residential property but a commercial property and given that the assessee has made investment in purchase of residential house out of sale consideration of the property situated at plot No. 1, Geejgarh Vihar, Hawa Sarak, Jaipur, the claim of deduction u/s 54 is not allowed. However, the Assessing officer held that the assessee is entitled to get benefit of deduction u/s 54F of the Act and the same was accordingly allowed to the assessee and the matter in quantum proceedings attained finality.
Separately, the AO initiated penalty proceedings u/s 271(1)(c) r.w.s 274 for furnishing inaccurate particulars of income and thereafter, by order dated 26.09.2014, the AO levied penalty stating that if mistake of claiming deduction u/s 54 was bonafide, the assessee should have filed a revised return of income which has not been done. Therefore, the AO held that claim of deduction u/s 54 instead of section 54F was not bonafide but it was mala fide with intention to avoid payment of taxes on long term capital gains. On appeal, the ld. CIT(A) has
3 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur
confirmed the levy of penalty against which both the assessees are in appeal before us.
During the course of hearing, the ld. AR submitted that the property was sold with residential construction and shed only which clearly demonstrate the fact that no commercial utilization of the property was made by the assessee at the time of sale. It was further submitted that the assessee has disclosed all facts in the computation of income and all the relevant documents have been made available to the ld. AO with a bona-fide view of taking deduction for reinvestment of the sale proceeds of property so sold in the residential house. It was submitted that there is no dispute that what has been purchased is a residential house and merely a mistake on part of the appellant to claim the deduction by mentioning wrong section by overlooking the fact of conversion for the reason being that the appellant from the very inception was holding and utilizing such property for residential purpose. It was submitted that merely making a claim under wrong section, penalty u/s 271(1)(c) should not be levied and in support reliance was placed on the decision of Hon’ble Supreme Court in case of Reliance Petroproducts Pvt ltd 322 ITR 158 (SC). Further, the ld AR placed reliance on the following decisions:
• Sh. Vikas Songara vs. DCIT Circle-1, Ajmer (ITA No. 84/JP/2018)- ITAT Jaipur
"Only dispute is regarding eligibility of claim under section 54 or section 54F of the Act. It is not in dispute that what has been sold is a non-residential property and the assessee is eligible for deduction
4 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur
in respect of fresh investment in house property. While the assessee has by mistake claimed deduction under section 54, the AO on examination found that the right provisions for allowing deduction is section 54F and he therefore allowed the deduction under section 54F of the Act. It is therefore not a case where the claim of the assessee is patently illegal or not allowable as per the provisions of the Act. Following the decision of the Hon'ble Supreme Court in case of Reliance Petroproducts (supra), where all the requisite particulars are founds to be inaccurate, merely allowing the claim under section 54F instead of section 54 would make the assessee liable for penalty under section 271(1)(c) of the Act."
• Chandra Pal Bagga v. Income-tax Appellate Tribunal [2003] 261 ITR 67 (Rajasthan)
"When the assessee has disclosed the transaction which is the basis for capital gain tax and though wrongly claimed exemption from the capital gain tax, but that cannot be a case of penalty under section 271(1)(c) of the Income-tax Act, 1961. If it has claimed any exemption after disclosing the relevant basic facts and under the ignorance of the provision of the Act, 1961, 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 Assessing Officer to ask further details and tax income if it is liable to tax and that has been done in this case.
In view of these facts on record, we see no reason to sustain the order of the Tribunal. The order of the Tribunal is set aside and penalty is cancelled. The appeal stands allowed accordingly."
5 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur • Pooja Industries Vs. ITO ITA No.322/Chd/2015 order dt.05.06.2015 (Chd.) (Trib.):
"Penalty u/s 271(1)(c) could not be levied only because the assessee had wrongly claimed deduction u/s 80IC @ 100% instead of deduction u/s 80IB @ 25%. Penalty could only be levied only and only if there were inaccurate particulars of the income and there were concealment of particulars of income of the assessee. Making an incorrect claim would not tantamount to furnishing inaccurate particulars.”
• Income Tax Officer Ward 2(4), Surat vs. Smt. Sarojben M. Kapadia, ITA No. 375/Ahd/2013:
“Admittedly, the Revenue has not brought any new material to establish there is a concealment of income or furnishing of inaccurate particulars of income to attract the penalty under section 271(1)(c) of the Act, except that, assessee had accepted its mistake and not suo motto revised its return of income. From the order of the CIT(A), we find that there is an inadvertent error in claiming the deduction by the assessee, and in the absence of any evidence to establish that the assessee had deliberately furnished inaccurate particulars or concealed its income consciously, we are of the view that the provisions of section 271(1)(c) does not attracted, and therefore, the CIT(A) is “justified in deleting the penalty, which we confirm, and the ground of the Revenue is dismissed.”
6 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur • Devi Dass Sukhani vs. Income-tax Officer [2006] 101 TTJ 551 (Jodh) “The undisputed facts of the case are that the assessee had withdrawn the deduction allowed in the asst. yr. 1999-2000 and had claimed the same again in this year under s. 54 of the act. This is a case of deduction having been claimed under a bonafide misconception and belief. There seen to be no evidence on record, which can establish any willful attempt to evade tax by the assessee. When the assessee claims a deduction, which is not permitted by the Act, it does not tantamount to concealment.”
• Sarv Prakash Kapoor v. Deputy Commissioner of Income-tax 4(1), Agra [2012] 26 taxmann.com 256 (Agra)
“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 of the Act investment of capital gain is the requirement whereas for claiming dedication under section 54F investment of sale consideration is the condition. From the facts of the case it is a clear cut case of bona fide calculation mistake. Such mistakes are rectifiable during the course of assessment proceedings. Rectifications of such mistakes are not concealment of particulars of income or furnishing of inaccurate particulars of income. The assessee explained that there is a bona fide mistake in calculation of deduction under section 54F of the Act. The A.O. though has invoked explanation-1 to section 271(1)(c) but he did not find that the
7 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur
explanation furnished by the assessee was a false explanation. Contrary to that the assessee has substantiated his explanation by submitting complete facts regarding calculation of capital gain misunderstanding of deduction under section 54 and 54 F of the Ac. Thus, the explanation of the assessee was bonafide and under that facts and circumstances, section of 271(1)(c) is not applicable"
• Income-tax Officer, Ward- 1 (2), Jaipur v. Smt. Saroj Devi Agarwal [2017] 87 taxmann.com 23 (Jaipur - Trib.)
"As per assessee by way of settlement amongst the co-owners, the assessee was given absolute rights over the new asset. Therefore, the assessee is entitled for exemption as claimed. It is further stated that law does not prohibit constructing a residential house on a commercial land. It is also argued that constructing a residential house in a commercial complex would not ipso facto alter the residential house into a commercial premises.
3.5 We find that the Revenue has not brought any material on record suggesting that on commercial land no residential house can be constructed. Even there is no material suggesting that any unauthorized construction by the assessee would debar it from claiming exemption u/ s. 54F. In the absence of such material, in our considered view benefit of section 54F cannot be denied. Another objection of the AO is with regard to the fact that construction of residential house was started prior to transfer of original asset. This objection is also misplaced when the assessee is entitled to exemption u/ s. 54F if the residential house is purchased one year before the transfer of the original asset. Therefore, in our
8 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur
considered view merely because the construction was started prior to transfer of original asset, if same is completed within three years of transfer of original asset, would not come into way of entitlement of exemption."
The ld DR is heard who has relied on the order of the lower authorities. It was submitted by the ld. DR that the assessee was very much aware that land use of the property has been changed from residential to commercial and what has been sold was a commercial property. Therefore, the claim of the assessee that there is a bona fide mistake in making a claim u/s 54 instead of section 54F is not acceptable. It was submitted that it is clear a case for furnishing of inaccurate particular of income, the penalty has been rightly levied by the Assessing Officer. Accordingly, he requested for confirmation of order of the lower authorities.
We have heard the rival contentions and purused the material available on record. It is not in dispute that the assessee is eligible for deduction in respect of fresh investment in house property. While the assessee has by mistake claimed deduction under section 54, the AO on examination found that the right provisions for allowing deduction is section 54F and he therefore allowed the deduction under section 54F of the Act. It is therefore not a case where the claim of the assessee is patently illegal or not allowable as per the provisions of the Act. In fact, the AO in the assessment order himself has stated that the assessee is eligible for deduction under section 54F of the Act. In the computation of income so filed by the assessee along with the return of income, we find that the assessee has disclosed and considered sale consideration
9 ITA No. 589 & 603/JP/2018 Shri Avnish Bansal & Shri Ashutosh Bansal, Jaipur Vs. ITO, Jaipur
of land as per registered document u/s 50C at Rs 1,72,43,350 and investment in house property amounting to Rs 41,60,100 which was claimed under section 54 of the Act. The computation so filed therefore clearly discloses the nature and specifics of the property so sold and subsequent purchase of house property by the assessee. There is thus proper disclosure as far as nature of property so purchased by the assessee is concerned in the return of income. On examination thereof, where the AO determines that the assessee is eligible for deduction under section 54F and not under section 54, the same cannot be held to be furnishing inaccurate particulars of income. Following the decision of the Hon'ble Supreme Court in case of Reliance Petroproducts (supra) and other decisions of the Coordinate Benches (supra), where all the requisite particulars are found to be accurate, merely making a claim under section 54 instead of section 54F would not make the assessee liable for penalty under section 271(1)(c) of the Act. In the result, the penalty so levied in both the cases is hereby directed to be deleted.
In the result, both the appeals of the respective assessees are allowed.
Pronounced in the Open Court on 17/12/2018.
Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vijay Pal Rao) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 17/12/2018.
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