ARUN KESHAVRAO NARWADE (HUF),,AURANGABAD vs. INCOME-TAX OFFICER, WARD 3(1), AURANGABAD

आयकर अपीलीय अिधकरण “बी” �ायपीठ पुणेम�। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.185/PUN/2022 िनधा�रण वष� / Assessment Year : 2005-06 Arun Keshavrao Narwade –HUF, The Income Tax Officer, Plot No.12, Rajnagar, Station V Ward-3(1), Aurangabad. Road, Aurangabad – 431005. s PAN: AAHHA 8135 K Appellant/ Assessee Respondent / Revenue Assessee by Shri M.K.Kulkarani – AR Revenue by Shri M.G.Jasnani – DR Date of hearing 23/12/2022 Date of pronouncement 23/12/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals), Aurangabad-2 dated 18.03.2019 emanating from penalty order of Assessing officer dated 30.03.2017 under section 271(1)(c) of the I.T.Act, 1961 for the A.Y.2005-06. The Assessee has raised the following grounds of appeal: “1) On the facts and in the circumstances of the case and in lawthe penalty under section 271(l)(c) levied of Rs. 5,66,058/- by the A.O. and confirmed by Ld. CIT(A) in his appeal order dt. 18-03- 2019 is not justified in view of latest Hon'ble Supreme Court Judgment reported as Pr. CIT v. Golden Peace Hotels and Resorts (P.) Ltd [2021] 124 taxmann.com 249 (SC) dt. 20-22-2020. The penalty levied being illegal and without jurisdiction be quashed.

ITA No.185/PUN/2022 Arun Keshavrao Narwade –HUF [A]

2) On the facts and in the circumstances of the case and in law the judgment of the Hon'ble Supreme Court reported as Pr. CIT v. Golden Peace Hotels and Resorts (P) Ltd [2021] 124 taxmann.com 249 (SC) dt. 20-02-2020 and referred to above applies retrospectively and is deemed to have been available to A.O. at the time of levy of penalty. The A.O. has not maintained any charge as to whether the offence was "Concealment" on furnishing of "inaccurate particulars of income". In view of this the penalty is not sustainable levied without "charge". IT be quashed.

3) On the facts and in the circumstances of the case and in law and on perusal of the assessment order shows that the capital gain arising of Rs. 28,59,402/- was not offered for taxation as long term capital gain but alternatively being sale of agricultural land the capital gain was not assessable in the hands of assessee. Basically no capital gain taxable arose to the assessee there was no question of taxability of the same. In the assessee full disclosure of the same there was no furnishing of any inaccurate particulars of Income. No penalty is exigible. The penalty is not exigible. It be quashed.

4) On the facts and in the circumstances of the case and in law the perusal of the assessment order vide para No. 5 of the order it appears the pleading of the assessee was the land was never converted into capital asset and the distance of the land (Gut No. 222/1) was only 9 kms and above and was agricultural land. It was an agricultural land. The A. O. failed to appreciate the legal issue in its proper perspective. Once an agricultural land is always an agricultural land till it is converted into a capital asset. In view of this the agricultural land having sold no capital gain arose. The penalty under S. 271(l)(c) for the charge of furnishing inaccurate particulars of income is not according to law. The penalty is not leviable. It be quashed and set aside.

5) On the facts and in the circumstances of the case and in law and the perusal of para No. 1 it is observed by A. 0. that the share of the assessee as per market value to be adopted u/s 50C of the Act is thus at Rs. 28,59,402/-. It is now settled law the valuation adopted under S. 50C of the Act is not to be invoked for valuation to computation of long term capital gain. It be held accordingly quashing the penalty levied.

ITA No.185/PUN/2022 Arun Keshavrao Narwade –HUF [A] 6) On the facts and in the circumstances of the case and in law the penalty levied under S. 271(l)(c) is illegal and without jurisdiction. The penalty is also not leviable in view of limitation and other legal problems involved. The penalty being not sustainable be quashed and set aside.”

ITA No.185/PUN/2022 Arun Keshavrao Narwade –HUF [A] 5. The only issue is levy of Penalty of Rs.5,66,058/- u/s.271(1)(c) of the Act. On perusal of the notice u/s 271(1)(c) dated 15.03.2013 issued by the Assessing Officer (AO), it is observed that the AO has not struck the appropriate words i.e. Concealed the particulars of Income or furnished Inaccurate particulars.

5.1 The Hon’ble Bombay High Court has held in the case of Ganga Iron & Steel Trading Co. v/s Commissioner of Income Tax. [2022] 135 taxmann.com 244 (Bombay) order dated December 22, 2021 as under : Quote, “10. We find that the law as laid down by the Full Bench applies on all fours to the facts of the present case as in the show cause notice dated 12-2-2008, the Assistant Commissioner of Income-tax is not clear as to whether there was concealment of particulars of income or that the Assessee had furnished inaccurate particulars of income. We therefore find that issuance of such show cause notice without specifying as to whether the Assessee had concealed particulars of his income or had furnished inaccurate particulars of the same has resulted in vitiating the show cause notice.

Heavy reliance was placed by the learned counsel for the Revenue on the decision in Mak Data (P.) Ltd. (supra) to urge that the penalty contemplated by section 271 (1) (c) of the said Act was in the nature of civil liability and mens rea was not essential therein. The decision in Dilip N. Shroff (supra) having been held as not laying down good law in Dharmendra Textile Processors Ltd. (supra), it was submitted that the show cause notice issued in the present proceedings was liable to be upheld. It may be noted

ITA No.185/PUN/2022 Arun Keshavrao Narwade –HUF [A] that all the decisions relied upon by the learned counsel for the Revenue were considered by the Full Bench while answering the issues referred to it on reference. The Full Bench having considered these decisions and having answered the question as regards defect in the notice under section 271(1)(c) of the said Act resulting in vitiating the penalty proceedings, we find ourselves bound by the answers given by the Full Bench. It would not be permissible for us to disregard this aspect and take a different view of the matter.

Accordingly substantial question of law no. III is answered by holding that since the show cause notice dated 12-2-2008 does not indicate whether there was concealment of particulars of income or furnishing of incorrect particulars of such income, the same would vitiate the penalty proceedings. ” Unquote.

5.2 In the case under consideration the AO has not struck the appropriate inapplicable words in the penalty notice. This issue goes to the root of initiation of penalty. Therefore, respectfully following the Hon’ble jurisdictional High Court, it is held that the penalty u/s.271(1)(c) is not maintainable. Hence, the Assessing Officer is directed to delete the penalty u/s.271(1)(c). Accordingly, appeal of the Assessee is allowed.

Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 23rd December, 2022/ SGR*