Amrutlal Ishwarlal Patel, Mehsana vs Assessee

Shri Amrutlal Ishwarlal Patel ITO, Ward-1 Prop: Patel Electrical Corporation Vs Mehsana. Vimal Super Market Mehsana 384 001.

अपीलाथ!/ (Appellant) "#यथ!/ (Respondent)

Assessee by : Shri Hardik Vora, AR Revenue by : Shri M.K. Singh, Sr.DR

सन ु वाई क तार ख/ Dateof Hearing : 02/03/2015 घोषणा क तार ख / Date of Pronouncement: 13/03/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: This an appeal filed by

the assessee against order of the CIT(A), Gandhinagar dated 3/6/2011 for Asstt.Year 2007-08.

2. The sole ground of appeal taken reads as under:

"1. On the facts and in cir instances of the case as well as law on the subject, the ld.CIT(A) has erred in confirming the penalty of Rs.1,08,580/- levied by the AO u/s.271(1)(c) of the I.T.Act, 1961."

3. We have heard rival submissions and perused orders of lower authorities and materials available on record. In the instant case, penalty under section 271(1)(c) of the Act for Rs.1,08,580/- was levied by the AO on the ground that the assessee has concealed particulars of income/furnished inaccurate particulars of income relating to income of Rs.6,30,778/-. In the instant case, the AO observed that the assessee ITA No.2237/Ahd/2011 2

has sold industrial land and shed for Rs.10 lakhs. The assessee credited the sale proceeds in the profit & loss account. After deducting various expenses incurred by it net result shown as business loss of Rs.6,898/- in its return of income. The AO was of the view that the profit derived on sale of industrial land and shed is assessable under the head "capital gains" as long term capital gain, and accordingly, computed long term capital gain of Rs.6,30,778/-. Various expenses claimed were not allowed as business loss. It is also noted that during the course of assessment proceedings when the AO confronted the assessee with his view, the assessee furnished revised computation showing therein the income as capital gain. The assessee accepted the assessment so made by the AO and did not file any appeal there against.

4. A perusal of the assessment order shows that no reason was stated therein by the AO for not allowing set off of business loss resulted from business expenses claimed by the assessee. In appeal against the penalty order, the CIT(A) confirmed the action of the AO as in his view, the assessee was guilty of furnishing inaccurate particulars of income in so far as the assessee has not disclosed the facts which were needed to determine the nature of income. It was not disclosed that the land and shed were used earlier for business and depreciation was claimed and it was later on rented and income shown as house property income.

5. AR of the assessee contended before us that mistake in computation of income was readily agreed by the assessee when pointed out by the AO and no attempt was made to conceal the income. He relied upon the decision of this Bench of the Tribunal in the case of ITO Vs. Shri Lalubhai Babubhai Patel, ITA No.228/Ahd/2013 order dated 20.6.2014 in the Asstt.Year 2009-10, wherein it was held as under:

ITA No.2237/Ahd/2011 3 "6. We find that no specific error in the order of the Commissioner of Income Tax (Appeals) could be pointed out by the Departmental Representative. Further, in the instant case it is not in dispute that the receipt of Rs 49,50,000/- was duly disclosed by the assessee during the course of assessment proceedings and when pointed out by the Assessing Officer about its taxability, the assessee readily agreed to that and made no attempt to hide the material fact. The above conduct of the assessee shows the bonafides of his contention that omission in return of income was not deliberate but was due to bonafide mistake. In the above circumstances, we do not find any good reason to interfere with the order of the Commissioner of Income Tax (Appeals). It is confirmed. The appeal of the Revenue is dismissed."

6. On the other hand, the DR supported the orders of the lower authorities.

7. We find that in the instant case, difference between the return of income and the assessed income arose mainly due to change of head of income under which the profit derived on sale of industrial shed and land is assessable by the AO, and also because of non-allowance of set off of business expenditure. We find that it is not the case of the Revenue that the assessee has not disclosed the particulars of sale of shed and land correctly and completely.

8. Further, no material was brought on record to show that the business expenditure claimed by the assessee in the return of income were bogus. Thus, no falsity or inaccuracy in the preliminary material facts furnished by the assessee in the return of income was found by the department. The only defect pointed out by the AO was in the computation of income on the basis of these preliminary facts.

9. In the above circumstances, in our considered view, the decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC) is clearly applicable to the facts of instant case and support the case of the assessee, wherein it was held that ITA No.2237/Ahd/2011 4

where there is no finding that no details supplied by the assessee in its return of income are found to be inaccurate or erroneous or false, there is no question of inviting the penalty under section 271(1)(c) of the Act. We, therefore, delete the penalty under section 271(1)(c) of the Act of Rs.1,08,580/- and allow the appeal of the assessee.

10. In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on Friday, the 13th March, 2015 at Ahmedabad.

Sd/- Sd/-

(SHAILENDRA KUMAR YADAV) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER