D.HARINDRAN,CHENNAI vs. ITO, CHENNAI

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

This appeal of the assessee is directed against the order of the CIT(A) -15, Chennai dated 18.12.2015 and pertains to Assessment Year

2011-12.

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that the assessing officer levied penalty under Section 271 (1) (c) of the

Act. On appeal by the assessee, the CIT(A) has also confirmed the same.

Referring to the penalty order, the learned counsel for the assessee

submitted that the assessee claimed exemption under Section 54/54F in

respect of a capital gain arising on the sale of the land at Injambakkam.

It is not in dispute that the assessee has furnished all the details of

transaction for sale of 10.03 grounds on 06.12.2010 for Rs.4,00,00,000/-.

In fact, the assessee acquired this property by means of a registered

settlement deed from his father Shri P.V.Devakumaran on 19.11.2010.

The assessing officer disallowed the claim of the assessee under Section

54/54F while computing the capital gain in the assessment proceeding.

During the course of penalty proceeding, the assessing officer observed

that the assessee purchased nanja land to the extent of 6.95 acres from

M/s.Conclave Constructions Private Limited by means of a registered sale

deed dated 06.03.2011 for a total consideration of Rs.3,27,06,437/-.

Referring to the copy of the return and other material available on

record, the learned counsel for the assessee submitted that the assessee

disclosed the purchase of agricultural land in the return and claimed the

statutory deduction under Section 54/54F of the Act. This

Rs.3,27,06,437/- includes the cost of the land and the development

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carried out by the assessee. The existence of residential house is

evidenced from the copy of the property tax payment receipt produced

before the assessing officer. The assessing officer found that the

assessee has furnished inaccurate particulars in claiming the exemption

under Section 54/54F of the Act.

3 . According to the learned counsel, it is not in dispute that the

assessee has disclosed the source of inheritance of property from his

father. It is also disclosed before the assessing officer that the

investment made in the residential house. The assessee has also

produced the copy of the property tax paid by the assessee to the

Vadakadampadi Panchayat as the proof for existence of residential house

in the land purchased by the assessee. Therefore, it cannot be said that

the assessee has furnished the inaccurate particulars. The assessee has

furnished all the details of the investment made out of the sale proceeds

of the land and claimed exemption under Section 54/54F. If the

assessing officer find that the assessee is not eligible for exemption

under section 54/54F, according to the learned counsel, it does not mean

that the assessee has furnished the inaccurate particulars of his income.

The gain arose to the assessee on transfer of capital asset is available

before the assessing officer. Therefore, it is for the assessing officer to

examine whether the assessee is eligible for exemption under Section

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54/54F of the Act. After examining the claim of the assessee, if the

assessing officer finds that the assessee is not eligible for deduction

under Section 54/54F of the Act in respect of investment made out of the

sale proceeds of the capital asset, it does not mean that the assessee

has furnished inaccurate particulars. Making a claim before the assessing

officer under the statutory provision cannot be considered to be as

furnishing inaccurate particulars of income or concealing any part of the

income. Placing reliance on the judgment of the Apex Court in the case

of CIT Vs. Reliance Petroproducts Pvt.Ltd. reported in [2010] 322 ITR

158 (SC), the learned counsel for the assessee submitted that making a

claim before the assessing officer after furnishing all the relevant

materials does not in any way amounts to furnishing of inaccurate

particulars or concealing any part of income. Therefore, the CIT(A) is not

justified in confirming the penalty levied by the assessing officer. The

learned counsel has also placed his reliance on the judgment of the

Madras High Court in the case of CIT Vs. Gem Granites (2013) 86 CCH

representative submitted that it is not in dispute that the assessee

inherited 10.03 grounds of land along with superstructure measuring

approximately 200 square feet from his father Shri P.V.Devakumaran by

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means of a settlement deed dated 19.11.2010. The assessee sold the

said property on 06.12.2010 for a total amount of Rs.4 crores. The

assessee claimed before the assessing officer that he invested

Rs.3,27,06,437/- in a residential house property and claimed exemption

under Section 54/54F of the Act. The assessing officer found that what

was purchased by the assessee is not a residential house property, it is

an agricultural land. The assessing officer on verification found that there

was a well for irrigation together with a room with asbestos roof.

Referring to the property tax said to be paid by the assessee, the learned

department representative submitted that the property tax was paid for

the super structure and there was no building in the nature of the

residential house. Therefore, the assessing officer found that the

assessee has furnished inaccurate particulars for the purpose of claiming

deduction under Section 54/54F. Accordingly, the assessing officer levied

penalty under Section 271(1)(c) of the Act. The CIT(A) on examination

found that the assessee made investment in the agricultural land having

known that the investment was not made in a residential property, the

assessee made a false claim before the assessing officer under Section

54/54F in the assessment proceeding. Therefore, the CIT(A) has rightly

confirmed the penalty levied by the assessing officer.

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perused the material available on record. Admittedly, the assessee

acquired 10.03 grounds of land along with a superstructure from his

father Shri P.V.Devakumaran by means of a settlement deed dated

19.11.2010. The assessee has also sold the land subsequently on

06.12.2010 for a consideration of Rs.4 crores. The assessee further

claimed before the assessing officer that he invested the sale proceeds in

residential house and claimed deduction under Section 54/54F. The

assessing officer found that the assessee invested the funds in

agricultural land and not in residential house and therefore not eligible

for exemption under Section 54/54F of the Act. The fact remains that the

assessee has furnished all the details of sale and purchase of the

properties and claimed deduction under Section 54/54F of the Act. The

question arises for consideration is when the assessee furnished all the

particulars of the sales and the investment and claimed exemption under

Section 54/54F, whether the assessee has furnished inaccurate

particulars of the income.

271(1)(c) of the Act. Section 271(1)(c) in categorical terms says that the

Assessing Officer may levy penalty if he is satisfied that the assessee has

concealed the particulars of his income or furnished inaccurate

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particulars of such income. In the case before us, the assessee has

furnished all the details of the transaction of the sale of the property. In

other words, the sale of the property for Rs.4 crores was disclosed before

the assessing officer. The assessee has also computed the capital gain

and disclosed the capital gain before the assessing officer. The assessee

claims exemption under Section 54/54F in respect of the investment

made by him in another landed property. The assessee claims that the

investment was made in residential house. The revenue claims that the

assessee invested in the agricultural land. It is not the case of the

assessing officer that the assessee has concealed any part of the sale

proceeds and thereby concealed the capital gain accrued to him. In those

circumstances, making a statutory claim under Section 54/54F of the Act,

cannot be said that the assessee has concealed any particulars of his

income. Similarly, it cannot also be said that the assessee has furnished

inaccurate particulars of his income. If it cannot be said that the

assessee has furnished the inaccurate particulars of income or concealed

any part of the income, this Tribunal is of the considered opinion that the

levy of penalty under Section 271 (1) (c) is not justified.

Court in the case of Reliance Petroproducts Pvt.Ltd. cited supra. The

Apex Court after considering the provisions of Section 271(1)(c) found

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that in order to expose the assessee to penalty under Section 271(1)(c),

the case shall be strictly covered by the provisions of Section 271(1)(c).

Unless the case is strictly covered by the provisions of Section 271(1)(c),

penalty provision cannot be invoked. The Apex Court has further found

that by no stretch of imagination, making of an incorrect claim in law

tantamount to furnishing inaccurate particulars.

High Court in Gem Granites (supra). The Madras High Court after

referring to the Apex Court judgment in Rajasthan Spinning and Weaving

Mills found that the conditions stated in 271(1)(c) must exist for levying

penalty.

Court, even if it is considered that the claim made by the assessee under

Section 54/54F is incorrect, it would not tantamount to furnishing of

inaccurate particulars of income. Penalty can be levied only in respect of

concealing the particulars of income or furnishing inaccurate particulars.

Making a claim before the assessing officer under the statutory

provisions cannot be considered by any stretch of imagination that the

assessee has concealed any part of the income or furnished inaccurate

particulars of income. This Tribunal is of the considered opinion that

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merely because claim made by the assessee under Section 54/54F was disallowed by the assessing officer in the assessment proceeding, that cannot be a reason to conclude that the assessee has furnished inaccurate particulars of his income or concealed any part of his income. Therefore, this Tribunal is of the considered opinion that the penalty levied by the assessing officer under Section 271(1)(c) is not justified. Accordingly, the orders of the lower authorities are set aside and the penalty levied by the assessing officer is deleted.

Order pronounced on 23rd September, 2016 at Chennai.

Sd/- Sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member चे�नई/Chennai, �दनांक/Dated, the 23rd September, 2016. sp. आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT, 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.