Pushipinder Bansal, Patiala vs Assessee

Pushpinder Bansal, Vs. The Income Tax Officer, Prop. M/s Amar Bio Coal Industries, Ward 2, Daun Kalan Road, Bhadurgarh, Patiala. Patiala. PAN: AEWPB9477J (Appellant) (Respondent)

Appellant by : Shri Rishab Kapoor Respondent by : Shri Manjit Singh, DR

Date of hearing : 18.03.2015 Date of Pronouncement : 20.03.2015

Per BHAVNESH SAINI, J.M. :

This appeal filed by the assessee is directed against

the order of learned Commissioner of Income Tax(Appeals),

Patiala dated 28.10.2014, challenging the levy of penalty

under section 271(1)(c) of the Income Tax Act, 1961.

2. Briefly, the facts are that the assessee has wrongly

computed the long term capital gain on account of sale of one

residential house and a plot. The Assessing Officer found

during the year, the assessee has sold on 9.5.2008 one

residential house at Malwa Enclave Patiala for Rs.10 lacs,

which was purchased for Rs.2 lacs on 24.7.2001. The 2

assessee also sold on 8.5.2005 another plot in Malwa Enclave

for Rs.28,50,000/- which was purchased for Rs.3,50,000/- on

24.7.2001. In the computation of income against total sale

consideration of both the properties i.e. Rs.38,50,000/-, the

assessee had shown capital gain of Rs.30,43,945/- after

applying indexed cost. Against it, the assessee claimed

deduction under section 54 of the Act at Rs.24,35,000/- on

account of one house purchased for Rs.9,35,000/- in Malkana

Village, Tehsil Samana and a flat No.5, Jassa Singh Road,

Patiala purchased for Rs.15 lacs. Besides it, deduction of

Rs.6,30,000/- was also claimed on account of investment in

specified bonds. After claiming deduction, capital gain was

declared at nil. It was pointed out to the assessee that the

deduction under section 54 of the Act is admissible against

capital gain on account of purchase of residential house only.

As regards sale of plot, deduction under section 54F of the Act

is to be allowed against capital gain chargeable to tax on

account of purchase of residential house and bonds.

Accordingly, the long term capital gain chargeable to tax was

calculated at Rs.4,79,262/- and addition was accordingly

made.

3. Secondly, the assessee was owning two residential

houses but no income under the head 'house property' was

declared by the assessee. The assessee was asked to

intimate in which house he resided during the year under

consideration and to explain as to why house property income

in respect of one house, which was not occupied by the 3

assessee, may not be assessed to tax. The assessee

intimated that he is residing in Flat No.5, Ground Floor,

Jassa Singh Road, Patiala and offered to assess rental income

of second house at village Malkana Tehsil Samana. The

Assessing Officer taking into consideration the market rate

made estimated addition of Rs.20,790/- under the head

'income from house property'.

4. Thirdly, it was noted that the assessee had not

shown interest income earned from bank and FDRs with the

bank. The assessee has earned interest of Rs.3415 from

State Bank of Patiala and interest on FDRs in a sum of

Rs.7000/- but no interest has been shown in the return of

income. The Assessing Officer accordingly made addition of

Rs.10,415/-. The Assessing Officer on all these three

additions initiated penalty proceedings. The assessee in

reply to show cause notice briefly submitted that the facts for

calculating capital gain were declared and the assessee made

claim of deduction out of capital gain and that the assessee

did not derive any income from one residential house, for

which notional income was added. Therefore, it is not a case

of concealment of income or furnishing of inaccurate

particulars of income. With regard to the interest income, it

was stated that inadvertently interest income could not be

shown in the return of income. The Assessing Officer was not

satisfied with the explanation of the assessee and levied

minimum penalty under section 271(1)(c) of the Act on all the

above additions.

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5. The learned CIT (Appeals) dismissed the appeal of

the assessee.

6. We have heard the learned representatives of both

the parties and perused the material available on record. The

learned counsel for assessee reiterated the submission mmade

before the authorities below and relied upon the order of the

I.T.A.T., Agra Bench in the case of Sarv Prakash Kapoor Vs.

DCIT, Agra, 26 Taxmann.com 256 (Agra) in which it was held

as under :

" IT : Wrong claim of exemp tion - Where assessee claimed excess deduction wh i l e misunderstanding provisions of sections 54 and 54F, penalty order passed under section 2 7 1 ( 1 ) ( c ) wa s t o b e s e t a s i d e . "

7. He has also relied upon the decision of Rajasthan

High Court in the case of Chandra Pal Bagga Vs. Income Tax

Appellate Tribunal, 128 Taxman 632 (Raj) in which it was

held:

" I f a n a s s e s s e e h a s c l a i me d e x e m p t i o n o f c a p i t a l g a i n s af t e r d i s c l o s i n g t h e r e l e v a n t b a s i c f a c t s a n d d u e t o i g n o r a n c e of the provisions of the Act and not off ered that amount f or tax, in such case, penal ty should not be imposed. In such cases, it is r ather the duty of the Assessing Off icer to ask f or f urther d e t a i l s a n d t a x i n c o me i f i t i s l i a b l e t o b e t a x e d . "

8. He has also relied upon the decision of the Hon'ble

Punjab & Haryana High Court in the case of CIT Vs. Shahabad

Co-op. Sugar Mills Ltd., 322 ITR 73 (P&H), in which it was

held :

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" S e c t i o n 2 7 1 ( 1 ) ( c ) o f t h e I n c o me - t a x A c t , 1 9 6 1 - P e n a l t y - F o r c o n c e a l me n t o f i n c o me - A s s e s s me n t y e a r 1 9 9 5 - 9 6

M a k i n g o f wr o n g c l a i m u n d e r s e c t i o n 8 0 P i s n o t a t p a r w i t h c o n c e a l me n t o r g i v i n g o f i n a c c u r a t e i n f o r m a t i o n ( i n f avour of assessee)."

9. The learned counsel for assessee stated that the

assessee has not challenged all the three additions on merits

and no appeal is pending on quantum.

10. On the other hand, the learned D.R for the Revenue

relied upon the orders of the authorities below.

11. Considering the submissions of the parties in the

light of the findings of the authorities below and material on

record, we are of the view that the penalty is not leviable on

first two additions. It is not in dispute that the assessee has

declared all the facts with regard to the computation of long

term capital gain in the return of income as well as before the

Assessing Officer at the assessment stage. According to the

Assessing Officer, the claim of the assessee for deduction

under section 54 of the Act was admissible against capital

gain on account of purchase of residential house only. As

regards sale of plot, the deduction under section 54F of the

Act was to be allowed against capital gain on account of

purchase of residential house and the bonds. These facts

would clearly disclose that though the assessee declared

complete facts with regard to long term capital gain before the

Assessing Officer and part of the claim of the assessee was

also accepted with regard to long term capital gain on sale of 6

residential house but for sale consideration of plot, the

Assessing Officer proposed to make addition of Rs.4,79,262/-.

It, therefore, appears that the assessee claimed excessive

deduction while misunderstanding the provisions of sections

54 and 54F of the Act. The claim of the assessee appears to

be bonafidie. Therefore, making the wrong claim perse may

not amount to concealment or giving of inaccurate particulars

of income. The decisions relied upon by the learned counsel

for assessee above clearly support the case of the assessee

that no penalty is leviable on account of capital gain. Further

with regard to addition of Rs.20,790/- on account of notional

income from house property, the assessee has not actually

earned any rental income and since the assessee was having

two residential houses, therefore, notional income from house

property in respect of one house shall have to be calculated.

Therefore, there is no question of making any inaccurate

particulars of income in the return of income as is proposed

by the Assessing Officer. The assessee has not earned any

income, therefore, it may not be a case of concealment of

income.

12. The Hon'ble Supreme Court in the case of CIT Vs.

Reliance Peptroproducts Pvt. Ltd., 322 ITR 158 held as under:

"A glance at the provisions of section 271(1)(c) of the I n c o me - t a x A c t , 1 9 6 1 s u g g e s t s t h a t i n o r d e r t o b e c o v e r e d b y i t , t h e r e h a s t o b e c o n c e a l me n t o f t h e p a r t i c u l a r s o f t h e i n c o me o f t h e a s s e s s e e . S e c o n d l y , t h e a s s e s s e e mu s t have f urnished inaccurate particulars of his income. The m e a n i n g o f t h e wo r d " p a r t i c u l a r s " u s e i n s e c t i o n 2 7 1 ( 1 ) ( c ) 7

wo u l d e mb r a c e t h e d e t a i l s o f t h e c l a i m m a d e . Where no inf ormation given in the return is f ound to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There c a n b e n o d i s p u t e t h a t e v e r y t h i n g wo u l d d e p e n d u p o n t h e return f iled by the assessee, because that is the only d o c u me n t wh e r e t h e a s s e s s e e c a n f u r n i s h t h e p a r t i c u l a r s o f h i s i n c o me . When such particulars are f ound to be i n a c c u r a t e , t h e l i a b i l i t y wo u l d a r i s e . To attract penalty, the details supplied in the return mu s t n o t b e a c c u r a t e , not exact or correct, not according to the truth or erroneous.

Where there is no f inding th at an y details supplied by the assessee in its return are f ound to be incorrect or e r r o n e o u s o r f al s e t h e r e i s n o q u e s t i o n o f i n v i t i n g t h e penalty under section 271(1)(c). A me r e m a k i n g o f a c l a i m , wh i c h i s n o t s u s t a i n a b l e i n l a w, b y i t s e l f , wi l l n o t amount to f urnishing inaccurate particulars regarding the i n c o me o f t h e a s s e s s e e . Such a claim made in the return c a n n o t a mo u n t t o f u r n i s h i n g i n a c c u r a t e p a r t i c u l a r s . "

13. Considering the above discussion, we are of the view

that penalty is not leviable with regard to the additions made

on account of long term capital gain and addition on account

of notional income from house property. The orders of the

authorities below to that extent are set aside and penalty

under section 271(1)(c) of the Act is cancelled.

14. However, with regard to levy of penalty on addition

on account of interest is concerned, it is admitted fact that 8

the assessee earned income from State Bank of Patiala as well

as on FDRs with HDFC bank. The interest was not shown by

the assessee in the return of income. Therefore, it is a clear

case of concealment of particulars of income in which the

assessee has not offered any explanation. Therefore, levy of

penalty under section 271(1)(c) of the Act on this head is

wholly justified. The orders of the authorities below to that

extent are confirmed and the appeal of the assessee on this

item is dismissed.

15. In the result, the appeal of the assessee is partly

allowed and the Assessing Officer is directed to re-calculate

the levy of penalty as per this order.

Order pronounced in the open court on this 20th day of

March, 2015.

Sd/- Sd/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 20 t h March, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh