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2017 (8) TMI 929 - HC - Income TaxPenalty u/s 271(1)(c) - Exemption claimed u/s 54B - proof of sale of agricultural land at Neelankarai and re-investment in agricultural land at Mahabalipuram - Bonafide belief - Held that - The Explanation to Section 271 makes it clear that, if in cases of concealment of particulars of income or furnishing of inaccurate particulars of income, the Assessee fails to offer an explanation or offers an explanation which is found by the ITO or the AAC to be false or offers an explanation which he is not able to substantiate, the amount added or disallowed in computing the total income of such person shall for the purpose of clause (c) i.e., for the purpose of concealment, be deemed to represent the income in respect of which particulars have been concealed. Penal proceedings are not automatic and the levy depends upon the facts and circumstances of each case. In the case on hand, having regard to the particular facts and circumstances of this case, the learned Tribunal has allowed the appeal and deleted the penalty. The proposition of law that emerges from the judgments referred to above is that in view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens rea in cases of concealment and/or short payment of tax. There is an onus on the Assessee. Whether the Assessee has been able to discharge the onus would depend on the facts and circumstances of the case. In the instant case, the learned Tribunal, in effect, arrived at a clear finding that imposition of penalty was not justified having regard to the facts and circumstances of the case that it was not the case of the Assessing Officer that the Assessee s claim was false or bogus. Neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) had examined the claim of the Assessee that the Assessee had given money to M/s.Alpha Commercials for the purpose of investment in residential property. The Assessee s remittance of demand raised by the department cannot be a reason for levy of penalty. Assessee had bona fide believed that M/s.Alpha Commercials had, as per mutual agreement, invested the money in residential property to enable the Assessee to claim the benefit of Section 54F/54B of the Act. - Decided in favour of assessee.
Issues Involved:
1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act. 2. Validity of the Assessee's claim for exemption under Section 54B of the Income Tax Act. 3. Whether the High Court should entertain the appeal under Section 260A of the Income Tax Act. Detailed Analysis: 1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act: The Assessee initially filed a return for the assessment year 2010-2011 admitting a total income of ?7,31,554/-. The Assessee claimed an exemption of ?1,90,00,000/- under Section 54B for reinvestment in agricultural land. However, a survey under Section 133A revealed that M/s. Alpha Commercials had not purchased agricultural land on behalf of the Assessee. Consequently, the Assessee filed a revised return excluding the capital gains and paid the taxes. Penalty proceedings were initiated under Section 271(1)(c) for incorrectly claiming the exemption. The Tribunal found that the Assessee had disclosed the sale proceeds and paid money to M/s. Alpha Commercials in good faith. The Tribunal held that the Assessing Officer failed to prove that the Assessee's claim was false or bogus and deleted the penalty. 2. Validity of the Assessee's claim for exemption under Section 54B of the Income Tax Act: Section 54B provides for exemption from capital gains tax if the Assessee reinvests the proceeds from the sale of agricultural land into another agricultural land within two years. The Assessee claimed this exemption but later withdrew it after it was found that the reinvestment was not made as required. The Tribunal observed that the Assessee had a bona fide belief that M/s. Alpha Commercials would invest the money in agricultural land as per their agreement. The Tribunal concluded that the Assessee's explanation was bona fide and not examined properly by the Assessing Officer. 3. Whether the High Court should entertain the appeal under Section 260A of the Income Tax Act: Section 260A allows an appeal to the High Court only if there is a substantial question of law. The High Court referred to the principles laid down in various Supreme Court judgments, emphasizing that a question of law must be substantial, debatable, and have a material bearing on the case. The Court found that the Tribunal's findings were factual and did not involve any substantial question of law. The Tribunal had concluded that there was no concealment of income and the Assessee's explanation was bona fide. Therefore, the appeal did not warrant interference under Section 260A. Conclusion: The High Court dismissed the appeal, holding that there was no substantial question of law involved. The Tribunal's factual findings that the Assessee's claim was bona fide and that there was no concealment of income were upheld. The penalty imposed under Section 271(1)(c) was deleted, and the Assessee's explanation was accepted as genuine.
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