SOUTH INDIA SURGICALS CO. LTD.,CHENNAI vs. ACIT, CHENNAI

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ITA 916/CHNY/2019Status: DisposedITAT Chennai29 July 2019AY 2015-165 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a mere unsustainable claim in the return of income does not amount to furnishing inaccurate particulars or concealment of income, especially when supported by evidence and judicial precedents.

What were the facts?

The assessee claimed profit from land sale as exempt, but the Assessing Officer treated it as capital gain and levied penalty. The assessee argued that the land was agricultural and the claim was a bona fide interpretation, not concealment.

What were the issues?

Whether a claim for exemption of profit from land sale, even if not accepted by the Assessing Officer, constitutes concealment or furnishing of inaccurate particulars of income warranting penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Before: Shri Duvvuru RL Reddy & Shri S. Jayaraman

Hearing: 03.07.2019Pronounced: 29.07.2019

O R D E R

PER DUVVURU RL REDDY, JUDICIAL MEMBER:

1.

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai dated 28.02.2019 relevant to the assessment year 2015-16 passed under section 271(1)(c) of the Income Tax Act, 1961 [“Act” in short].

2.

Brief facts of the case are that the assessee filed the return of income belatedly for the assessment year 2015-16 on 05.11.2015 declaring a total income of ₹.(-) 4,51,72,033/-. The case was selected for scrutiny and assessment was completed under section 143(3) of the Act by assessing total income at ₹.15,51,44,390/- by making various additions. Subsequently, penalty proceedings under section 271(1)(c) r.w.s. 274 of the Act were initiated. After considering the submissions of the assessee, the Assessing Officer levied penalty of ₹.4,19,09,428/- under section 271(1)(c) of the Act. On appeal, the ld. CIT(A) confirmed the penalty levied under section 271(1)(c) of the Act.

3.

On being aggrieved, the assessee is in appeal before the Tribunal. It was the submission of the ld. Counsel that in the return of income, the assessee has admitted the profit arose out of land sale amounting to ₹.15,40,40,938/- as exempt. It was further submission that there was no survey or search operation carried out, thereby the Department invented any undisclosed income warranting levy of penalty under section 271(1)(c) of the Act. It was further submission that penalty under section 271(1)(c) of the Act is not warranted under debatable issue. It was further submission that the assessee has furnished complete particulars of income for assessment and therefore, the assessee has not concealed any particulars of income or furnished inaccurate particulars and prayed that the penalty levied should be deleted. On the other hand, the ld. DR strongly supported the orders of authorities below.

4.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. With regard to levy of penalty under section 271(1)(c) of the Act, in the return of income the assessee claimed the profit arose out of land sale amounting to ₹.15,40,40,938/- as exempt. However, the claim of the assessee was not accepted by the Department and capital gain tax was levied and brought to tax. The Assessing Officer initiated penalty proceedings and levied penalty under section 271(1)(c) of the Act on the ground that the assessee has wilfully concealed the income. Admittedly, there was no survey or search under the Income Tax Act. Though belatedly, the assessee voluntarily filed the return of income by admitting the entire income of the assessee and furnished all the particulars. During the course of scrutiny assessment proceedings, based on the details furnished by the assessee, the Assessing Officer has observed that the claim of the assessee is not exempt and accordingly, the tax levied was accepted.

4.1 Thereafter, the Assessing Officer has levied penalty under section 271(1)(c) of the Act on the ground that the assessee has wilfully concealed the particulars of income. It was the submission of the ld. AR that the land was classified as agricultural land and the report of the Inspector, IT Department clearly establishes that there is coconut trees, banana trees, drumstick trees, etc. It was the submission that the Assessing Officer has accepted the same, but he denied claim since there is a building and swimming pool existing in some part of the land and the assessee has also claimed depreciation on the building and swimming pool. It was further submission that sale deed is also clearly establishes the nature of land is agricultural land and moreover, there was no conversion of the land. He further submits that the assessee has voluntarily shown the sale transaction in the return of income, but claimed as exempt from the tax. The ld. Counsel further submitted that there is no wilful concealment or inaccurate particulars furnished by the assessee, but it is only a wrong claim since the classification of the land, sale deed and due to the existence of the coconut trees and other trees, the assessee claimed it as agricultural land. It was further submission that even the date of sale, all the land revenue records establishes that the nature of the land was agricultural land and thus, by relying upon the following decisions, it was prayed for deleting the penalty.

4.2 In the case of Union of India v. Dharmendra Textile Processors 306 ITR 277, the Hon’ble Supreme Court has pointed that a mere making a claim, which is not sustainable in law, by itself would not amount to furnishing of inaccurate particulars regarding the income of the assessee. Similar view was also taken by the Hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. 322 ITR 158. In view of the above judicial pronouncement and in view of the facts and circumstances, we find force in the arguments of the ld. Counsel. In this case, we find that the assessee has made a claim in the return of income, which was not accepted by the Assessing Officer and based on such claim of the assessee, forming an opinion that the assessee has concealed the particulars of income or furnished inaccurate particulars of income is not correct in view of the decision of the Hon’ble Supreme Court in the case of Union of India v. Dharmendra Textile Processors (supra). Under the above facts and circumstances of the case, the penalty levied under section 271(1)(c) of the Act stands deleted. Thus, the ground raised by the assessee is allowed.

5.

In the result, the appeal filed by the assessee is allowed. Order pronounced on the 29th July, 2019 at Chennai.

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