SH. RAVI DUTT SHARMA,GHAZIABAD vs. ITO, GHAZIABAD

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is appeal filed by the assessee against the order of the ld CIT (A), Ghaziabad dated 26.08.2014 for the Assessment Year 2005-06. 2. The assessee has raised the following grounds of appeal:- “1. That the Learned CIT (A) erred in Law as well as on fact by reject the appellant Ground No 1 That the learned ITO erred in law as well as on fact to imposed the penalty of Rs.1,00,000/-U/s 271(1)(C) of Income Tax Act,

2. That the learned CIT(A) not justified in reject the Citation on which the assessee place Reliance which are very relevant in the assessee case.

3. That the learned CIT(A) erred In law as well as on fact by reject the appellant Ground No. 3 That in any case it is not proved by the AO that the assessee furnished inaccurate particulars of income or concealed any particular of income. So penalty order is illegal and against material available on records and liable to be cancelled.

4. That in any case rejection of assessee appeal by CIT(A) was wrong and illegal.”

3. Brief facts of the case are that assessee is an individual filed his return of income declaring of Rs. 99750/- on 09.01.2006. Assessment u/s 143(3) of the Income Tax Act was made at Rs. 657600/-. The main difference arising between the returned income and assessed income is Rs. 489409/- on account of sale of land at village Kundla and Village Raipur. The reasons for addition is that assessee has claimed the excessive value of cost of acquisition and has also claimed exemption u/s 2(14)(iii) of the Income Tax Act. Ld Assessing Officer while passing Page 2 of 3 the assessment order computed the capital gain after taking correct cost of acquisition and also holding that land is not exempt u/s 2(14) of the Income Tax Act. The assessee agitated the matter before ld CIT (A), who reduced the addition from Rs. 489409/- to Rs. 372838/- on the ground that Rs. 120,000/ has been shown by the assessee in the earlier year’s balance sheet. In penalty proceedings assessee submitted before the ld Assessing Officer that assessee has disclosed details of sale of agriculture land, however, the exemption was denied and further, provision of section 50C of the act were invoked in respect of sale of land at Dehradun. Further, claim of deduction of interest of Rs. 409851/- to bank for purchase of agricultural land was denied. Therefore, the claim of the assessee was that he has disclosed all the material facts in the return of income and none of them is false. Ld Assessing Officer rejected the contention of the assessee. He was of opinion that in the computation of income filed along with the return of income assessee claimed exemption u/s 2(14) of the Income Tax Act and during the course of assessment proceedings submitted that the land is situated beyond the 8 kms from municipal limit of Tilukhwa. Therefore, according to the ld Assessing Officer the assessee has willfully furnished inaccurate particulars of the income. Therefore, he imposed the penalty of Rs. 1 lac u/s 271(1)(c) of the Act. The assessee carried the matter before the ld CIT(A), who rejected the submission of the assessee for the reason that according to him the claim made by the assessee of exemption u/s 2(14) of the Act was not bonafide as the land was situated within 8 kms of the specified limits. Therefore, according to him the claim of the assessee was malafide as knowing fully well that exemption is not available, assessee claimed the same. He therefore applied the decision of Hon’ble Delhi High Court in case of Zoom Communication Pvt. Ltd. and confirmed the penalty u/s 271(1)(c) of the act.