2021 (7) TMI 1225 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - transfer of agricultural land were subjected to capital gain tax and as the assessee did not offer the gains in his return of income - As strongly contended that when the assessee sold the impugned piece of agricultural land said land was beyond the distance of 8 KMS from the municipal limits and this was confirmed by the Tehsildar of Sohana - CIT(A) deleted the penalty levied by the AO - HELD THAT - It is an undisputed fact that the distance of the land sold on the date of CBDT notification No. 9447 dated 06.01.1994 was more than 8 KMS. As equally true that on the date of sale the said distance was less than 8 KMS. We are of the considered view that the chargeability of capital gain tax under such circumstances is a debatable issue. We further find that the appellant claim is well supported by the certificate of the Tehsildar, Sohna which was also confirmed by the A.O. in his remand report. Hon'ble Supreme Court in the case of Reliance Petro Chemicals Limited 2010 (3) TMI 80 - SUPREME COURT has held that merely making an incorrect claim would not tantamount to furnishing of inaccurate particulars unless it was established that appellant had acted with mala fide intention. In totality in the light of certificates of the Tehsildar, Sohna we are of the considered view that the CIT(A) has rightly deleted the penalty levied u/s. 271(1)(c) of the Act and calls for no interference. Appeal filed by the revenue is dismissed.

Summary

Issues:
- Appeal against deletion of penalty under section 271(1)(c) of the Act by CIT(A)
- Interpretation of distance criteria for capital gain tax liability
- Consideration of Tehsildar's certificates in determining the distance of land from municipal limits

Analysis:
1. The appeal was filed by the revenue against the CIT(A)'s decision to delete the penalty imposed under section 271(1)(c) of the Act. The revenue contended that the CIT(A) erred in deleting the penalty.

2. The case involved the interpretation of the distance criteria for determining capital gain tax liability. The A.O. initiated penalty proceedings as the assessee did not offer gains in the return of income, believing that the consideration received on transfer of agricultural land was subject to capital gain tax.

3. The CIT(A) considered the appellant's submissions, noting that the land sold was initially beyond 8 Km from the municipal limits but came within the distance due to revised notifications extending the limits. The appellant provided certificates from the Tehsildar, Sohna, confirming the distance prior to the notifications.

4. The CIT(A) observed that the land was situated more than 10 Km from the municipal limits before the notifications and the issue of distance on the date of CBDT notification or sale was debatable. Relying on judicial decisions, the CIT(A) deleted the penalty levied by the A.O.

5. The Tribunal reviewed the orders and confirmed that the distance on the date of the CBDT notification was over 8 Km, while it was less than 8 Km on the date of sale. Considering the debatable nature of capital gain tax chargeability, the Tribunal upheld the CIT(A)'s decision based on the Tehsildar's certificates and lack of mala fide intention.

6. Referring to the Supreme Court case of Reliance Petro Chemicals Limited, the Tribunal emphasized that an incorrect claim does not constitute furnishing inaccurate particulars without proof of mala fide intention. Consequently, the Tribunal agreed with the CIT(A)'s decision to delete the penalty under section 271(1)(c) of the Act.

7. Ultimately, the Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the penalty. The decision was announced in the presence of both representatives on the specified date.