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Principal Commissioner of Income Tax-II Versus M/s GK Properties Pvt. Ltd.

2015 (7) TMI 739 - ANDHRA PRADESH HIGH COURT

Penalty levied under Section 271(1)(c) - assessee made a wrong claim of business profits on purchase and sale of land as adventure and income warranting the said penalty - Held that:- In the facts of the present case and in the light of the guidance as provided by the Supreme Court in the case of Reliance Petro (2010 (3) TMI 80 - SUPREME COURT ), merely because the assessee made a claim which is not acceptable ipso facto cannot be said to have made a wrong claim by furnishing inaccurate particul .....

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7-08, raising the following substantial question of law: In the facts and circumstances of the case, whether the order of the Honble Tribunal (ITAT) is not erroneous and perverse in law in cancelling the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, when the Respondent-assessee made a wrong claim of business profits on purchase and sale of land as adventure and income warranting the said penalty. 2. The facts on record are not in dispute. The case of the appellant- Departme .....

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e came to be confirmed even after the stage of Tribunal. In other words, the sum and substance of the learned Standing Counsels argument is that the intention on the part of the assessee to trade in agricultural lands by way of an adventure is established and stands uncontroverted and confirmed. Inasmuch as the assessee made a false claim and claimed exemption from taxation, the penalty proceedings are a natural corollary and the Tribunal ought not to have interfered with the orders of the Asses .....

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ever order which may ultimately be set aside by the appellate forum or the higher authority, basing on certain well settled legal principles, merely because the same was erroneous, need not be perverse or cannot be called as perverse. 4. In the facts of the present case, the Tribunal had recorded a finding in the penalty proceedings that the assessee had purchased agricultural lands and for a good number of years had offered income as agricultural income on account of the assessee earning income .....

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on to evade the tax. Merely because the claim made by the assessee has 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 is inaccurate inviting penalty. This issue of the matter is well settled by the judgment of the Supreme Court in CIT v. Reliance Petro Products (2010) 322 ITR 158, wherein the apex Court held as under: We have already seen the meaning .....

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the Act. A mere making of the claim, which is 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. 5. In fact, the Tribunal had also taken into consideration of the law laid down by the Punjab & Haryana High Court in Sidhartha Enterprises 322 ITR 82, wherein it was held as under: The judgment of the Supreme Court in Union of India vs. Dharamendra .....

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