2002 (10) TMI 735 - AT - Income Tax

Summary

Issues:
- Appeal against cancellation of penalty under section 271(1)(c) for assessment year 1990-91.

Analysis:
1. Issue of Exemption Claims: The appellant, an assessee, sold agricultural land and claimed exemptions under sections 54B, 54E, and 54F. The Assessing Officer disallowed the exemption claimed under section 54F as the residential house was not constructed within the specified period, leading to the imposition of a penalty under section 271(1)(c).

2. Imposition of Penalty: The Assessing Officer imposed a penalty of Rs. 1,02,600 on the assessee for furnishing inaccurate particulars of income under section 271(1)(c)(iii) of the Act. The penalty was based on the failure to construct a residential house or deposit the amount in the specified account as required by law.

3. CIT(A) Decision: The CIT(A) accepted the assessee's argument that the penalty could not be levied since the disallowance was confirmed in appeal. The CIT(A) considered the technical default in depositing the amount in the specified account as a non-fit case for penalty under section 271(1)(c) and canceled the penalty.

4. Appellate Tribunal Decision: The Revenue appealed the CIT(A)'s decision, arguing that the penalty was justified as the assessee did not comply with the statutory requirements. However, the Tribunal upheld the CIT(A)'s order, considering the assessee's bona fide actions in investing in a plot for construction and keeping the balance amount in a bank account for the same purpose.

5. Tribunal's Rationale: The Tribunal noted that the penalty was imposed solely because the amount was not deposited in a specified account, without evidence of mala fide intent. The Tribunal found the default to be technical and upheld the cancellation of the penalty, emphasizing that the assessee acted in good faith and utilized the exempted amount for the intended purpose of constructing a residential house.

6. Conclusion: The Tribunal dismissed the appeal, affirming the cancellation of the penalty under section 271(1)(c) for the assessment year 1990-91. The decision highlighted the technical nature of the default and the absence of evidence to suggest any deliberate wrongdoing on the part of the assessee, leading to the penalty being deemed unjustified.