Case Law Details
ACIT Vs Chandrakant G. Patel (ITAT Ahmedabad)
Penalty u/s 271(1)(c) of the Act in the present case was levied on the assessee for failure to return income from sale of agricultural land, held as stock in trade, to tax. The charge of the Revenue being that the assessee had furnished inaccurate particulars of income to this effect. We do not find any infirmity in the order of Ld. CIT(A) who has, we find, after a careful consideration of the facts, which have remained uncontroverted and correct application of law, held that there was no furnishing of inaccurate particulars of income by the assessee so as to attract penalty u/s 271(1)(c) of the Act.
The finding of fact of the Ld.CIT(A) that the said transaction of sale of agricultural land was reflected in the audited profit and loss account of the assessee and the income therefrom disclosed in the return of income filed, though claimed as exempt u/s 2(14) of the Act, remains uncontroverted before us.
The explanation of the assessee for failing to return the said income to tax for the reason that it was under a false impression that the said lands constituted investments of the assessee and did not qualify as capital assets, as per section 2(14) of the Act, thus income earned thereon being exempt from tax, we find has not been found to be outrightly false by the Revenue. As per section 2(14) of the Act rural agricultural lands specified therein do not qualify as capital assets. It is not the case of the Revenue that the lands sold were not rural agricultural lands which did not qualify as capital assets as per section 2(14) of the Act. The contention of the assessee that it held land both as stock and as investments, has also not been controverted by the Revenue. Therefore, we agree with the Ld.CIT(A) that the explanation of the assessee that he mistakenly treated the said transaction as exempt from tax appears bonafide.
That the explanation is bonafide is, we find, supported by the fact that during assessment proceedings the assessee, realizing his mistake even before detection by the Revenue, returned the same to tax. The fact that the assessee surrendered the said income prior to detection by the Revenue is evident from the chronology of events pointed out to us by the Ld.Counsel for the assessee above showing that the income was surrendered on 16-11-16 before the assesses case was converted from limited to complete scrutiny on 28-11-16 and inquiry made for treating the said income as exempt vide questionnaire dated 02-12 -16, which fact has not been denied by the Revenue.
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