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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
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.
Shri D.Anand, the learned counsel for the assessee submitted 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 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 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
Copy of which was filed by the learned counsel for the assessee.
On the contrary, Shri A.V.Sreekanth, the learned department 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 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.
We have considered the rival submissions on either side and also 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.
We have carefully gone through the provisions of Section 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 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.
We have also carefully gone through the judgment of the Apex Court in the case of Reliance Petroproducts Pvt.Ltd. cited supra. The Apex Court after considering the provisions of Section 271(1)(c) found 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.
We have also carefully gone through the judgment of the Madras 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.
In view of this judgment of the Apex Court and Madras High 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 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.
In the result, the appeal of the assessee is allowed.
Order pronounced on 23rd September, 2016 at Chennai.