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TMI Blog2015 (1) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... d of evidence, it is not possible to accept the contentions of the assessee on the claim of making reinvestment to the extent of 3,68,14,038. From the above factual matrix, it is amply clear that the assessee has failed to discharge the onus on him to establish with material evidence the claim of having incurred the expenditure on reinvestment. Interest on repayment of Housing Loan - Held that:- It is not in dispute that the claim for deduction on account of interest on housing loan made in the return of income was admittedly erroneous and this erroneous claim was detected by the Assessing Officer in the course of assessment proceedings. For the reasons discussed and the reasoning given earlier in this order, while dealing the earlier grounds of appeal (supra), the levy of penalty u/s. 271(1)(c) of the Act on this issue is justified. Assessment of income from layout formation as ‘income from business - Held that:- In the case on hand, the assessee's decision to declare the income from layout formation in the return of income filed on 30.6.2008 as ‘income from capital gain’ was a conscious one. The assessee has not been able to furnish any explanation, supported by material evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances of the case, the learned CIT (Appeals) ought to have appreciated that there was no mala fide intention on the part of the appellant for him to justify the levy of penalty u/s.271(1)(c) of the Act. 3. On the facts and in the circumstances of the case, the learned CIT (Appeals) ought to have appreciated the fact that the appellant had purchased the land on 16.08.2005 and sold it on 13.05.2006 and thereby the appellant could not have incurred an expenditure of ₹ 1,56,98,159 towards cost of improvement of land. 4. On the facts and in the circumstances of the case, the learned CIT (Appeals) ought to have appreciated the fact that the extent of land developed was 65 acres and that the said expenditure was not unreasonable considering the extent of land and accordingly the impugned addition was unwarranted. Consequently, the levy of penalty upheld is purely on surmises and unjustified. 5. The learned CIT (Appeals) ought to have appreciated the fact that the reasonable cause and hardship of the appellant for not having furnished proof for reinvestment to claim exemption under section 54B of the Act since the appellant's failure to produce the documents was onacocu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s.54B of the Act to the extent of ₹ 3,68,14,038. Penalty proceedings under section 271(1)(c) of the Act was initiated simultaneously on all the above four disallowances made in the order of assessment (supra). The Assessing Officer proceeded to complete the penalty proceedings under section 271(1)(c) of the Act, levying the minimum penalty on all the above four disallowances amounting to ₹ 1,78,35,511 vide order dt.29.6.2009. 3.2 Aggrieved by the order levying penalty of ₹ 1,78,35,511 under section 271(1)(c) of the Act dt.29.6.2009 for Assessment Year 2006-07, the assessee preferred an appeal before the CIT (Appeals) - III, Bangalore, who disposed off the same vide the impugned order dt.24.2.2012 confirming the levy of penalty by the Assessing Officer. It is against this order of the learned CIT (Appeals), that the assessee is in appeal before this Tribunal. 3.3 In the meantime, the CIT, Bangalore-III, in exercise of his revisionary powers under section 263 of the Act, passed an order dt.28.2.2011 in which he partially set aside the order of assessment for Assessment Year 2006-07 dt.15.12.2008. The issues dealt with in the order under section 263 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we proceed to examine the various grounds of appeal raised before us in the present appeal and the submissions made therein. 4.1 In the course of appellate proceedings, the learned Authorised Representative of the assessee assailed the orders of the learned CIT (Appeals) and the Assessing Officer. It was contended that there was no mala fide intention on the part of the assessee to justify the levy of penalty and that there is no concealment of income or furnishing of inaccurate particulars of income warranting levy of penalty under section 271(1)(c) of the Act. In support of the assessee's contentions the learned Authorised Representative placed reliance on the following decisions :- i) CIT V Gem Granites, ITA No.504 of 2009 (Madras H C) ii) CIT V K.P. Sampath Reddy 197 ITR 232 (Kar) iii) CIT V Manjunatha Cotton & Ginning Factory 357 ITR 565 (Kar). iv) CIT V SAS Pharmaceuticals 335 ITR 259 (Del) v) CIT V Career Education & Infotech, 336 ITR 257 (P&H) 4.2 Per contra, the learned Departmental Representative supported the orders of the authorities below. 4.3 We have heard the rival contentions and perused and carefully considered the material on record; including the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty u/s. 271(1)(c) of the Act on the ground that the onus lies on the assessee to prove the genuineness of any expenditure claimed and that the assessee had failed to discharge this onus. 6.3 Before us, the learned Authorised Representative of the assessee submitted that though the purchase of the property was registered on 16.8.2005, the assessee had entered into an agreement with the sellers as early as 31.10.2003 by paying an advance and obtained possession of the said property. As the property was sold on 1.3.2006, the assessee had sufficient time to make improvements and therefore the claim of improvement is genuine and valid. It was also contended that, looking into the extent of the land development, i.e. about 65 acres, the expenditure claimed is reasonable. It was submitted that while the disallowance of the expenditure claimed was accepted in assessment proceedings due to lack of evidence and to buy peace, levy of penalty u/s. 271(1)(c) of the Act was not warranted in the facts and circumstances of the case. In support of the assessee's contentions, the learned Authorised Representative placed reliance on the judicial decisions cited earlier in this order. 6.4.1 We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation & Infotech (supra), cited by the assessee, the penalty levied was deleted on the ground that the Tribunal had recorded a categorical finding that there was no material to infer concealment of income or furnishing of inaccurate particulars of income and therefore penalty could not be levied merely because the assessee surrendered additional income consequent to survey action. In the case on hand, however, the penalty has been levied because the assessee could not furnish any evidence in support of the claim of expenditure incurred made in the return of income / financial statements and the presumption has not been rebutted. The facts of the cited case vis-a-vis the case on hand are quite different. 6.4.4 In the case of SAS Pharmaceuticals (supra), it was held that there cannot be any penalty levied only on surmises, conjectures and possibilities and since 271(1)(c) of the Act has to be construed strictly, unless there is actually concealment of income or nondisclosure of the particulars of income, penalty cannot be levied as the assessee has made a complete disclosure in the return of income. In the case on hand, however, the penalty has been levied because the assessee could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. In that case, the penalty was cancelled because the assessee had given a cogent explanation and therefore discharged the onus upon it. In the case on hand, however, the assessee has not given any explanation supported by material evidence to substantiate the claim made in the return of income and as such the decision in the cited case is not applicable to the facts of the case on hand. In view of the above discussion of the facts and circumstances of the case, we are of the considered view that the decision of the learned CIT(A) in confirming the levy of penalty u/s.271(1)(c) of the Act on this point does not call for any interference by us. Consequently, Ground Nos.3 and 4 of the assessee's appeal are dismissed. 7. Ground No.5 7.1 This ground of appeal is regarding the penalty levied with respect to the disallowance of the claim of exemption under section 54B of the Act. From a perusal of the material on record, it is seen that the Assessing Officer observed that the assessee had shown 'income from capital gains' of ₹ 10,45,29,911 and after claiming exemption of ₹ 10,38,54,572 under section 54B of the Act, income thereunder was declared at ₹ 6,75,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m deduction under section 54B of the Act to the extent of ₹ 6,70,40,704. Therefore, the original stand of the Assessing Officer had got restored. In other words, the disallowance of exemption under section 54B of the Act to the extent of ₹ 3,68,14,038 on which penalty has been levied u/s.271(1)(c) of the Act, because the assessee is not eligible for exemption under section 54B of the Act, but because the assessee failed to produce evidence to substantiate the claim made. In this view of the matter, the decision of the learned CIT(A) upholding the eligibility of the assessee to be allowed exemption under section 54B of the Act and the Tribunal upholding the decision of the learned CIT(A) in the matter, will not have any bearing on the disallowance of ₹ 3,68,14,038 on which the penalty u/s.271(1)(c) of the Act has been levied and which is presently for consideration before us. 7.4.2 We have carefully considered and appreciated the facts on record on the issue for consideration before us. It is not in dispute that the assessee had not been able to furnish any evidence to substantiate the claim of reinvestment to the extent of ₹ 3,68,14,038 made by him. We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the penalty levied u/s. 271(1)(c) of the Act. In respect of the case laws cited by the assessee, the discussion thereon at paras 6.4.1 to 6.4.7 of this order while dealing with Ground NO.4 of this appeal is applicable to this ground as well. In view of the above discussion on the facts and circumstances of the case on hand, we are of the considered view that the decision of the learned CIT (Appeals) in upholding the levy of interest u/s. 271(1)(c) of the Act on this issue does not warrant any interference. Consequently, Ground No.5 of the assessee's appeal is dismissed. 8. Ground No.6 : Interest on repayment of Housing Loan. 8.1 This ground of appeal is in respect of the levy of penalty with respect to the disallowance of interest claimed on repayment of housing loan. 8.2 In the course of assessment proceedings, the Assessing Officer noticed that the assessee made a claim for deduction of ₹ 1,00,000 under section 80C of the Act towards repayment of housing loan and an amount of ₹ 1,50,000 towards interest on housing loan under the head 'income from house property'. On examination thereof, the Assessing Officer found that both the claims made were wrong. ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional) income charged to tax under the head Business Income instead of Capital Gains which was accepted to buy peace was based upon the joint venture income managed by the associate viz., Sri E. Krishnappa who managed the joint venture. 5. The learned CIT (Appeals) ought to have appreciated that, the explanation offered by the appellant in respect of the facts material to computation of his income was neither found to be false material to computation of his income was neither found to be false nor did the appellant fail to prove his bona fides because, difference between the assessed income and income returned was voluntarily offered for peace and no tax was sought to be evaded. 6. The learned CIT (Appeals) ought to have appreciated the explanation/s given by the appellant and ought to have refrained form upholding the levy of impugned penalty. 7. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed." 11. The facts and circumstances under which penalty u/s.271(1)(c) of the Act was levied on the assessee are, briefly, as under :- 11.1 The assessee is an individual deriving income from agriculture and is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 84,56,800 as was determined in the course of survey action under section 133A of the Act. 11.5 Penalty proceedings u/s.271(1)(c) of the Act were initiated simultaneously and the Assessing Officer proceeded to levy the minimum penalty of ₹ 38,12,640 u/s.271(1)(c) of the Act vide order dt.29.6.2010 by considering the total assessed income of ₹ 1,14,93,587 as concealed income. On appeal, the learned CIT (Appeals) vide the impugned order dt.2.3.2012 confirmed the levy of penalty u/s.271(1)(c) of the Act holding that the Assessing Officer was correct in assessing the income from layout formation as 'income from business.' 11.5.1 In the proceedings before us, the learned Authorised Representative assailed the levy of penalty u/s.271(1)(c) of the Act and its confirmation by the learned CIT (Appeals) in the impugned order. It was submitted that the assessee had not hidden or concealed any material details form revenue and the Assessing Officer has not made any incriminating findings during the survey action under section 133A of the Act. It was contended that the additional income brought to tax in the assessee's hands is only because what was considered by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered for levy of penalty has been correctly taken. 11.7.3 In the case on hand, the facts do not support the contention of bona fide explanation put forth by the assessee. We find from an appreciation of the facts on record that it was in the course of the survey action in the assessee's case on 1.2.2008, when the assessee admitted the nature of the income from layout formation. Even then, the assessee chose to declare the income from layout formation in the return of income filed on 30.6.2008 after the survey action as 'income from capital gains' rather than 'income from business.' It was only after the survey under section 133A of the Act conducted on 11.2.2009 in the case of Sri Krishnappa that the assessee accepted the income from layout formation and 'income from business'. But for the survey conducted on 11.2.2009 in the case of Sri Krishnappa, the assessee would not have accepted the income from layout formation as 'income from business.' 11.7.4 It is true that it is settled principle that a mere change of head of income or a wrong characterization of income may not be a ground for levy of penalty u/s.271(1)(c) of the Act on grounds of concealment of income. It is reb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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