2010 (5) TMI 713

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..... 1, 2009 pertaining to the assessment year 2006-07. The issue raised is that the learned Commissioner of Income-tax (Appeals) erred in confirming the levy of penalty of Rs. 2,17,964 under section 271(1)(c) of the Income-tax Act. In this case the main issue involved was the treatment of receipt of Rs.10,03,814. The assessee had shown the income from sale of plants and trees as agricultural income .....

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..... 4] 93 ITR 314 (Ker). The apex court has held that the receipt on transfer of trees is not a revenue receipt, but capital receipt in Commr. of Agrl. I.T. v. Kailas Rubber and Co. Ltd. [1966] 60 ITR 435 (SC). Further, on perusal of the sale deed it is observed that the sale proceeds was arbitrarily bifurcated into the value of the land and the value of the trees. As has also been observed by the lea .....

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..... x (Appeals) in the quantum appeal and held that no logical basis for the bifurcation and valuation has been given by the assessee. Hence he confirmed the levy of penalty. Against this order the assessee is in appeal before us. We have heard the assessee and the learned Departmental representative. We find that penalty in this case has been levied for the difference in treatment of the receipts f .....

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..... been claiming income from such agricultural activity. Now the assessee has furnished all the necessary particulars and made a claim. There was no concealment of particulars. It was only the Assessing Officer's opinion that being composite sale the assessee's claim cannot be accepted. The claim of the assessee cannot be construed as ex facie bogus. This in our considered opinion cannot be a reason .....

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..... ted then in the case of every return where the claim is not accepted by the Assessing Officer for any reason, the assessee will invite the penalty under section 271(1)(c). This is clearly not the intendment of the Legislature. In the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and delete the levy of penalty. In the result, the appeal filed .....

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