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Issues involved: Appeal against levy of penalty u/s 271(1)(c) of the Income-tax Act for treatment of receipt from sale of plants and trees as agricultural income.
Summary: The main issue in this case was the treatment of receipt of Rs.10,03,814 from the sale of plants and trees by the assessee. The Assessing Officer disagreed with the assessee's classification of the income as agricultural and treated it as capital gains. Subsequently, penalty proceedings u/s 271(1)(c) were initiated based on the difference in treatment of the receipts. The Assessing Officer observed that the trees on agricultural land constituted capital assets and the receipt from their transfer was considered a capital receipt. The penalty was imposed due to the perceived lack of logical basis for the bifurcation of the sale proceeds and the valuation of trees by the assessee. Upon appeal, the learned Commissioner upheld the penalty citing lack of logical basis for the valuation provided by the assessee. However, the Appellate Tribunal found that the assessee had not concealed any particulars and had provided all necessary details regarding the sale of land with existing crops. The Tribunal referred to the apex court decision in CIT v. Reliance Petroproducts P. Ltd. and held that the claim of the assessee could not be considered as ex facie bogus, thus setting aside the penalty imposed. In conclusion, the appeal filed by the assessee against the levy of penalty u/s 271(1)(c) was allowed, and the penalty was deleted based on the Tribunal's findings and legal precedent.
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