2019 (1) TMI 398 - AT - Income Tax

Penalty u/s 271(1)(c) - land in question is not an agricultural land - concealing or furnishing inaccurate particulars of income - Held that - It is a common knowledge that in many areas, the Registration Department for the reasons best known to them, has classified the lands even though the classification in the revenue records stand as wet land or dry land. This Tribunal is of the considered opinion that if the land is classified as wet land, then there should be natural source of irrigation for cultivation. In case it was classified as dry land, the land may be cultivated by using rain or there may be artificial source of irrigation by way of well or borewell. These factors were not brought on record either by the Assessing Officer or by the CIT(Appeals). Moreover, a mere claim in the return of income as agricultural land cannot be considered to be furnishing inaccurate particulars of income or concealing any part of income. No case of the Revenue that the assessee has not disclosed entire sale consideration. It is also not the case of the Revenue that the assessee has concealed any part of sale proceeds of the said land. The admitted case of the Revenue is that the assessee claims the gain arising out of sale of land as exemption on the ground that the land in question is agricultural land. This Tribunal is of the considered opinion that this claim of the assessee cannot be considered to be concealing any part of income or furnishing inaccurate particulars of income as held in CIT Vs. Reliance Petroproducts (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT - decided in favour of assessee.

Summary

Issues:
Assessment of penalty under Section 271(1)(c) of the Income-tax Act, 1961 for claiming sale of land as agricultural income and exemption.

Analysis:
The appeal was against the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961. The assessee claimed the sale of land as agricultural income and exemption, while the Assessing Officer treated the land as nonagricultural based on a classification by the Sub-Registrar. The Assessing Officer's verification did not consider material evidence or the Adangal extract for cultivation. The Tribunal noted that the mere claim in the return of income as agricultural land does not amount to furnishing inaccurate particulars of income or concealment. The Revenue did not allege non-disclosure of sale consideration or concealment of sale proceeds. The Tribunal held that the claim for exemption based on land being agricultural cannot be considered concealment of income, citing the case of CIT Vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158. Therefore, the penalty levied by the Assessing Officer was deleted.

The Tribunal emphasized the importance of considering factors like natural sources of irrigation for wet lands or artificial sources for dry lands in determining agricultural classification. It noted that the Revenue did not provide evidence to support its claim that the land was nonagricultural. The Tribunal highlighted that the Revenue's case was solely based on the classification by the Registration Department for stamp duty collection, which is insufficient to determine the nature of the land. The Tribunal found that the Revenue failed to establish concealment or inaccurate particulars of income by the assessee, leading to the deletion of the penalty.

The Tribunal's decision was based on the lack of concrete evidence supporting the Revenue's claim that the land was nonagricultural. It stressed that the Revenue did not prove any concealment or inaccurate reporting of income by the assessee. The Tribunal's analysis focused on the absence of substantial verification by the Assessing Officer regarding the agricultural nature of the land. By setting aside the orders of the lower authorities and deleting the penalty, the Tribunal upheld the assessee's claim of agricultural land classification for the purpose of exemption, in line with legal precedents.