2022 (5) TMI 336 - AT - Income Tax

Penalty proceedings u/s 271(1)(c) - Nature of land sold - assessee had received sale consideration on sale of agricultural land in Dehradun andhad claimed this amount as exempt as it was sale of agricultural land but as held by Ld. AO the income derived from sale of such assets was liable to taxation and not exempt - HELD THAT - As in the assessment order the Ld. AO has not given any conclusive finding as to if the particulars furnished before the Tax Authorities were inaccurate to the knowledge of the assessee. There were certainly disputed facts. Revenue authority registering the sale deed had not made objection to the recital that land was outside the Municipal Area. It appears that the ld. AO had to himself take assistance of the local revenue and Municipal Authorities and technical expertise and apparatus to come to a decisive conclusion that three plots sold by assessee were within six kilometers from western limits of Municipal Corporation Dehradun. No reason was mentioned by the ld. AO to discredit the submission of assessee that on advise of Patwari they had taken the Municipal Limit from Ghantaghar (Clocked hour). There is no force in the grounds of appeal raised by the revenue. Accordingly appeal of the revenue is dismissed.

Summary

Issues:
1. Appeal against order imposing penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2015-16.
2. Validity of penalty imposed for furnishing inaccurate particulars of income.
3. Consideration of facts and circumstances leading to penalty imposition.
4. Disputed facts regarding the sale of agricultural land and calculation of tax liability.
5. Interpretation of judicial precedents in determining penalty imposition.

Issue 1: Appeal against Penalty Imposition

The appeal was filed by the revenue challenging the order dated 11.11.2019 imposing a penalty of Rs. 51,59,540 under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2015-16. The penalty was initiated due to the assessee claiming sale consideration of Rs. 2,60,40,000 as exempt on the sale of agricultural land in Dehradun. The revenue contended that the income derived from the sale was taxable, leading to penalty proceedings.

Issue 2: Validity of Penalty for Inaccurate Particulars

The revenue raised grounds of appeal questioning the deletion of the penalty by the Ld. CIT(A). They argued that the assessee's case not being selected for scrutiny would not have exempted the Long Term Capital Gain from tax liability. The revenue also emphasized that the burden was on the assessee to prove otherwise, which they failed to do. The Ld. CIT(A) was accused of ignoring the presumption of concealment under section 271(1) and the need for the assessee to provide cogent evidence, which was allegedly not discharged.

Issue 3: Circumstances Leading to Penalty Imposition

During the assessment proceedings, the assessee, a 72-year-old widow, claimed innocence and wrong advice for not paying tax, leading to the penalty imposition. The Ld. AO imposed the penalty based on the furnishing of inaccurate particulars of income, which was later set aside in appeal. The assessee's cross objections highlighted the disclosure of all material facts in the return of income and questioned the lack of a recorded satisfaction by the assessing officer for imposing the penalty.

Issue 4: Disputed Facts and Tax Liability Calculation

The assessment order revealed discrepancies regarding the distance of the sold land from the Municipal Limits, leading to conflicting interpretations. The assessee claimed innocence based on reliance on advice and immediate tax payment upon realizing the error. The Ld. CIT(A) concluded that no penalty should be imposed based on various judicial precedents and the absence of conclusive findings by the Ld. AO regarding the accuracy of the furnished particulars.

Issue 5: Interpretation of Judicial Precedents

The judgment in CIT(A) vs. Zoom Communications Pvt. Ltd. was cited to emphasize the requirement of a bona fide claim by the assessee, distinguishing between incorrect claims and mala fide intentions. The Ld. CIT(A) relied on this precedent to argue that the penalty imposition was automatic and lacked proper consideration of the circumstances. The Bench dismissed the revenue's appeal and the cross objections as infructuous based on the detailed analysis of the facts and legal principles involved.

This detailed analysis of the judgment covers the issues raised in the appeal against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2015-16, providing a comprehensive understanding of the circumstances leading to the penalty imposition and the legal interpretations applied.