TMI Blog2015 (1) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... ption under S.54F was excessive. Having regard to all these facts of the case, we are of the view that the assessee is clearly guilty of furnishing inaccurate particulars of income, as rightly held by the authorities below, attracting penalty under S.271(1)(c). As regards the alternative claim of the assessee that quantum of penalty worked out by the Assessing Officer is wrong, we direct the Assessing Officer to verify this alternative claim of the assessee and to allow appropriate relief on such verification. - Decided partly in favour of assessee. - ITA No. 1576/Hyd/13 - - - Dated:- 31-12-2014 - Shri P. M. Jagtap And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Shri S.Rama Rao For the Respondent : Shri Ramakrishna B., DR ORDER Per P. M. Jagtap, Accountant Member : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax(Appeals) III, Hyderabad, whereby he confirmed the penalty of ₹ 47,35,554 imposed by the Assessing Officer under S.271(1)(c) of the Act. 2. The relevant facts of the case giving rise to this appeal are as follows: The assessee is an individual, who filed his return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to impose penalty for concealment of income for additions made, during the course of scrutiny proceedings, on the ground that the additions were made to the extent of non utilisation of sale consideration for construction of house property. In this regard, I herewith state that I have already furnished and disclosed all the information in this regard and at the time of submitting the return of income. I have paid the capital gain tax on the part amount which is not being used for construction of house voluntarily at the time filing of return of income. Due to my other preoccupations, I could not utilise the entire sale consideration towards construction and this resulted in capital gain for which appropriate tax was paid. Later on the case was selected for scrutiny, I have submitted the necessary information explanations. I have not concealed any amount in the return of income filed u/s. 139(1). I have accepted for the additions made by the AO to the extent of non utilisation for construction of house and I have already paid the entire tax demand raised by the AO. In view of the above compliances from my side, I kindly request you to drop the penalty proceedings pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under Sec. 54 of the I.T. Act. Accordingly he proposed to bring the same to tax. The appellant agreed for such a proposition as there was no progress in the construction of the building as already there existed a dispute between the appellant and the builder and as the builder was not likely to complete the construction within the stipulated period as contemplated in section 54F of the IT. Act. Hence the appellant agreed for adding the amount of RS.l.25 Crore in the assessment in order not to protract the litigation and to purchase peace with the department. The Assessing Officer accordingly computed the income of the appellant in the assessment by allowing an amount of ₹ 4,60,68,798/- as deduction under Sec.54F of the IT Act and after setting off of the loss from the sale of shares of M/s.Roshni Power Tech and also the capital gain returned by the appellant. Thus working out, the Assessing Officer brought to tax an amount of ₹ 1,39,32,201/- as long term capital gain by initiating penalty proceedings under Sec.271(1)(c) of the IT Act. The penalty proceedings so initiated were finalized on 26.08.2012 by imposing a penalty of ₹ 47,35,554/-. It is against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of shares as discussed supra, apart from other amounts, the appellant also paid an amount of ₹ 1,25,00,000 to M/s. Robo Infrastructure private limited. Apart from this amount the appellant had spent ₹ 4,41,20,935/- on purchase of the plot, ₹ 33,79,865/-for levelling of the ground, for erection of compound wall et cetera. Therefore the appellant had spent approximately ₹ 6 crore on the construction of the house. He claimed this entire amount as deduction u/s 54F of the Income Tax Act. The claim of the appellant that the amount of ₹ 1.25 crore was paid to the builder in the good-faith of construction of house is not correct and is riddled with loopholes and inconsistencies. First of all the amount of ₹ 1.25 crore paid to M/s Robo infrastructure was not done for the purpose of house building. Rather it was shown in the appellant's own financial statements as investment in the aforementioned company. Such an investment would not qualify for deduction u/s 54F. As per the appellant, he agreed for reducing this amount from the aforementioned deduction as he was sure that this amount would never be spent on the construction of the house and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the assessee for exemption under S.54F could not be allowed fully. He explained that some dispute arose between the assessee and the contractor subsequently, as a result of which, the contractor left the construction work incomplete. He invited our attention to the copies of the relevant bills raised by the contractor on 9.7.2009 and 27.3.2010, to point out that construction work of the value of about ₹ 39 lakhs only was completed by the contractor and the balance amount was refunded by him. He contended that keeping in view the subsequent development, the assessee voluntarily surrendered his claim for exemption under S.54F partly during the reassessment proceedings and accepted the disallowance made by the Assessing Officer under S.54F to that extent. He contended that the real intention of the assessee, however, was always to invest the amount of ₹ 1.25 crores in the construction of house and it cannot be said that the claim of the assessee for exemption under S.54F was wrongly made by the assessee, in order to attract the penalty under S.271(1)(c). He also contended that the construction of house was stopped at incomplete stage in the month of March, 2010 and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount in lump sum for construction of house. The failure of the assessee to explain any such basis creates a doubt about the bona fide claim of the assessee as sought to be made by the learned counsel, especially when it is seen in the light of the fact that the building plan for the construction of house was sanctioned by the cornered authorities much later and even the construction of house only to the extent of about ₹ 39 lakhs was completed by the contractor upto March, 2010, i.e. after a period of more than one and half year after the payment of advance. 10. It is also observed that in the month of Mach, 2010, the contractor had left the construction of house incomplete and also refunded the balance amount of advance to the assessee. The assessee thus had become fully aware in the month of March, 2010 itself that the claim made by him for exemption under S.54F in the original return was excessive. In this regard, the learned counsel for the assessee has contended before us that the date for filing of the revised return by this time had already expired and the assessee thus was not in a position to withdraw its excess claim for exemption under S.54F. This argument, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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