2024 (5) TMI 686 - AT - Income Tax

Condonation of delay in filing appeal before CIT(A) - delay of 170 days - advice on Tax Consultant leads to delay - HELD THAT - Hon'ble Apex Court in the case of Concord of India Insurance Co. Ltd. Vs Smt. Nirmala Devi 1979 (4) TMI 29 - SUPREME COURT held that legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay and coupled with the other circumstances and factors for applying liberal principles and then said delay can be condoned - an overall view in the larger interest of justice has to be taken. None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority finds that the litigant has deliberately and intentionally delayed in filing of the appeal. Thus we find that the assessee in the present appeal was also acting on the legal advice of consultant. However, on coming to know of addition, filed appeal before the ld. CIT(A), thus, find that there was a reasonable cause for condonation of delay in filing appeal before the ld. CIT(A). Thus, the order of ld. CIT(A) in not condoning the delay is set aside. Nature of land sold - Gain earned on sale of land/acquisition - land of assessee was rural agricultural land and compulsorily acquired by State Government under settlement - HELD THAT - Similar case of Hazira land as well as land in Village Mora, wherein the land was compulsorily acquired by State Government under settlement, the Division Bench of Surat Tribunal 2022 (5) TMI 1403 - ITAT SURAT has held that the land situated in Hazira notified area is not situated within Municipal limit and / or Hazira Notified area is not deemed municipality and held that such land was rural agricultural land and compensation/consideration received thereon is not taxable being exempt under Section 10(37) of the Act - Thus the capital gain earned on sale of land/acquisition is not taxable under capital gain. In the result, the ground No1 of appeal of assessee in quantum assessment is allowed. Penalty levied u/s 271(1)(c) - Once the assessee succeeded in quantum assessment wherein it has been held that no capital gain is to be taxed in the hands of assessee, therefore, the penalty levied under section 271(1)(c) will not survive. Penalty u/s 271F - Assessee has no other source of income except the capital gain earned during the impugned assessment year, the assessing officer has not taxed any other income except impugned capital gain earned on transferred of land at More village, thus, the assessee was not under obligation to file return of income, therefore, the assessee has shown sufficient cause for not filing return of income, hence, both the penalties i.e. penalty under Section 271(1)(c) and 271F of the Act are also deleted. Appeals of assessee allowed.

Summary

Issues Involved:
The judgment involves challenges to quantum assessment, validity of penalties under Section 271(1)(c) and Section 271F of the Income Tax Act, 1961.

Quantum Assessment Challenge:

The individual assessee challenged the addition of Rs. 28,33,438 concerning the sale of agricultural land, arguing it was not a capital asset. The reopening of assessment and the subsequent assessment under Section 144 were also contested. The assessee claimed the land was compulsorily acquired by the State Government and was not a capital asset. The delay in filing the appeal was attributed to incorrect advice from a consultant. The Tribunal found merit in the assessee's contentions, ruling that the land was rural agricultural land and the capital gain was not taxable.

Penalty under Section 271(1)(c) Challenge:

The penalty levied under Section 271(1)(c) was challenged by the assessee, contending that since no capital gain was taxable, the penalty should not apply. The Tribunal agreed, stating that once the capital gain was deemed non-taxable, the penalty under Section 271(1)(c) could not be sustained.

Penalty under Section 271F Challenge:

The penalty under Section 271F was also contested by the assessee, arguing that as the only income was the capital gain, there was no obligation to file a return of income. The Tribunal found the assessee's reasoning valid and deleted both penalties under Section 271(1)(c) and 271F of the Act.

Conclusion:

The Tribunal allowed all three appeals of the assessee, ruling in favor of the assessee on the quantum assessment, and deleting the penalties under Section 271(1)(c) and 271F. The judgment highlighted the importance of legal advice and reasonable cause for condonation of delay in filing appeals, emphasizing the need for a fair adjudication process.