Sarv Prakash Kapoor v. Dy. CIT

Case Laws Analysis
Relied CIT v. Reliance Petroproducts (P) Ltd. 2010 TaxPub(DT) 1683 (SC)
Relied Veejay Service Station v. Asstt. CIT 2009 TaxPub(DT) 1573 (Del-Trib)
Distinguished Union of India & Ors. v. Dharamendra Textile Processors & Ors. 2008 TaxPub(DT) 2320 (SC)
Relied Udayan Mukherjee v. CIT 2007 TaxPub(DT) 1568 (Cal-HC)
Relied Zycus Infotech (P) Ltd. v. ITO, Asstt. CIT 2007 TaxPub(DT) 1331 (Mum-Trib)
Relied T. Ashok Pai v. CIT 2007 TaxPub(DT) 1251 (SC)
Relied Devi Dass Sukhani v. Income Tax Officer 2006 TaxPub(DT) 1585 (Jod-Trib)
Relied Kamal Kishore Swami v. Income Tax Officer 2004 TaxPub(DT) 1758 (Jod-Trib)
Relied Chandra Pal Bagga v. Income Tax Appellate Tribunal & Anr. 2003 TaxPub(DT) 1004 (Raj-HC)
Distinguished CIT v. Vidyagauri Natverlal & Ors. 1999 TaxPub(DT) 0977 (Guj-HC)

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The Tax PublishersITA No. 95 (Agra) of 2012 2013 TaxPub(DT) 0645 (Agra-Trib) : (2013) 050 (II) ITCL 0036 INCOME TAX ACT, 1961 --Penalty under section 271(1)(c)Concealment Deduction under section 54F was wrongly calculated--Assessee earned long-term capital gain on sale of land. He invested a part of sale consideration in residential house and claimed the same as deduction under section 54F. Assessing officer noted that assessee was entitled for proportionate amount of deduction as he had invested a part of sale consideration thus, deduction claimed under section 54F was excessive. On knowing above contention of assessing officer, assessee submitted that he had wrongly claimed exemption on the basis of section 54 instead of section 54F due to misunderstanding of his clerical staff, therefore, he filed revised return and offered wrongly calculated extra deduction to tax. Assessing officer however, rejected assessees contention and levied penalty under Explanation 1 of section 271(1)(c). *Held:* Was not justified as assessee had made bona fide mistake in calculation of deduction under section 54F and rectification of such mistakes were not concealment of particulars of income or furnishing of inaccurate particulars of income. Moreso, assessee had substantiated his explanation by submitting complete facts regarding calculation of capital gain while misunderstanding of deduction under sections 54 and 54F. Income Tax Act, 1961 Section 271(1)(c) Income Tax Act, 1961 Section 54 Income Tax Act, 1961 Section 54F In the ITAT, Agra Bench Bhavnesh Saini, J.M. & A. L. Gehlot, A.M. Sarv Prakash Kapoor v. DCIT ITA No. 95 (Agra) of 2012 A.Y. 2007-08 7 September, 2012 Income Tax Act, 1961, Ss. 271(1)(c), 54 & 54F *Decision:* In assessees favour. Appellant by : Anil Verma Respondent by : Anuradha ORDER This is an appeal filed by the assessee against the order dated 30-1-2012 passed by the learned Commissioner (Appeals)-II, Agra for the assessment year 2007-08. 2. The effective ground raised in the appeal is in respect of penalty of Rs. 2,78,000 levied under section 271(1)(c) of the Income Tax Act, 1961 (the Act hereinafter). 3. The brief facts of the case are that during the assessment proceedings the assessing officer noticed that the assessee has sold a property worth Rs. 82,53,000 and earned Long Term Capital Gain of Rs. 71,79,363. The assessee invested in residential house Rs. 70,00,000 and claimed exemption under section 54F of the Act. The assessee offered balance amount of Rs. 1,79,363 for taxes. The assessing officer further noticed that the assessee has claimed deduction under section 54F of the Act whereas the assessee has invested in residential house a part amount, Rs. 70,00,000. The assessing officer was of the view that the assessee is entitled for only proportionate amount of deduction under section 54F of the Act. The assessing officer accordingly found that the assessee has made excess claim of deduction under section 54F for Rs. 9,10,634. During the assessment proceedings the assessing officer pointed out to the assessee about the said excess deduction of Rs. 9,10,634. The assessee filed a revised return and submitted that the assessee has wrongly claimed exemption on the basis of section 54 of the Act which exemption was to be claimed under section 54F of the Act. The aforesaid mistake was on account of misunderstanding on the part of the clerical staff of the Counsel and was not at all intentional. It was submitted that when the mistake came to the notice, the assessee has voluntarily filed revised return of income. The assessing officer levied penalty of Rs. 2,78,660 by invoking provisions of section 271(1)(c) read with explanation-1 of the Act on the ground that the assessee is aware of the exemption under section 54F and claiming the same in his return of income as the primary onus lies with the assessee to fulfill all the requisite conditions for availing the benefit of the said exemption. The assessee has deliberately and knowingly filed the inaccurate particulars and thereby concealed the income. Supposedly, the case would not have been selected under scrutiny assessment and in that situation the Department could not have detected wrong claim of the assessee and the assessee could have easily taken extra benefit for which he was not entitled to receive. The assessing officer held that it is clearly established that the assessee has deliberately claimed wrong deduction without any reasonable cause. The assessing officer also rejected the assessees contention regarding revised return on the ground that the revised return was filed after being detected by the office and that too barred by limitation under section 139(5) of the Act. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA No. 95 (Agra) of 2012
2013 TaxPub(DT) 0645 (Agra-Trib) : (2013) 050 (II) ITCL 0036

INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)Concealment Deduction under section 54F was wrongly calculated--Assessee earned long-term capital gain on sale of land. He invested a part of sale consideration in residential house and claimed the same as deduction under section 54F. Assessing officer noted that assessee was entitled for proportionate amount of deduction as he had invested a part of sale consideration thus, deduction claimed under section 54F was excessive. On knowing above contention of assessing officer, assessee submitted that he had wrongly claimed exemption on the basis of section 54 instead of section 54F due to misunderstanding of his clerical staff, therefore, he filed revised return and offered wrongly calculated extra deduction to tax. Assessing officer however, rejected assessees contention and levied penalty under Explanation 1 of section 271(1)(c). Held: Was not justified as assessee had made bona fide mistake in calculation of deduction under section 54F and rectification of such mistakes were not concealment of particulars of income or furnishing of inaccurate particulars of income. Moreso, assessee had substantiated his explanation by submitting complete facts regarding calculation of capital gain while misunderstanding of deduction under sections 54 and 54F.

Income Tax Act, 1961 Section 271(1)(c)

Income Tax Act, 1961 Section 54

Income Tax Act, 1961 Section 54F

In the ITAT, Agra Bench

Bhavnesh Saini, J.M. & A. L. Gehlot, A.M.

Sarv Prakash Kapoor v. DCIT

ITA No. 95 (Agra) of 2012

A.Y. 2007-08

7 September, 2012

Income Tax Act, 1961, Ss. 271(1)(c), 54 & 54F

Decision: In assessees favour.

Appellant by : Anil Verma

Respondent by : Anuradha

ORDER

This is an appeal filed by the assessee against the order dated 30-1-2012 passed by the learned Commissioner (Appeals)-II, Agra for the assessment year 2007-08.

2. The effective ground raised in the appeal is in respect of penalty of Rs. 2,78,000 levied under section 271(1)(c) of the Income Tax Act, 1961 (the Act hereinafter).

3. The brief facts of the case are that during the assessment proceedings the assessing officer noticed that the assessee has sold a property worth Rs. 82,53,000 and earned Long Term Capital Gain of Rs. 71,79,363. The assessee invested in residential house Rs. 70,00,000 and claimed exemption under section 54F of the Act. The assessee offered balance amount of Rs. 1,79,363 for taxes. The assessing officer further noticed that the assessee has claimed deduction under section 54F of the Act whereas the assessee has invested in residential house a part amount, Rs. 70,00,000. The assessing officer was of the view that the assessee is entitled for only proportionate amount of deduction under section 54F of the Act. The assessing officer accordingly found that the assessee has made excess claim of deduction under section 54F for Rs. 9,10,634. During the assessment proceedings the assessing officer pointed out to the assessee about the said excess deduction of Rs. 9,10,634. The assessee filed a revised return and submitted that the assessee has wrongly claimed exemption on the basis of section 54 of the Act which exemption was to be claimed under section 54F of the Act. The aforesaid mistake was on account of misunderstanding on the part of the clerical staff of the Counsel and was not at all intentional. It was submitted that when the mistake came to the notice, the assessee has voluntarily filed revised return of income. The assessing officer levied penalty of Rs. 2,78,660 by invoking provisions of section 271(1)(c) read with explanation-1 of the Act on the ground that the assessee is aware of the exemption under section 54F and claiming the same in his return of income as the primary onus lies with the assessee to fulfill all the requisite conditions for availing the benefit of the said exemption. The assessee has deliberately and knowingly filed the inaccurate particulars and thereby concealed the income. Supposedly, the case would not have been selected under scrutiny assessment and in that situation the Department could not have detected wrong claim of the assessee and the assessee could have easily taken extra benefit for which he was not entitled to receive. The assessing officer held that it is clearly established that the assessee has deliberately claimed wrong deduction without any reasonable cause. The assessing officer also rejected the assessees contention regarding revised return on the ground that the revised return was filed after being detected by the office and that too barred by limitation under section 139(5) of the Act.