2015 (9) TMI 1548 - AT - Income Tax

Penalty levied u/s 271(1)(c) - capital gain - Transfer exigible to tax by reference to Section 2(47)(v) read with Section 53-A of the Transfer of Property Act, 1882 - JDA entered by assessee - Held that - On perusal of the case of the assessee bunched alongwith the case of C.S Atwal 2015 (7) TMI 878 - PUNJAB & HARYANA HIGH COURT we find that the High Court has decided the quantum issue in favour of the assessee by holding that the assessee was liable to pay tax on capital gain earned on only that portion of the land which had been duly transferred by way of Registered sale deed and consideration relating to which had been received by the assessee. With respect to the balance land, the High Court held that no transfer of the same had taken place even by virtue of the JDA and hence the assessee was not exigible to capital gain tax on the same. Also see Shri Balwinder Singh case 2015 (8) TMI 1384 - ITAT CHANDIGARH In view of the above, since the addition made to the income of the assessee does not survive, the question of levy of penalty u/s 271(1)(c) does not arise at all. - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the Income-tax Act, 1961 for concealment of income.

Analysis:
The case involved an appeal by the Revenue against the cancellation of a penalty of Rs. 37,10,407 levied under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2007-08. The assessee, a member of a housing society, had not declared income from capital gains arising from a land transfer agreement. The Assessing Officer computed the income as capital gains, leading to the penalty imposition. However, the CIT(A) cancelled the penalty, stating that the appellant had disclosed the amount received in the return and had a reasonable explanation for not disclosing the entire capital gain amount. The CIT(A) found the appellant's explanation to be bonafide, considering unresolved disputes related to the land transfer and construction issues. The Tribunal upheld the CIT(A)'s decision, emphasizing the appellant's disclosure of material facts and the similarity of the case with previous judgments favoring the assessee.

The appellant argued that no capital gain arose from incomplete transactions and that all relevant details were disclosed to the Assessing Officer. The appellant cited a recent High Court decision that favored the assessee, similar to the present case. The Tribunal noted the similarity with another case involving a penalty cancellation for the same group of assesses and upheld the CIT(A)'s decision. The Tribunal concluded that the penalty was not justified under section 271(1)(c) of the Act, following the precedent set by previous judgments favoring the assessee. Consequently, the appeal by the Revenue was dismissed, affirming the cancellation of the penalty.

In summary, the judgment revolved around the cancellation of a penalty under section 271(1)(c) of the Income-tax Act, 1961 for concealment of income related to capital gains from a land transfer agreement. The decision highlighted the appellant's disclosure of material facts, unresolved disputes, bonafide explanation, and the similarity with previous judgments favoring the assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of justification for the penalty imposition based on the circumstances and legal precedents.