2016 (12) TMI 1614 - AT - Income Tax

Penalty u/s 271(1)(c) - deduction u/s 54F allowability - Held that - JDA agreement was not completed and assessee had not received the balance payments and had also not received the flat as promised in the agreement. The ld. CIT(A) has also held that the belief of the assessee that the capital gains on which he had to pay tax has to be computed only on the basis of the amount which he had actually received, cannot be considered to be totally unreasonable. It is undisputed fact that in the present case the assessee had invested ₹ 17,65,000/- towards investment in residential house and had claimed deduction to that extent and Assessing Officer has also allowed deduction. Therefore, keeping in view of the decision in the case of C.S. Atwal Vs. CIT, Ludhiana 2015 (7) TMI 878 - PUNJAB & HARYANA HIGH COURT the assessee was required to pay capital gain tax only on the amount received which in the present case is ₹ 15,00,000/- and for which assessee has been allowed deduction u/s 54F. Therefore, no capital gains tax was payable during the year and if there was no capital gain tax payable, the question of penalty does not arise. In view of the above facts and circumstances the assessee cannot be said to have concealed the particulars of his income. - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act by ld. CIT(A) for Asst. Year: 2007-08.

Detailed Analysis:

1. Background: The appellant, Revenue, challenged the deletion of penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act by ld. CIT(A) for the assessment year 2007-08.

2. Factual Overview: The case involved the appellant, a member of a cooperative society, who sold land under a Joint Development Agreement. The Assessing Officer added a substantial amount as long-term capital gains, leading to the penalty imposition.

3. Initial Appeals: The appellant appealed to the ld. CIT(A) who upheld the addition, and further to the Hon'ble ITAT, which also confirmed the addition, leading to the penalty imposition under section 271(1)(c).

4. Appellant's Arguments: The appellant contended that the amount received from the land sale was declared in the return of income, and the penalty was unjustified as the balance amount was to be taxed in subsequent years based on the agreement terms.

5. Appellate Tribunal's Decision: The ITAT analyzed the facts and legal precedents. It noted that the appellant received only a portion of the sale consideration and invested a significant amount in a residential property, claiming deductions under section 54F.

6. Legal Precedent: The ITAT cited a judgment by the Hon'ble Punjab & Haryana High Court, emphasizing that capital gains should be calculated based on the actual amount received by the assessee. The court held that no further tax liability arose if the amount received was invested as per tax provisions.

7. Conclusion: Considering the facts and legal interpretations, the ITAT dismissed the Revenue's appeal, ruling that as the appellant had paid tax on the received amount and invested the balance, no concealment of income or penalty imposition was warranted.

In conclusion, the ITAT upheld the deletion of the penalty under section 271(1)(c) for the assessment year 2007-08, based on the principle that tax liability should be determined based on actual receipts and investments, as per relevant tax provisions and legal precedents.