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TMI Blog2010 (10) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 723(Bang)/2010, - - - Dated:- 29-10-2010 - George George K., A. Mohan Alankamony, JJ. Prathap Singh for the Appellant C.J. Brito for the Respondent ORDER George George K.:- 1. This appeal by the revenue and the cross objection by the assessee arise out of the order of the CIT(Appeals)-III, Bangalore, dated 9-2-2010. The order of the CIT(A) emanates from the order of the AO levying penalty u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act']. 2. The solitary issue that is raised in this appeal is whether the CIT(A) is justified in deleting the penalty levied u/s 271(1)(c) amounting to Rs.7,02,281/-. Brief facts of the case are as follows:- 2.1 The assessee is an individual. For the assessment year under consideration viz., 2002-03, the assessee filed return of income disclosing total income of Rs.6,81,278/-. This included capital gain of Rs. 5,12,822/-. The assessee in all made total capital gain of Rs.41,20,807/- out of which Rs.5,12,822/- was offered to capital gain. The return of income was accompanied by a detailed statement showing the computation of the entire capital gain assessable and as well as non-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , particularly para. 8 of the written submission dealing with the decision of Karnataka High Court in the case of CIT vs. Ananda Basappa = [2009] 309 ITR 329 which was in favour of the assessee and held as follows in paragraph Nos. 6.2, 7, 8, 8.1, 8.2 and 8.5:- "6.2 The appellant pleaded before me that the matter carried to appeal was only with respect to interpretation of law, and not with respect to assimilation of facts. It was specifically stated that the issue is debatable one and no certainty has arisen so far about the interpretation. The appellant further pleaded that the AO committed an error in stating that "the assessee has not disclosed true and correct taxable income". The provisions of section 271(1)(c) does not incorporate the word 'taxable'. According to the appellant he had disclosed the entire income arising from the joint development agreement and claimed exemption as per the provisions of the Act. The appellant adopted a view favorable to him in interpretation of phrase 'a' used in section 54F of the Income Tax Act by relying on various judgments. In brief the submission made by the appellant during the appellate proceedings are as under: 7.0 The Karnata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by side. The builder has also stated that he has effected modification of the flats to make it as one unit by opening the door in between two apartments. The fact that at the time when the inspector inspected the premises, the flats were occupied by two different tenants is not the ground to hold that the apartment is not a one residential unit. The fact that the assessee could have purchased both the flats in one single sale deed or could have narrated the purchase of two premises as one unit in the sale deed is not the ground to hold that the assessee had no intention to purchase the two flats as one unit. For the reasons and discussion made above, the substantial questions of law are answered in favour of the assessee. The appeal is dismissed. 8.0 It is an admitted fact that there existed adequate ambiguity in the interpretation of law prevailing at the time when the return was filed, since inconsistent views were expressed by different benches on this matter. The appellant cannot be held to have concealed any particulars or furnished inaccurate particulars of joint development agreement merely because he claimed a deduction based on a view that was favorable to him wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 54/54F and the same could be detected by the AO only when the case was selected for scrutiny and details of investments on the basis of which exemption was claimed were examined. The learned departmental representative also relied on the judgment of the Hon'ble Jurisdictional High Court in the case of CIT vs. Sree Valliappa Textiles = (294 ITR 322). Learned AR of the assessee, on the other hand, reiterated the submissions made before the authorities below and supported the finding of the CIT(A). 5. We have heard rival submissions and perused material on record. So far as the material particulars are concerned on the question of exemption, it was nowhere held by the Tribunal that the assessee had concealed any particulars of income. Eventually the order of the Tribunal, which was decided in favour of the department, was based on interpretation of the provisions of Section 54F after considering the various judgments and in particular its own decision in the case of D Ananda Basappa (91 ITD 53). 5.1 The assessee has furnished all particulars on facts and in law. Nowhere has the AO said that the particulars furnished by the assessee are inaccurate or in correct. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. In the instant case, as stated earlier, the assessee has relied on several judgments which interpreted provisions of section 54 and 54F as being available to more than one house, based on the definition of "a" which could mean many or more than one as held by the Hon'ble Jurisdictional High Court in the case of Ananda Basappa (supra). 5.4 The decision relied on by the learned departmental representative is not applicable to the facts of the present case. In the case of Sree Valliappa Textiles (supra) the Hon'ble jurisdictional High Court was considering a case where the assessee had made false claim of depreciation, extra shift allowance and investment allowance in respect of a machinery which had not even reached its premises before the end of the relevant accounting year. It was noticed by the Hon'ble High Court that the machinery was received only on 13-7-1984 much after the close of the accounting year and the claim of depreciation, extra-shift allowance and investment allowance in respect of said machinery is false and not bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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