2016 (7) TMI 604 - AT - Income Tax

Penalty levied u/s 271(1)( c ) - exemption u/s 54F denied - whether for the purpose of calculating the date of purchase, the date of allotment is to be considered, or the date of registration? - Held that - This aspect has been duly considered in various decisions, as relied on by the assessee. In these decisions, it is the date of allotment, which has been held to be the relevant date for the purpose of calculating the date of purchase. That being so, the factum of assessee‟s contention being that she had purchased the flat on 30.4.2003, which remains unsupported, but for the affidavit of the seller, would not be decisive so far as regards the levy of concealment penalty. It is an issue on which the assessee entertains a particular belief, which is not the belief of the taxing authorities and which view, being judicial supported, as above, cannot be said to be an implausible or impossible view. As such, it is a debatable issue, on which, concealment penalty, in my considered opinion, is not leviable. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legitimacy of the holding period for capital gains calculation.
2. Validity of the exemption claim under Section 54F of the Income Tax Act.
3. Appropriateness of the penalty levied under Section 271(1)(c) for furnishing inaccurate particulars of income.

Detailed Analysis:

1. Legitimacy of the Holding Period for Capital Gains Calculation:
The primary issue in this case was whether the holding period of the immovable property sold by the assessee should be calculated from the date of possession (30.04.2003) or the date of registration (05.06.2003). The assessee claimed the holding period began on 30.04.2003, the date on which a token payment was made and possession was allegedly taken. However, the Assessing Officer (AO) treated the holding period from the date of registration, resulting in a period of less than 36 months, thereby classifying the gain as short-term capital gain. The CIT(A) and the ITAT upheld this view, rejecting the assessee's claim due to lack of credible evidence supporting the earlier possession date.

2. Validity of the Exemption Claim under Section 54F:
The assessee claimed exemption under Section 54F, which was denied by the AO on the grounds that the holding period was less than 36 months. The assessee argued that the date of allotment should be considered as the date of purchase, referencing CBDT Circular No. 471 and various case laws supporting this view. The Tribunal acknowledged these precedents, noting that the date of allotment has been judicially supported as the relevant date for calculating the holding period. Consequently, the Tribunal found that the issue was debatable and supported by judicial precedents, thereby making the assessee's claim plausible.

3. Appropriateness of the Penalty Levied under Section 271(1)(c):
The AO levied a penalty of ?9,25,650 under Section 271(1)(c) for furnishing inaccurate particulars of income, which was upheld by the CIT(A). The CIT(A) emphasized that the assessee, being highly educated and holding a responsible position, should have known the legal implications of her claim. The Tribunal, however, took a different view. It held that the issue of the holding period was debatable and supported by various judicial decisions. Therefore, the Tribunal concluded that the assessee's claim, although not accepted by the authorities, was made in good faith based on a reasonable interpretation of the law. Consequently, the Tribunal ruled that concealment penalty was not leviable in this case.

Conclusion:
The Tribunal allowed the appeal, deleting the penalty imposed under Section 271(1)(c). It emphasized that the issue of whether the date of allotment or the date of registration should be considered for calculating the holding period was debatable and supported by judicial precedents. Hence, the assessee's claim, though not accepted by the authorities, was made in good faith and did not warrant a penalty for furnishing inaccurate particulars of income.