2016 (7) TMI 740 - AT - Income Tax

Penalty under Section 271(1)(c) - sale of agricultural land - as per assessee capital gain arising on sale of agricultural land located at a village in Goa was exempt as the agricultural land did not constitute capital asset which was liable to capital gain tax - Held that - This fact is not denied that the land was situated in a village. Further, this fact is also not denied that the impugned land is described as agricultural land in the land records maintained with the local authorities. This fact is also not denied that the assessee belonged to a rural background and he is not well educated. The assessee apparently acted on the advice of other persons, who were indeed not competent enough to advise the assessee. These facts have nowhere been denied by the AO or Ld. CIT(A). The conduct of the assessee has been such that the moment he came to know that agricultural land may be situated within 8 kms of the municipal limits, and therefore, it may not be exempt from income-tax, he immediately revised the return of income and paid tax thereon. Although, the assessee withdrew the claim and paid taxes, the precise location of land and its distance from the municipal limit is still unknown. During the penalty proceedings also nothing was brought on record by the AO to prove that the claim of the assessee was false and distance of the land was actually less than 8 kms from the municipal limits. This facts still remains under shadow of doubts. During the penalty proceedings also, nothing was brought on record by the AO to prove that the claim of the assessee was false and distance of the land was actually less than 8 kms. The addition has been made solely relying upon the revised computation sheet filed by the assessee. In the given circumstances, we find that it cannot be said that the claim was not bonafide at all.The only reason for disallowing the claim was the possibility of its location within the 8 kms radius of the municipality. The exact answer to this question is not available on record. Under these circumstances, the addition itself remains under the shadow of doubts. Under these circumstances, we do not find it to be a case of concealment of income or furnishing of inaccurate particulars of income, and thus not fit for levy of penalty. - Decided in favour of assessee

Summary

Issues:
Levy of penalty under section 271(1)(c) for alleged concealment of income.

Detailed Analysis:

1. Background of the Case:
The appellant filed an appeal against the penalty order under section 271(1)(c) passed by the Ld. CIT(A) against the order of the Assessing Officer. The primary issue in this appeal was the levy of a penalty amounting to ?1,55,302.

2. Arguments and Submissions:
The appellant, a layman from a rural background, contended that there was no concealment of income as the claim made regarding the exemption of long term capital gain was withdrawn during assessment proceedings upon realizing the correct legal position. The appellant emphasized that the claim was based on advice received from a chartered accountant. The department, however, relied on the orders of the lower authorities to support the penalty.

3. Judicial Interpretation:
The Tribunal considered the facts that the land was situated in a village, described as agricultural in land records, and the appellant's lack of awareness about income tax proceedings. The Tribunal noted that the appellant immediately revised the return and paid taxes upon being informed about the correct legal position. The Tribunal observed that no evidence was presented to prove the claim was false or that the land was within 8 kms of municipal limits.

4. Legal Precedents and Rulings:
The appellant cited various judicial pronouncements to support the argument that no penalty should be imposed under the circumstances presented. The Tribunal referred to judgments by the Gujarat High Court and the Bombay High Court, emphasizing that if the explanation provided by the assessee remains unproved but not disproved, no penalty should be imposed.

5. Conclusion and Decision:
Considering the facts of the case, the Tribunal concluded that there was no concealment of income or furnishing of inaccurate particulars. The Tribunal highlighted that the claim was made in good faith based on professional advice and the appellant's background. Hence, the penalty levied by the Assessing Officer was deemed unjustified, and the appeal of the assessee was allowed. The penalty was directed to be deleted.

This detailed analysis showcases the Tribunal's thorough examination of the facts, legal arguments, precedents, and ultimately, the decision to overturn the penalty imposed on the appellant.