Case Law Details
Brief of the case
Assesse made a claim that income arising out from sale of agricultural land was capital gain exempt from tax. Revenue authorities and Tribunal brought said income to tax, treating it as ‘ business income ’, on ground that assesse was involved in business of sale and purchase of agricultural lands . A penalty order was also passed under section 271(1)(c) by revenue authorities for furnishing inaccurate particulars of income .High Court, however, confirmed view taken by Tribunal that claim raised by assesse in return, which was not accepted ipso-facto did not amount to furnishing of inaccurate particulars of income and thus penalty order passed under section 271(1)(c) was not sustainable.
Facts of the case
- The assesse filed its return claiming exemption, with respect to capital gain arising from sale of agricultural land.
- During assessment proceedings under Section 143(3), the exemption claimed with respect to the capital gains of sale of agricultural lands was negatived by the Assessing Officer and the same came to be confirmed even after the stage of Tribunal.
- Further, penalty under section 271(1) (c) was also invoked against assesse, on account on furnishing inaccurate particulars. The Commissioner confirmed penalty order.
Contention of Revenue
That assesse had purchased said agricultural land with clear intension to trade in buying and selling of agricultural lands, construction of residential and commercial complexes and for leasing of such lands etc. Thus income arising from sale of agricultural land was regarded as business income.
Held by ITAT
However, the Tribunal deleted impugned penalty holding that merely because the claim made by the assessee had not been accepted ipso facto,the said claim cannot be said to be a deliberate act of furnishing inaccurate particulars and it also cannot be said that the information furnished by the assessee was inaccurate inviting penalty.
HELD by HIGH COURT
- In the facts of the present case and in the light of the guidance as provided by the Supreme Court in CIT v.Reliance Petro Products case wherein it was held that it was held that mere making of the claim, which was not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars.
- Thus, it was held that merely because the assessee made a claim which was not acceptable ipso-facto cannot be said to have made a wrong claim by furnishing inaccurate particulars attracting penalty under Section 271(1)(c) of the Income Tax Act, for the relevant assessment year.
- In that view of the matter, there was no infirmity in the order of the Tribunal, and the substantial question of law was answered in favour of the assessee. Thus, the appeal is, accordingly, dismissed.
