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2022 (5) TMI 729 - AT - Income TaxPenalty u/s 271(1)(c) - Gain on sale of land - AO noted that the agricultural income was shown as exempt and but for scrutiny notice, the assessee would not have come forward to file a revised working of its income - claiming the taxable income to be agricultural income clearly denotes furnishing of inaccurate particulars of income - HELD THAT:- Transaction has happened in AY 2010-11, going by the version of Ld. AO that the Joint Development Agreement (JDA) would crystallize capital gains liability on the assessee, the said transaction would have been taxable in the year of entering into JDA i.e. AY 2010-11. Nevertheless, the assessee has offered the transaction in AY 2012-13 which would lend credence to the argument that the assessee made sincere efforts to put a quietus to the possible litigation by accepting the proposal of Ld. AO. Another fact to be noted is that this land was purchased in the year 1995 and the deed of purchase clearly mentioned that the land was agricultural land only. In fact that assessee incurred development expenditure and initially planted fodder and seasonal crops. But due to non-viability of the project, the assessee in the year 2007, planted mango trees and coconut trees. All these facts would lend credence to assessee’s belief that the land under consideration was an agricultural land only and any income arising there from would be agricultural income only which is exempt from tax. On the basis of said belief, the assessee separately disclosed sale of agricultural land in the financial statements as well as in the computation of income. Upon perusal of these documents, it could be well said that the transaction was duly disclosed in the financial statement as well as in the return of income and it could not be said that there was any concealment of particulars of income by the assessee. No mala-fide intention could be attributed on the part of the assessee to conceal the income or to furnish inaccurate particulars of income. The assessee made a claim in the return of income which was not accepted by Ld. AO. However, this fact alone would not necessarily justify imposition of penalty as per the decision of Hon’ble Supreme Court in the case of CIT V/s Reliance Petro Products Private Ltd. [2010 (3) TMI 80 - SUPREME COURT] Defective notice - non specification of charge - Show cause notice issued to the assessee does not specify the limb for which the penalty was being initiated i.e. for furnishing of inaccurate particulars of income or for concealment of income. This issue, though raised before Ld. CIT(A), has been decided against the assessee wherein it has been held that both the limbs of Sec.271(1)(c) were applicable. However, we find that it is settled position of law that exact charge should be framed against the assessee in the show cause notice and in the absence of such specific charge, the penalty proceedings become null and void as held by larger bench of Hon’ble High Court of Bombay in the case of Mohd. Farhan A.Shaikh V/s DCIT [2021 (3) TMI 608 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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