Shri Maheshbhai Shantilal Patel, Ahmedabad V. The DCIT , Central Circle-1(2), Ahmedabad

ITA 267/AHD/2023

AI Insights

The case involves Maheshbhai Shantilal Patel, the appellant, who contested a penalty imposed by the Deputy Commissioner of Income Tax (DCIT), Central Circle-1(2), Ahmedabad, under section 271(1)(c) of the Income Tax Act, 1961. The penalty was levied following an assessment where the assessee's claim for exemption under section 54B for long-term capital gains on the sale of agricultural land was disallowed. The Commissioner of Income Tax (Appeals) upheld the penalty, which was then challenged at the Tribunal. The Tribunal, referencing several judicial precedents, concluded that the imposition of the penalty was not justified as the assessee had not furnished inaccurate particulars of income but had merely made an unsuccessful claim for exemption.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114162 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2023
• Other Referred Cases: PCIT Vs. Intas Pharma Ltd., CIT Vs. D. Harindran, PCIT Vs. Sesa Goa Ltd., CIT Vs. Reliance Petroproducts (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation
• Section: 54; 132; 271(1)(c); 54B; 153A; 32(1)(iia); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Maheshbhai Shantilal Patel, B-202, Maruti Tower, Shivranjani Char Rasta, Ahmedabad-380015 Gujarat PAN: ABXPP3026F (Appellant) Vs The DCIT, Central Circle-1(2), Ahmedabad (Respondent) Assessee Represented: Written Submission Revenue Represented: Ms. Saumya Pandey Jain, Sr.D.R. Date of hearing : 23-08-2023 Date of pronouncement : 27 -09-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the appellate order dated 06.03.2023 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad arising out of the levy of Penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2011-12. ITA No. 267/Ahd/2023 Assessment Year 2011-12 I.T.A No. 267/Ahd/2023 A.Y. 2011-12 Page No Maheshbhai Shantilal Patel vs. DCIT 2 2. The solitary issue involved in this appeal is confirmation of Penalty of Rs.1,30,258/- levied u/s. 271(1)(c) of the Act, ignoring the fact that there is no case of furnishing inaccurate particulars of income by the assessee. 3. The brief facts of the case is that the assessee is an individual deriving income from business, capital gain and other sources. There was a search action u/s. 132 of the Act on 27-04-2011 in the case of Savvy Group and the assessee also covered in this search action. Consequently, notice u/s. 153A of the Act was issued on 22-09-2011. In response, the assessee filed his Return of Income on 05-11-2012 declaring total income of Rs. 8,23,980/- and agricultural income of Rs. 3,70,242/-. 3.1. The assessee claimed Long Term Capital Gain of Rs. 6,23,321/- on sale of two agricultural lands situated at Survey No. 1188/1/2 and 1188/1 at Uvarsad Gam. Against the same, the assessee purchased new agriculture land at Dungarpur, Rajasthan and claimed exemption u/s. 54B of the Act. It is not in dispute that both lands are agriculture lands only. During the assessment proceedings, the assessee submitted bills of agriculture activity, but the Ld. A.O. did not accept the same and the Ld. A.O. also disallowed the claim of exemption u/s. 54B of the Act and determined the income as Rs. 14,56,300/- and agricultural income of Rs. 3,70,242/-. I.T.A No. 267/Ahd/2023 A.Y. 2011-12 Page No Maheshbhai Shantilal Patel vs. DCIT 3 4. Aggrieved against the same, the assessee filed an appeal before Ld. CIT(A), the same was dismissed for non-production of relevant documents to claim that the sale of land as an agriculture land. The assessee filed further appeal before this Tribunal with a delay of 921 days, the same was also dismissed for not explaining the delay by filing proper affidavit by the assessee. In the meanwhile, the Assessing Officer levied penalty u/s. 271(1)(c) for furnishing inaccurate particulars of income and thereby levied minimum penalty of Rs. 1,30,258/-. 5. Aggrieved against the same, the assessee filed further appeal before Ld. CIT(A) who confirmed the levy of penalty but also rejected the additional documents filed under Rule 46A of the I.T. Rules observing as follows: “....7.7.2 In the instant case, I find that the appellant has not explained any satisfactory reason for non-submission of the details during the assessment proceedings or appellate proceedings or penalty proceeding. In view of these facts, I hold that the appellant' case does not fall under any of the exception provided in sub-rule (1) of rule 46A and also that the appellant has not furnished any reply/reason for admission of additional evidence. Therefore, additional evidence related to deduction u/s.54B of the Act filed by the appellant before this office, is not admitted.” 6. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The order passed by AO and confirmed by CIT (A) is invalid, bad in law and required to be quashed. 2 Ld. CIT(A) erred in law and on facts in imposing penalty of Rs.1,30,258/- under section 271(1)(c) of the Act ignoring the fact that there is no case of furnishing inaccurate particulars of income but it is question of interpretation only and accordingly no case for penalty. 3 Ld. CIT (A) erred in law and on facts in confirming penalty ignoring fact that AO failed to record proper satisfaction for imposing penalty. I.T.A No. 267/Ahd/2023 A.Y. 2011-12 Page No Maheshbhai Shantilal Patel vs. DCIT 4 6.1. None appeared on behalf of the assessee, however a written submission is filed by the assessee alongwith relied upon case laws. 7. The Ld. Sr. D.R. Ms. Saumya Pandey Jain appearing for the Revenue submitted that the Ld. CIT(A) is correct in confirming the levy of penalty since the assessee failed to submit the relevant documents before any of the Lower Authorities for the claim of exemption u/s. 54B of the Act. Therefore the order passed by the Lower Authorities does not require any interference and therefore the present appeal filed by the Assessee is liable to be dismissed. 8. We have given our thoughtful consideration and perused the materials available on record. It is seen from the appellate order, the submissions of the assesse are as follows: “ (i) Disallowance u/s. 54B of Rs. 6,32,321/- is wrongly made as the land was used for agricultural purposes as per 7/12 extracts, thus, the land sold out was used for Agricultural purposes and Ag. Income was shown in IT return filed for AY 2011-12 and AY 2012-13. (ii) The appellant has furnished complete details of sale of land. Ag. Records for Agriculture produce, investment in new Ag. Lands and Ag. Land is shown in ITR, this shows that the complete particulars were filed before AO, who has not appraised the same and disallowed claim u/s. 54B merely on presumptions. (iii) As the penalty proceedings are separate from assessment proceedings, your appellant further submits that the Ag. Lands sold out were far from Municipal limits of Gandhinagar and the Ag. Land is not a capital asset as per Section 2(14)(iii) of the I.T. Act. Therefore, the LTCG on agriculture land sale was not taxable at all, vis-a-versa investment of sale proceeds and claim u/s. 54B was also immaterial. In view of the above facts, explanations, legal provisions and decisions of Hon'ble Courts and Tribunals. It is submitted that as the appellant has not furnished inaccurate details, the disallowance is merely on presumption by AO, whereas, the facts are different. The appellant has furnished full I.T.A No. 267/Ahd/2023 A.Y. 2011-12 Page No Maheshbhai Shantilal Patel vs. DCIT 5 facts and explanations, IT return shows agriculture income and the land in question is also not an capital assets u/s. 2(14)(iii) of the IT Act It is therefore prayed that penalty levied us. 271(1)(c) may kindly be deleted.” 8.1. It is seen from the Penalty order that the Ld. A.O. has given a show cause notice dated 04-02-2020 fixing the case was hearing on 21-02-2020 why not to levy penalty u/s. 271(1)(c) since Ld. CIT(A) confirmed the disallowance made by the Assessing Officer. When the assessee failed to make any reply to the above show cause notice, however with the materials available on record as well as the Ld. CIT(A) confirming the disallowance by dismissing the assessee appeal, thereby Ld. A.O. levied the minimum penalty of Rs. 1,30,258/-. 8.2. During the course of appellate proceedings, the assessee filed the Penalty appeal with a delay of 371 days which was falling partly during Covid-19 period and also age old diseases of the assessee. However the Ld. NFAC condoned the delay of 391 days in filing the above appeal, but rejected the claim of additional documents stating that the assessee has not explained why the additional documents were not filed before the Assessing Officer. In fact it is seen from the original return, the assessee was showing agricultural income from the above lands. 8.3. It is well settled principle of law that merely because exemption on merit was not granted by the Authority, which will not attract penalty provisions. The assessee in the penalty appeal has produced all the relevant documents by way of additional documents, but the same were not accepted by the Ld. CIT(A). I.T.A No. 267/Ahd/2023 A.Y. 2011-12 Page No Maheshbhai Shantilal Patel vs. DCIT 6 8.4. The Jurisdictional High Court in the case of PCIT Vs. Intas Pharma Ltd. reported in [2022] 138 taxmann.com 474 (Gujarat) held as follows: “Section 271(1)(c), read with section 32, of the Income-tax Act, 1961 Penalty - For concealment of income (Disallowance of claim of depreciation) - Assessment year 2011-12 - Assessee claimed additional depreciation for plant and machinery under section 32(1)(iia) on strength of Tax Audit Report - Assessing Officer disallowed claim on ground that production had been started in current year by assessee and, therefore, it could not be said to have been already engaged in business of manufacturing He also levied penalty under section 271(1)(c) on ground of concealment of income - Tribunal reached to conclusion that merely because claim on merit was not granted, penalty could not be levied It held that disallowance of claim of depreciation could not give rise to any question of concealment of income Whether Tribunal was right in so holding - Held, yes [Para 13] [In favour of assessee]” 8.5. Similarly Madras High Court in the case of CIT Vs. D. Harindran reported in [2018] 97 taxmann.com 297 (Madras) held as follows: “Section 271(1)(c), read with sections 54 and 260A, of the Income-tax Act, 1961 Penalty - For concealment of income (Disallowance of claim, effect of) - Assessment year 2011-12- Assessee sold his residential property and purchased another residential property - Accordingly, assessee claimed exemption under section 54 - Assessing Officer disallowed same on ground that there was no evidence that property sold by assessee was used for residential purposes and, thus, computed long-term capital gain - Assessing Officer also imposed penalty under section 271(1)(c) - Tribunal observed that it was not a case that assessee had concealed any part of sale proceedings and thereby concealed capital gain that had accrued to him - Assessee had furnished all details of sale and purchase of property - Accordingly, Tribunal deleted penalty - Whether since Tribunal had arrived at factual findings that assessee had neither concealed his income nor furnished inaccurate particulars of income, such factual findings could not be interfered with in an appeal under section 260A, thus, impugned order deleting penalty was to be upheld - Held, yes [Para 17] [In favour of assessee]” 8.6. The Bombay High Court in the case of PCIT Vs. Sesa Goa Ltd. reported in [2021] 132 taxmann.com 42 (Bombay) held as follows: “Section 271(1)(c) of the Income-tax Act, 1961 Penalty - For concealment of income (Disallowance of claim, effect of) - Assessee filed return declaring a total income - Assessing Officer noted that assessee made an incorrect claim of deduction under section 10B and levied a penalty under section 271(1)(c) - An erroneous claim simpliciter does not automatically attract a penalty and it is only when an erroneous claim is based on a deliberate misrepresentation of facts or deliberate suppression of relevant material facts that a penalty is imposed after deduction is denied - Whether since there was no error on part of assessee in claiming I.T.A No. 267/Ahd/2023 A.Y. 2011-12 Page No Maheshbhai Shantilal Patel vs. DCIT 7 deduction, there was obviously no question of imposing any penalty upon assessee – Held, Yes [Para 7] [ in favour of assessee]” 8.7. The Hon’ble Supreme Court of India in the case of CIT Vs. Reliance Petroproducts (P.). Ltd. reported in [2010] 189 taxmann.com 322 (SC) held as follows: “9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as :-"not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.” 9. Respectfully following the above judicial precedents, we have no hesitation in deleting the penalty of Rs. 1,30,258/- levied u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income. Thus the ground raised by the Assessee is hereby allowed. 10. In the result, the appeal filed by the Assessee is hereby allowed. Order pronounced in the open court on 27 -09-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 27/09/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT I.T.A No. 267/Ahd/2023 A.Y. 2011-12 Page No Maheshbhai Shantilal Patel vs. DCIT 8 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद