Jayantilal Ambaram Patel HUF, Surat V. Assistant Commissioner Income Tax , Cir.2(3), Surat

ITA 327/SRT/2022

AI Insights

The case involves Jayantilal Ambaram Patel HUF, the appellant, contesting a penalty of Rs. 9,67,250 imposed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, which was confirmed by the Commissioner of Income Tax (Appeals). The penalty was levied following the AO's treatment of compensation received from the compulsory acquisition of agricultural land by Surat Municipal Corporation for a sewage treatment plant as a long-term capital gain, which the assessee argued was exempt under Section 10(37) of the Act. The Tribunal had previously ruled in favor of the assessee in a similar quantum appeal, allowing the exemption under Section 10(37), which led to the deletion of the LTCG and consequently, the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301574 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-02-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 09-11-2022
• Other Referred Cases: ITA No. 518/Ahd/2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH (SMC), SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 327/Srt/2022 (Assessment Year 2010-11) (Virtual hearing) Jayantilal Ambaram Patel HUF, 5, Western Seven Seas, Behind Gangeshwar Temple, Opp. Saint Mark School, Adajan, Surat, Gujarat- 395009. PAN No. AAFHJ 0354 R Vs. A.C.I.T., Circle-2(3), Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Ms. Urvashi Shodhan, Advocate Department represented by Shri Vinod Kumar, Sr. DR Date of hearing 06/02/2023 Date of pronouncement 06 /02/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals), (in short, the ld. CIT(A)) dated 28/09/2022 for the Assessment year (AY) 2010-11 wherein the assessee has raised following grounds of appeal: “1. The ld. CIT(A) erred in law and on facts in confirming penalty levied by AO of Rs. 9,67,250/- invoking provisions of S. 271(1)(c) of the Act ignoring that appellant neither concealed income nor furnished inaccurate particulars of income. 2. The ld. CIT(A) erred in law and on facts confirming penalty levied by AO merely on the basis of disallowance of the claim U/s 10(37) of the Act ignoring that the appellant had disclosed complete details with relevant documents relating to claim made tendering full explanation during assessment proceedings. 3. The ld. CIT(A) erred in law and on facts rejecting submissions of the appellant that no penalty can be levied on agricultural land acquired by Surat Municipal Corporation by way of compulsory acquisition for installing sewage treatment plant for the city of Surat. ITA No. 327/Srt/2022 Jayantilal Ambaram Patel HUF Vs ACIT 2 4. The ld. CIT(A) erred in law and on facts confirming penalty since appellate order confirmed action of AO rejecting the claim of the appellant u/s 10(37) of the Act. 5. Appellant respectfully submits that Hon’ble ITAT allowed appeal challenging finding of lower authorities to hold that claim u/s 10(37) of the Act made by the appellant was allowable and capital gain arising on sale of agricultural land is not exigible to capital gains tax. (copy of order enclosed). Since the disallowance itself is deleted penalty levied on addition cannot survive.” 2. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that the addition of long term capital gain (LTCG) on the basis of which penalty was levied by the Assessing Officer has been deleted by the Division Bench of this Tribunal in assessee’s own quantum appeal in ITA No. 518/Ahd/2017 dated 13/12/2019. The ld. AR submits that she has placed on record copy of decision of Division bench dated 13/12/2019. The ld. AR further submits that the land of assessee was acquired by the State Government for requirement of Surat Municipal Corporation (SMC) for setting up of Sewerage Treatment Plant under compulsory acquisition. The assessee claimed such compensation is exempted under Section 10(37) of the Act. However, the Assessing Officer treated such compensation as capital gain and levied penalty under Section 271(1)(c) of the Act. The division Bench of Surat Tribunal has already allowed the exemption under Section 10(37) of the Act, therefore, penalty order will not survive. 3. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue after going through the decision of the Division Bench of this Tribunal in assessee’s own case for same assessment year ITA No. 327/Srt/2022 Jayantilal Ambaram Patel HUF Vs ACIT 3 in ITA No. 518/Ahd/2017 dated 13/12/2019, relied on the orders of lower authorities. 4. I have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. I find that the ld. AR of the assessee has explained correctly all fact in her submission. I find that the Assessing Officer levied penalty on treating the compensation as long term capital gain and levied penalty under Section 271(1)(c) of the Act vide his order dated 23.03.2018, which was confirmed by ld CIT(A). I find that the Division Bench of this Tribunal in assessees own case in ITA No 518/Srt/2018, alongiwth other similarly situated assessees, accepted their contention that compensation received by them on account of compulsory acquisition of land is exempted under Section 10(37) of the Act. Considering the fact that once the addition of LTCG, on the basis of which penalty was levied has already been deleted, therefore, the penalty order under section 271(1)(c) dated 23/03/2018 will not survive. Accordingly, grounds of appeal raised by the assessee are allowed. 5. In the result, this appeal of assessee is allowed. Order pronounced in the open court on 06 th February, 2023. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 06/02/2023 *Ranjan ITA No. 327/Srt/2022 Jayantilal Ambaram Patel HUF Vs ACIT 4 Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr. Private Secretary, ITAT, Surat