DCIT, CHENNAI vs. D.PARTHASARATHY, CHENNAI

Shri Shiva Srinivas, the learned department representative submitted that the assessee has sold a vacant land and claimed deduction under Section 54 of the Act. According to the learned department representative, what was sold by the assessee is a vacant land and not a residential property. During the scrutiny proceeding, the assessing officer found that the assessee was not eligible for deduction under Section 54 of the Act. Moreover, the assessing officer has also found that the assessee was not eligible for deduction under Section 54F of the Act also as he is an owner of more than one residential property on the date of transfer. The assessing officer found that the assessee has concealed the particulars while filing the return of income and made a wrong claim. Therefore, the assessing officer levied penalty under Section 271(1)(c) of the Act. Since the assessee has furnished inaccurate particulars according to the department representative, the assessing officer levied penalty under Section 271(1)(c) of the Act. The CIT(A) however deleted the penalty levied by the assessing officer without any justifiable cause.

On the contrary, Shri N.Sabapathy, the learned counsel for the assessee submitted that the assessee engaged itself in the business of civil construction. During the year under consideration, the assessee sold a residential premise at Anna Nagar and claimed exemption under Section 54 of the Act. In fact, the house property at Anna Nagar was purchased by the assessee. The assessee has also declared the rental income from this house property. Subsequently, the house was demolished on the request of the buyer and sale deed was executed during the year under consideration. Therefore, the assessee made a claim under Section 54 of the Act. Even if for any reasons, the claim under Section 54 could not be allowed, the assessee is definitely eligible for deduction under Section 54F of the Act. Referring to the judgment of the Apex Court in CIT Vs. Reliance Petroproducts Pvt.Ltd.

(2010) 189 TAXMAN 322, the learned counsel for the assessee submitted that the assessee has furnished all the details of the capital asset, the sale transaction and also claimed exemption under Section 54 of the Act.

We have considered the rival submissions on either side and also perused the material available on record. We have carefully gone through the provisions of Section 271(1)(c) of the Act. Section 271(1)(c) enables the assessing officer or the Commissioner or the Principal Commissioner to levy penalty in case any one of them is satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. In the case before us, admittedly, the assessee transferred his property during the year under consideration and earned capital gain and the assessee has furnished the details of the capital gain before the assessing officer. Therefore, the assessee has not concealed any part of his income. Now, coming to inaccurate particulars of income, the assessee claimed deduction under Section 54 of the Income Tax Act. Alternatively, the assessee has also claimed deduction under Section 54F. The assessing officer disallowed the claim of the assessee under Section 54 on the ground that what was sold by the assessee is a vacant cite. The alternate claim of the assessee under Section 54F was also disallowed on the ground that the assessee owns more than one residential house other than the new asset on the date of the transfer of the original asset.

The question arises for consideration is whether the claim made by the assessee under Section 54 and 54F of the Act would amount to furnishing inaccurate particulars of income. This Tribunal is of the considered opinion that in view of the judgment of the Apex Court in Reliance Petroproducts Pvt.Ltd. (supra), the claim made by the assessee under Section 54 or 54F of the Act, it cannot be considered as furnishing inaccurate particulars of income. A statutory claim made by the assessee which was disallowed by the assessing officer cannot be considered by any stretch of imagination that the assessee has furnished inaccurate particulars of his income. At the best, we may say that the claim made by the assessee is not sustainable in law or the assessee has wrongly claimed deduction under Section 54 or 54F of the Act. The claim made wrongly or which is not sustainable in law cannot be a reason to levy penalty under Section 271(1)(c). This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed.

In the result, the appeal of the revenue is dismissed.