2015 (12) TMI 1671 - 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 order of the Hon ble Punjab & Haryana High Court in 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. 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 - Concealment of income or furnishing inaccurate particulars.

Analysis:

1. Background: The appeal was filed by the Revenue against the cancellation of a penalty of Rs. 35,87,962/- imposed under section 271(1)(c) of the Income Tax Act, 1961 by the Ld. CIT(A), Chandigarh.

2. Facts: The assessee, a member of a Housing Society, entered into a Tripartite Joint Development Agreement for land transfer. The Assessing Officer computed capital gains leading to an addition of Rs. 1,66,62,473/- to the assessee's income. Subsequently, penalty proceedings were initiated and a penalty was levied.

3. CIT(A) Decision: The Ld. CIT(A) observed that the appellant disclosed the amount received and paid tax on it, showing bona fide intent. The CIT(A) held that the penalty for concealment was wrongly levied as the appellant had disclosed the necessary details in the return, even though there were disputes regarding the transfer of land.

4. Revenue's Appeal: The Revenue contended that since the agreement was cancelled and the addition was based on conjectures, the penalty should not have been levied. The Revenue cited similar cases where penalties were cancelled by the Tribunal.

5. High Court's Decision: The High Court ruled in favor of the assessee, stating that tax was only payable on the transferred portion of land. Since the addition did not survive, the question of penalty under section 271(1)(c) did not arise. The High Court's decision supported the assessee's bonafide explanation.

6. Tribunal's Decision: After considering all arguments, the Tribunal found no infirmity in the CIT(A)'s order canceling the penalty. The Tribunal dismissed the Revenue's appeal, upholding the decision to delete the penalty of Rs. 35,87,962/-.

7. Conclusion: The Tribunal upheld the CIT(A)'s decision, emphasizing the bonafide nature of the assessee's explanation and the lack of grounds for penalty imposition. The appeal of the Revenue was dismissed, affirming the cancellation of the penalty under section 271(1)(c) of the Income Tax Act, 1961.