Case Law Details
P.S. Jayaraman Vs ACIT (ITAT Chennai)
Ld. CIT(A) concurred with assessee’s submissions that deduction u/s 54F was solely due to difference in interpretations of the provisions and therefore, the penalty was not to be levied on this count. However, the provisions of Sec. 54EC were clear that the investment in a financial year was not to exceed Rs.50 Lacs and therefore, it could not be said that the assessee’s interpretation of provisions of Sec. 54EC was bona-fide. Therefore, the penalty against this addition as well as other two small addition of difference in pension and interest on bank account was to be confirmed. Aggrieved, the assessee is in further appeal before us.
Assessee considered the sale transactions as three sale transactions and made three separate investments in REC bonds to claim deduction u/s 54EC. The assessee accordingly claimed deduction of aggregate investment. The assessee furnished full particulars and made the claim in the return of income which was partly accepted. However, mere non-acceptance of claim made in the return of income would not attract penalty. In such a case, the ratio of decision of Hon’ble Supreme Court in the case of CIT V/s Reliance Petroproducts Pvt. Ltd. (322 ITR 158) was squarely applicable to assessee’s case. In this decision, it has been held by Hon’ble Court that mere making of wrong claim do not amount to furnishing of inaccurate particulars of income. In the absence of finding that any details supplied by the assessee is incorrect or false, penalty could not be levied. The Ld. AO must prove that there was concealment of income or the return of income furnished by the assessee or documents submitted by assessee were based on incorrect fact, falsity and untruth. Therefore, it is not a fit case for imposition of penalty. The other two additions are small additions which, in any way, is not a fit case for levy of penalty considering the fact that the assessee is a senior citizen and may have missed out to compute pension and interest correctly. Therefore, we by deleting the impugned penalty, we allow the appeal.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2011-12 arises out of the order of learned Commissioner of Income Tax (Appeals)-10, Chennai [CIT(A)] dated 28-09-2018 confirming levy of penalty u/s. 271(1)(c) by Ld. AO vide order dated 30.05.2017. Though the assessee has raised multiple grounds of appeal, however, in sum and substance the assessee assails the confirmation of penalty on the ground that the claim was a legitimate claim.
2. The Ld. AR submitted that mere making of claim u/s 54EC which was partly accepted do not call for levy of penalty. The Ld. SR. DR, on the other hand, submitted that the claim was not made in accordance with law. Having heard rival submissions, our adjudication would be as under.
3. The assessee was assessed u/s. 143(3) on 27-03-2014. The assessee earned capital gains and claimed exemption u/s. 54F & 54EC of the Act. The exemption u/s. 54EC was claimed for Rs.100 Lacs. The assessee invested into thee REC Bonds in respect of three sales. However, Ld. AO held that the land sold was one and therefore, the exemption would be allowable only to the extent of Rs.50 Lacs. The assessee was saddled with other small additions of difference of pension amount and interest on bank account. The order was subjected to appeal before first appellate authority wherein Ld. CIT(A) granted partial relief to the assessee. The deduction claimed u/s 54EC was confirmed and deduction claimed u/s 54F was partly allowed. The order attained finality by dismissal of further appeals by assessee as well as by department vide Tribunal’s orders. Consequently, penalty proceedings were initiated and penalty of Rs.39.99 Lacs was levied vide penalty order dated 30.05.2017 for concealment of income and furnishing of inaccurate particulars of income.
4. Upon further appeal, Ld. CIT(A) concurred with assessee’s submissions that deduction u/s 54F was solely due to difference in interpretations of the provisions and therefore, the penalty was not to be levied on this count. However, the provisions of Sec. 54EC were clear that the investment in a financial year was not to exceed Rs.50 Lacs and therefore, it could not be said that the assessee’s interpretation of provisions of Sec. 54EC was bona-fide. Therefore, the penalty against this addition as well as other two small addition of difference in pension and interest on bank account was to be confirmed. Aggrieved, the assessee is in further appeal before us.
5. From the facts, it emerges that the assessee considered the sale transactions as three sale transactions and made three separate investments in REC bonds to claim deduction u/s 54EC. The assessee accordingly claimed deduction of aggregate investment. The assessee furnished full particulars and made the claim in the return of income which was partly accepted. However, mere non-acceptance of claim made in the return of income would not attract penalty. In such a case, the ratio of decision of Hon’ble Supreme Court in the case of CIT V/s Reliance Petroproducts Pvt. Ltd. (322 ITR 158) was squarely applicable to assessee’s case. In this decision, it has been held by Hon’ble Court that mere making of wrong claim do not amount to furnishing of inaccurate particulars of income. In the absence of finding that any details supplied by the assessee is incorrect or false, penalty could not be levied. The Ld. AO must prove that there was concealment of income or the return of income furnished by the assessee or documents submitted by assessee were based on incorrect fact, falsity and untruth. Therefore, it is not a fit case for imposition of penalty. The other two additions are small additions which, in any way, is not a fit case for levy of penalty considering the fact that the assessee is a senior citizen and may have missed out to compute pension and interest correctly. Therefore, we by deleting the impugned penalty, we allow the appeal.
6. The appeal stands allowed in terms of our above order.
Order pronounced on 20th October, 2022.
