SHRI R. VASUDEVAN,CHENNAI vs. DCIT, CENTRAL CIRCLE - 1 (1), CHENNAI

Shri R. Vasudevan, The Dy. Commissioner of Flat No.R-35, TNHB Complex, Income Tax, T.S. Krishna Nagar, Vs. Central Circle-1(1), Mugappair West, Chennai. Chennai – 600 050. [PAN: ABPPV 1970J] (&'थ(/Respondent) (अपीलाथ�/Appellant) अपीलाथ( की ओर से/ Appellant by : Mr. I. Dinesh, Advocate &'थ( की ओर से /Respondent by : Mrs. R. Anitha, Addl. CIT सुनवाई की तारीख/Date of Hearing : 01.09.2021 घोषणा की तारीख /Date of Pronouncement : 24.09.2021 आदेश / O R D E R

Per V. Durga Rao, Judicial Member:

2 -: capital gain of Rs. 1,28,30,287/-. The assessee has claimed deduction u/s. 54F of the Income Tax Act, 1961 (hereinafter as “the Act”) of Rs. 1,12,06,199/-. The A.O after examining the entire facts, he has disallowed the deduction claimed by the assessee u/s. 54F of the Act and the same was confirmed by the Ld. CIT(A). On appeal the ITAT also upheld the order passed by the Ld. CIT(A). In the penalty order, the A.O has noted that the assessee has furnished the copy of the document in respect of land purchased at No.OP-8(SP) in the Government Industrial Estate, Ambattur, Chennai. The sale registered vide No.2832/2013 dated 14.06.2013 was also furnished as per the sale deed and the assessee was authorized to use the property only for the purpose of running an industry and other connected activities and for no other purpose. The assessee was required to utilize the allotment of land only for constructing industrial work sheds and for running an industry for which it was intended and allotted therefore, it was clear that the very nature of the property purchased for industrial and not a residential house. Therefore, denying the claim u/s. 54F of the Act. He further noted that the assessee is already having more than one house one is at Mogappiar another one is at Anna Nagar, Chennai and therefore, the assessee is not eligible for deduction u/s. 54F of the Act and levied penalty u/s. 271(1)(c) of the Act and the same was confirmed by the Ld. CIT(A).

3 -: 3. On appeal before us, the assessee has submitted that the assessee has made bonafide claim u/s. 54F of the Act and simply because denial of claim u/s. 54F of the Act not warranted penalty u/s. 271(1)(c) of the Act. He relied on the decision on the decision of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. [2020] 322 ITR 158 (SC) and submitted that no penalty can be levied.

4 -: house and levied penalty u/s. 271(1)(c) of the Act. It is a fact that the assessee has not purchased a residential house. It is a bonafide claim of the assessee that on sale of the property he can purchase another property, but, the fact remains that another property which is supposed to be purchased only residential house and not an industrial property.

Therefore, the assessee is not entitled for the deduction u/s. 54 of the Act. Therefore, the A.O denied the claim u/s. 54 of the Act and the Ld. CIT(A) confirmed and ITAT also finally upheld the order of the Ld. CIT(A). So far as penalty is concerned, the assessee simply made a claim, which is not acceptable to the A.O, penalty cannot be levied u/s. 271(1)(c) of the Act automatically as has been held in the case of CIT vs. Reliance Petroproducts (P) Ltd. (supra), wherein, the Hon’ble Supreme Court explained that whether a claim simply not accepted by the A.O., it does not mean that it is a concealment of income or furnishing of inaccurate particulars of income so that penalty can be levied. Therefore, following the judgment of the Hon’ble Supreme Court, we are of the opinion that the assessee has neither concealed the income nor furnished inaccurate particulars in this case and therefore, the penalty levied by the A.O and confirmed by the Ld.CIT(A) is not correct. In view of the above, we cancel the penalty levied under section 271(1)(c) of the Act by the Assessing Officer.

Order pronounced on 24th September, 2021 in Chennai.