A.J.HAMEED SULAIMAN,CHENNAI vs. ITO NON CORPORATE WARD 1(3), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -2, Chennai, dated 28.09.2017, confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act') for the assessment year 2013-14.

Sh. Saroj Kumar Parida, the Ld.counsel for the assessee, submitted that during the course of assessment, the assessee claimed deduction under Section 54F of the Act in respect of the investment in purchase of property at Nerkundram Road, Vadapalani, Chennai. According to the Ld. counsel, the assessee had sold a property at Lathams Bungalow Road, Ramanathapuram and the capital gain was invested in the new property at Vadapalani.

On the contrary, Shri S. Nataraja, the Ld. Departmental Representative, submitted that the assessee originally claimed deduction under Section 54F of the Act in respect of capital gain on sale of property at Lathams Bungalow Road, Ramanathapuram. During the course of assessment proceeding, according to the Ld. D.R., the Assessing Officer found that the new property purchased by the assessee at Nerkundram Road, Vadapalani, is a commercial one. Therefore, the assessee by a letter dated 10.02.2016, offered to withdraw the claim made under Section 54F of the Act. Since the assessee withdrew the claim of deduction under Section 54F of the Act after the Assessing Officer pointed out that the property purchased by the assessee by investing the capital gain is a commercial one, according to the Ld. D.R., the assessee has furnished inaccurate particulars in respect of capital gain. Hence, the CIT(Appeals) has rightly confirmed the penalty levied by the Assessing Officer.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the long term capital gain accrued to the assessee on sale of property at Ramanathapuram. It is also not in dispute that the assessee invested the capital gain in a property at Nerkundram Road, Vadapalani, Chennai. The assessee claimed deduction under Section 54F of the Act. The Assessing Officer found that the investment made by the assessee in the property at Nerkundram, Vadapalani is a commercial one, therefore, the assessee is not eligible to claim deduction under Section 54F of the Act. In view of the above, the assessee withdrew his claim. The question arises for consideration is whether a mere claim under Section 54F of the Act for deduction in respect of long term capital gain and subsequent withdrawal of the same by a letter amounts to furnishing of inaccurate particulars of income or not? It is not in dispute that the assessee has furnished entire capital gain arose out of the sale of property. The assessee also claimed deduction under Section 54F of the Act. This Tribunal is of the considered opinion that the assessee has not concealed any particulars of his income or furnished any inaccurate particulars of his income. As found by the Apex Court in Reliance Petroproducts Pvt. Ltd. (supra), a mere statutory claim in the return of income does not amount to concealing any part of income or furnishing any inaccurate particulars. In view of the above, we are unable to uphold the order of the CIT(Appeals). Accordingly, orders of both the authorities below are set aside and the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act is deleted.

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