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2016 (3) TMI 42 - ITAT PUNE

2016 (3) TMI 42 - ITAT PUNE - TMI - Penalty under section 271(1)(c) - assessee has not disclosed the Capital Gain from sale of property - assessee not claimed relief u/s. 54/54F - Held that:- The facts of the present case suggest that it is a peculiar case where the assessee was not aware about the taxation provisions. The assessee had not disclosed the Capital Gains arising from sale of property in his return of income and at the same time had not claimed relief u/s. 54/54F of the Act for which .....

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uffered by paying tax on the amount on which he was otherwise eligible to claim deduction u/s. 54/54F of the Act. In view of the peculiar facts of the case we delete the penalty levied u/s. 271(1)(c) and allow the appeal of the assessee. - Decided in favour of assessee - ITA No. 1563/PN/2012 - Dated:- 22-1-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Sunil Pathak For The Revenue : Shri Dheeraj Kumar Jain ORDER PER VIKAS AWASTHY, JM : The present appeal by the ass .....

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to the assessee. During the course of assessment proceedings u/s. 147 the Assessing Officer observed that the assessee was required to pay tax on the Capital Gains earned on sale of property situated at Kakasaheb Gadgil Marg, Prabhadevi, Mumbai. The assessee in his return of income had not declared capital gain arising from sale of property. The assessee had sold the property for a consideration of ₹ 42 lakhs where as the market value of the property for stamp duty purpose was ₹ 50 l .....

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The Commissioner of Income Tax (Appeals) vide impugned order confirmed the levy of penalty u/s. 271(1)(c) and dismissed the appeal of the assessee. Now, the assessee is in second appeal before the Tribunal against the findings of Commissioner of Income Tax (Appeals). 3. Shri Sunil Pathak appearing on behalf of the assessee submitted that the assessee is a salaried employee and was ignorant about the provisions of tax laws. The assessee was under the bonafide belief that the Capital Gain was not .....

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me of his wife. At the time of assessment proceedings the assessee did not inform his representative that he had invested sale proceeds towards the purchase of flats. The assessee was not aware that he could claim deduction u/s. 54/54F of the Act. The ld AR submitted that the assessee is filing following additional evidences i.e. (i) A copy of bank account of the assessee, (ii) Allotment letter from M/s. Juhu Beach Corporation and (iii) Deed of Confirmation in respect of flats No. 202 and 701 fr .....

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ssee was eligible to claim deduction u/s. 54/54F on the purchase of flats in the name of his wife. In support of his submissions, the ld. AR draws support from the decision of Hon'ble Karnataka High Court in the case of Director of IT, International Taxation Vs. Mrs. Jennifer Bhide reported as 349 ITR 80 and the decision of Hon'ble Delhi High Court in the case of CIT Vs. Ravinder Kumar Arora reported as 342 ITR 38. The ld. AR contended that no penalty can be levied in the facts and circu .....

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aced reliance on the decision of Hon'ble Supreme Court of India in the case of UOI Vs. Dharmendra Textile Processors Ltd. reported as 306 ITR 277 and the decision of Hon'ble Madras High Court in the case of N. Ranjit Vs. CIT reported as 262 CTR 411. The ld. DR further submitted that even otherwise the assessee was not eligible to claim deduction u/s. 54/54F as the flats were purchased by the assessee in the name of his wife. The assessee could have claimed exemption under the provisions .....

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ome Tax Officer reported as 306 ITR 335 (P&H). 5. The ld. AR controverting the submissions made on behalf of the Department submitted, that the authorized representative of the assessee before the authorities below did not ask the assessee about any investment made by the assessee from the Capital Gains earned. Since the assessee was oblivious of the deduction u/s. 54/54F, he did not disclose the fact of investment voluntarily. As far as the decision of Hon'ble Bombay High Court in the c .....

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itted that where two views are possible, the view in favour of the assessee should be taken. The ld. AR placed reliance on the decision of Hon'ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Vegetable Products Limited reported as 88 ITR 192 (SC). 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the decisions on which the rival sides have placed reliance. It is an .....

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of his wife. The flats were allotted vide allotment letter dated 15-04-2005. The payment of the flats was made in the month of January/February, 2006 from the bank account of the assessee. The deed of confirmation was executed in the name of the wife of the assessee on 11-12-2007. To be eligible to claim deduction under the provisions of section 54, the amount of Capital Gain should be invested within one year before or two years after the date on which the transfer took place. Since, the asses .....

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39;ble High Court in unequivocal terms has held that the investment made in the name of wife is eligible for deduction u/s. 54F of the Act. To support the stand of Department, the ld. DR has placed reliance on the decision rendered by the Hon'ble Punjab and Haryana High Court in the case of Jai Narayan Vs. Income Tax Officer (supra). In the said case the investment was made in the agricultural land in the name of son and grandson and the deduction was claimed u/s. 54B of the Act. The Hon' .....

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the condition stipulated in section 54 are fulfilled even if the property is purchased in the joint name with wife. Moreover, section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of assessee only. The Hon'ble High Court further held that the provisions of section 54F are beneficial provisions and should be liberally interpreted in favour of the exemption/deduction to the tax payer. The deduction shou .....

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eculiar case where the assessee was not aware about the taxation provisions. The assessee had not disclosed the Capital Gains arising from sale of property in his return of income and at the same time had not claimed relief u/s. 54/54F of the Act for which he was eligible. The assessee accepted the addition made in assessment proceedings without any protest. In such circumstances the addition in assessment proceedings can be sustained. However, in our considered opinion it is not a fit case for .....

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