2010 (10) TMI 670 - AT - Income Tax

Penalty u/s 271(1)(c) - Capital gain - Deduction u/s 54F - The builder has also stated that he has effected modification of the flats to make it as one unit by opening the door in between two apartments - assessee could have purchased both the flats in one single sale deed or could have narrated the purchase of two premises as one unit in the sale deed is not the ground to hold that the assessee had no intention to purchase the two flats as one unit - Decided in favour of the assessee Regarding penalty - Nowhere has the AO said that the particulars furnished by the assessee are inaccurate or in correct. He levied penalty only because judicial decisions are against the assessee - The taxable capital gain is shown in the return of income and non-taxable capital gain claimed according to the assessee, which is explained elaborately above was detailed in the computation sheet that accompanied the return of income - the claim of deduction centres around interpretation of a provision based on various judgments of the Hon ble High Court and the orders of the Tribunal - Decided in favour of the assessee

Summary

Issues Involved:
1. Whether the CIT(A) is justified in deleting the penalty levied under Section 271(1)(c) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Justification of Deleting Penalty under Section 271(1)(c):

Facts of the Case:
The assessee filed a return of income for the assessment year 2002-03, which included a capital gain of Rs. 5,12,822 out of a total capital gain of Rs. 41,20,807. The return was accompanied by a detailed statement showing the computation of the entire capital gain, including the non-assessable portion due to a deduction under Section 54F. The Assessing Officer (AO) restricted the exemption under Section 54F to only one flat out of the 10 flats claimed by the assessee, disagreeing with various case laws cited by the assessee. The AO levied a penalty of Rs. 7,02,281 under Section 271(1)(c) for not disclosing true and correct taxable income.

CIT(A)'s Findings:
The CIT(A) examined the facts and submissions, particularly the decision of the Karnataka High Court in CIT vs. Ananda Basappa, which supported the assessee's interpretation of Section 54F. The CIT(A) held that the issue was debatable and the assessee had disclosed the entire income arising from the joint development agreement. The CIT(A) concluded that there was no concealment or furnishing of inaccurate particulars by the assessee, and the penalty was not justified.

Tribunal's Analysis:
The Tribunal noted that the assessee had furnished all particulars on facts and in law, and the AO had not claimed that the particulars were inaccurate. The penalty was levied solely because judicial decisions were against the assessee. The Tribunal emphasized that the issue was debatable, with various decisions supporting both sides. The Tribunal cited the Supreme Court's judgment in CIT vs. Reliance Petroproducts Pvt. Ltd., which held that making a claim that is not sustainable in law does not amount to furnishing inaccurate particulars.

Conclusion:
The Tribunal concluded that since the assessee had fully disclosed the capital gains transaction, it could not be said that there was concealment of income. The Tribunal upheld the CIT(A)'s decision to delete the penalty, as the claim was based on an interpretation of the law supported by various judgments. The appeal filed by the revenue was dismissed, and the cross-objection filed by the assessee was dismissed as infructuous.

Final Order:
The appeal filed by the revenue is dismissed, and the cross-objection filed by the assessee is dismissed as infructuous. The order was pronounced in the open court on 29.10.2010.