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Manpreet Kaur, Prop. M/s Lily's Creation Boutique Versus Commissioner of Income Tax, Patiala

2015 (11) TMI 123 - PUNJAB AND HARYANA HIGH COURT

Penalty under section 271(1) (c) - disallowance of exemption under section 54 for construction - Held that:- The Tribunal while affirming the findings of the Assessing Officer and the CIT(A) had recorded that the assessee had failed to produce bills or vouchers. She had also failed to produce any proof of construction and the date of completion of construction during the assessment proceedings. Merely reflecting the expenditure incurred on construction in the balance sheet alongwith the income t .....

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e had reflected certain amount of expenditure claimed to be on account of construction of property in its balance sheet does not entitle the assessee to the claim of deduction under section 54 of the Act being the amount spent on construction of the asset on sale of residential property. In the entirety of the facts and circumstances where the claim of the assessee was found to be false, the assessee is liable to penalty under section 271(1)(c) of the Act - Decided against assessee. - ITA No. 34 .....

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nt year 2006-07, claiming following substantial questions of law:- i) Whether in the present facts and circumstances of the case, the learned ITAT was justified in confirming the action of the authorities below in levying the penalty under Section 271(1) (c) on the disallowance of exemption under Section 54 for construction wherein the exemption under section 54 was allowed for purchase of plot, however the exemption under section 54 is available for the construction of residential house and not .....

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- as per detail given below:- i) Salary derived from M/s Malwa Gas Service ₹ 40,500/- ii) Boutique income ₹ 1,61,680/- iii) Capital gain after claiming exemption under section 54F Nil The Assessing officer passed order dated 31.8.2010, Annexure A.1 under section 143(3) of the Act making additions on various counts and disallowed the claim of exemption under section 54 of the Act on the income under the head 'Capital gains' generated from transfer of residential house on the g .....

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at nil. Since the assessee had furnished inaccurate particulars of income in respect of long term capital gain, penalty proceedings under section 271(1)(c) of the Act had been initiated. Aggrieved by the order, the assessee went in appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 19.5.2009, the appeal was partly allowed. The issue of disallowance of exemption under Section 54 of the Act was decided against the appellant. Thereafter, the Assessing Officer passed o .....

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the assessee. 3. We have heard learned counsel for the parties. 4. Learned counsel for the assessee-appellant submitted that there was no furnishing of inaccurate particulars with regard to claim under Section 54F of the Act. In such a situation, levy of penalty was unjustified. Support was drawn from judgments of the Apex Court in Commissioner of Income Tax, Madras vs.Khoday Eswarsa and Sons, (1972) 83 ITR 369 and Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Limited, (2010) 322 I .....

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affirming the findings of the Assessing Officer and the CIT(A) had recorded that the assessee had failed to produce bills or vouchers. She had also failed to produce any proof of construction and the date of completion of construction during the assessment proceedings. Merely reflecting the expenditure incurred on construction in the balance sheet alongwith the income tax return was not sufficient to establish the claim. It was noticed in para 16 as under:- 16. The third addition made in the ha .....

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g Officer allowed the investment made in plot at ₹ 8,23,000/- as allowance under section 54 of the Act. However, the exemption claimed in respect of expenditure incurred on construction was denied by the Assessing Officer as the assessee had failed to furnish any evidence in respect of the same during the assessment proceedings. The balance long term capital gains was brought to tax by the Assessing Officer. The CIT(appeals) upheld the additions as the assessee had failed to discharge the .....

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