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2022 (8) TMI 1032 - HC - Income TaxOffences u/s 276C(1) and 277 - assessee has not invested the sale consideration to acquire residential house as provided u/s 54F of the Act, since he has invested in an industrial property - Penal proceedings were also initiated under Section 271[1][c] for wrong claim of deduction u/s 54F - case of the prosecution that the accused has willfully attempted to evade the tax by making a false claim, which were not allowable under the provisions of the Income Tax Act - HELD THAT:- To attract the offence, the prosecution must establish the fraudulent removal and concealment, transfer or deliver of any property or any interest thereon with intend to prevent the property and interest thereon in order to evade the tax. The very crux of the allegation in the complaint indicate that the accused has sold house property to construct a building in the industrial site. The prosecution case is that the amount ought to have been invested in the house property. It is also admitted by the prosecution that the assessee has claimed exemption under Section 54F. The very averment in the complaint itself indicates that there is no concealment or willful suppression of any materials, what was sought for is exemption under Section 54F of the Income Tax Act. Of course, an Assessment Officer has not accepted the claim for exemption under Section 54F of the Act. Accordingly, the Assessment Order passed by the authorities were upheld by the Tribunal which is not disputed. It is the fact that the accused has not purchased residential house. It is the bona fide claim of assessee that on the sale of property he has purchased the another property. The fact remains that the another property, which is supported his case, only a residential house not an industrial property. On relying upon the judgment of the CIT vs. Reliance Petroproducts (P) Ltd.,[2010 (3) TMI 80 - SUPREME COURT] wherein the Apex court explained that whether a claim simply not accepted by the A.O., it does not mean that it is a concealment of income or furnishing of inaccurate particulars of income so that penalty can be levied. Accordingly, the penalty imposed is set aside by the Appellate Tribunal. The penalty proceedings also reached finality, no further appeal is filed. As it is not observed anywhere that the assessee claimed false or bogus it cannot be said that there is concealment or wilful evasion of the Tax. When the Tribunal has held that the Assessee has made bona fide claim it cannot be held that there was willful evasion of tax. It is not the case of the Assessing Officer that the Claim is false or bogus. Thus as in this case income has not suppressed only exemption has been claimed. It is also observed in the penalty proceedings that no suppression of materials it is only bona fide. In such a view of the matter this Court is of the view that continuation of the prosecution is nothing but futile exercise and abuse of process of law. Accordingly, the complaint in E.O.C.C.No.12 of 2018 pending on the file of the learned Additional Chief Matropolitan Magistrate, Economic Offences- II, Egmore, Chennai for the the offence under Section 276C(1) and 277 of the Income Tax Act, 1961 is quashed and the Criminal Original Petition is ordered.
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