2019 (4) TMI 206 - AT - Income Tax

Penalty u/s 271(1)(c) - capital gains arising on sale of property - assessee had bonafide belief that land was an agricultural land and was therefore exempted from capital gain tax - As per assessee land belong to HUF and was not the individual property - HELD THAT - We have perused the order of the CIT(A) in this regard and also the order of the AO in penalty proceedings as well as quantum proceedings. We notice that CIT(A) has appreciated the facts and circumstances of the case in perspective as noted above and applied the law in proper perspective. The assessee has demonstrated that the bonafide circumstances existed for non-inclusion of the capital gains. The assessee was under mistaken belief that land sold being agricultural land is not susceptible to tax. The CIT(A) has rightly interpreted the fact situation and granted relief. We thus decline to interfere. - decided against revenue.

Summary

Issues involved:
Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 concerning assessment year 2011-12 for concealment of income and furnishing inaccurate particulars of income.

Detailed Analysis:

1. Background and Assessment by AO:
The appellant filed its return of income for AY 2011-12 declaring total income of ?643,190, which was selected for scrutiny. The Assessing Officer (AO) observed that the assessee had sold immovable property without recording the gain. The AO re-computed the escapement of income towards long term capital gain and added it to the total income, imposing a penalty of ?20,77,581 under section 271(1)(c) of the Act.

2. Appeal before CIT(A):
The assessee appealed before the Commissioner of Income Tax (Appeals) citing bonafide belief that the land was agricultural and exempt from capital gain tax, as it belonged to the Hindu Undivided Family (HUF) and not the individual. The CIT(A) noted that the assessee submitted the capital gain calculation upfront, demonstrating no evasive tactics, and held that the penalty was not justified.

3. Judgment and Legal Precedents:
The CIT(A) referenced various case laws and judgments, including ITAT Ahmedabad rulings, to support the decision. The CIT(A) emphasized that the appellant voluntarily disclosed the capital gain details and tax liability upon realizing the taxability, indicating a bonafide belief. The judgment highlighted that the AO did not specify the reason for initiating the penalty, which was found unspecific and not justifiable.

4. Tribunal Decision:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision. The Tribunal noted the bonafide circumstances for non-inclusion of capital gains, the mistaken belief of the appellant regarding agricultural land taxation, and the lack of specific reasons for penalty initiation by the AO. The Tribunal found no grounds to interfere with the relief granted by the CIT(A) and upheld the decision to dismiss the appeal of the Revenue.

In conclusion, the Tribunal affirmed the CIT(A)'s decision, emphasizing the bonafide belief of the appellant, lack of specific reasons for penalty initiation, and the voluntary disclosure of capital gain details. The judgment underscores the importance of bonafide intentions and proper interpretation of facts and circumstances in tax penalty cases.