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2015 (5) TMI 366 - AT - Income TaxPenalty u/s 271(l)(c) - assessee has concealed the income by way of Capital Gain on sale of land at 44/A/1, Dhanori, Pune and furnished inaccurate particulars thereof - Held that - In the present case too having regard to the conspectus of facts and circumstances, non-declaration of capital gain in assessment year 2007-08 cannot be construed as a deliberate lapse but it could only be construed as an inadvertent error of judgement on a point of law and therefore no penalty u/s 271(1)(c) of the Act is imposable. Moreover, it is also apparent from the contours of the dispute that the claim of the assessee for taxability of capital gains in assessment year 2008- 09 instead of 2007-08 has been rejected not on the basis of any falsity or inaccuracy in facts or particulars furnished by the assessee but only on an application of a legal position. In this context, a mere making of a claim, which is not found to be sustainable in law by the Assessing Officer cannot by itself be construed as furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act, as held by the Hon ble Supreme Court in the case of CIT vs. Reliance Petro products Pvt. Ltd., (2010 (3) TMI 80 - SUPREME COURT ). Thus lower authorities have erred in imposing the penalty u/s 271(1)(c) of the Act on the impugned aspect of the matter. - Decided in favour of assessee.
Issues Involved:
1. Confirmation of penalty under Section 271(1)(c) of the Income-tax Act, 1961. 2. Allegation of concealment of income by way of capital gain and furnishing inaccurate particulars. 3. Dispute over the fair market value (FMV) of the property as on 01.04.1981. 4. Dispute over the year of taxability of income. 5. Limitation for passing the penalty order. Issue-wise Detailed Analysis: 1. Confirmation of Penalty under Section 271(1)(c): The primary issue in this appeal is whether the penalty under Section 271(1)(c) of the Income-tax Act, 1961, should be confirmed. The penalty was imposed due to the addition made by the Assessing Officer (AO) on account of long-term capital gain on the sale of land. The CIT(A) upheld the penalty but reduced it to Rs. 12,76,62,859. The Tribunal examined whether the penalty was justified based on the facts and legal precedents. 2. Allegation of Concealment of Income and Furnishing Inaccurate Particulars: The AO imposed the penalty on the grounds that the assessee concealed income and furnished inaccurate particulars by inflating the FMV of the property as on 01.04.1981 and not offering the capital gain in the correct assessment year. The Tribunal noted that the assessee had disclosed all facts correctly and that the FMV was supported by a Registered Valuer's Report. The Tribunal emphasized that a mere disagreement with the AO on FMV or the year of taxability does not amount to concealment or furnishing inaccurate particulars. 3. Dispute over the Fair Market Value (FMV) of the Property as on 01.04.1981: The assessee adopted an FMV of Rs. 1230 per sq.mtr. based on a Valuation Report, while the AO adopted Rs. 15.23 per sq.mtr. The Tribunal, in the quantum proceedings, directed the FMV to be Rs. 665 per sq.mtr. The Tribunal referenced its earlier decision in the assessee's case for AY 2005-06, where similar FMV issues were involved, and no penalty was levied. The Tribunal concluded that no penalty should be imposed for differences in FMV estimation, as it is a matter of opinion and estimation. 4. Dispute over the Year of Taxability of Income: The AO taxed the capital gain in AY 2007-08 based on a Development Agreement dated 19.03.2007, while the assessee offered it in AY 2008-09. The Tribunal noted that the assessee had declared the capital gain in AY 2008-09 and paid advance tax. The Tribunal highlighted that the difference in the year of taxability is a debatable issue and does not justify a penalty. The Tribunal cited legal precedents, including the Supreme Court's decision in Reliance Petroproducts Pvt. Ltd., to support its view that a mere incorrect claim does not amount to furnishing inaccurate particulars. 5. Limitation for Passing the Penalty Order: The assessee argued that the penalty order dated 27.05.2011 was barred by limitation under Section 275(1)(a) of the Act. The Tribunal referred to the Madras High Court's judgment in Rayala Corporation P. Ltd., which clarified that the limitation period is six months from the end of the month in which the Tribunal's order is received by the Commissioner of Income Tax. The Tribunal found that the penalty order was within the limitation period and dismissed the assessee's additional ground on this issue. Conclusion: The Tribunal concluded that the penalty under Section 271(1)(c) was not justified for both the FMV estimation and the year of taxability issues. The Tribunal set aside the CIT(A)'s order and directed the AO to delete the penalty imposed. The appeal of the assessee was partly allowed. Order Pronounced: The order was pronounced on 10th April, 2015.
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