KADIRAVAN CHEMICALS P LTD.,CHENNAI vs. DCIT, CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -8, Chennai, dated 18.01.2017 for the assessment year 2011-12, confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee claimed the sale of land as agricultural income and claimed exemption. According to the Ld. counsel, the Assessing Officer, however, treated the nature of land as non- agricultural. On a query from the Bench, the Ld.counsel submitted that there was no further appeal against the order of the Assessing Officer. According to the Ld. counsel, the land in question is agricultural land and the assessee used it for cultivation. The Assessing Officer on the basis of classification said to be made by the Sub-Registrar appears to have taken the view that it is not an agricultural land. Therefore, according to the Ld. counsel, the levy of penalty is not justified.

On the contrary, Shri V. Nandakumar, the Ld. Departmental Representative, submitted that the Assessing Officer after due verification found that the land in question is not an agricultural land.

We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer observed in the assessment order that on due verification, it was found that the land in question is not an agricultural land.

It is a common knowledge that in many areas, the Registration Department for the reasons best known to them, has classified the lands even though the classification in the revenue records stand as wet land or dry land. This Tribunal is of the considered opinion that if the land is classified as wet land, then there should be natural source of irrigation for cultivation. In case it was classified as dry land, the land may be cultivated by using rain or there may be artificial source of irrigation by way of well or borewell. These factors were not brought on record either by the Assessing Officer or by the CIT(Appeals). Moreover, a mere claim in the return of income as agricultural land cannot be considered to be furnishing inaccurate particulars of income or concealing any part of income.

It is not the case of the Revenue that the assessee has not disclosed entire sale consideration. It is also not the case of the Revenue that the assessee has concealed any part of sale proceeds of the said land. The admitted case of the Revenue is that the assessee claims the gain arising out of sale of land as exemption on the ground that the land in question is agricultural land. This Tribunal is of the considered opinion that this claim of the assessee cannot be considered to be concealing any part of income or furnishing inaccurate particulars of income as held by the Apex Court in CIT Vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR

In view of the above, we are unable to uphold the orders of the authorities below. Accordingly, the orders of both the authorities below are set aside and the penalty levied by the Assessing Officer is deleted.

In the result, the appeal filed by the assessee is allowed.