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M/s. Solar Paper Mill Ltd Versus The Assistant Commissioner of Income Tax, Corporate Circle 6 (2) , Chennai

2016 (5) TMI 245 - ITAT CHENNAI

Penalty u/s 271(1)(c) - sale of agriculture land - Held that:- The ld. Authorised Representative argued the grounds against the addition by the Assessing Officer though accepted the addition and also paid taxes. The assessee company is a public limited company and Books of Accounts are Audited under Companies Act and provisions of Income Tax Act. The assessee’s contention that the land is agricultural land cannot be sustained with proof, as reiterated before lower authorities and also filed pape .....

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y evidence except relying on the notification and the decisions which the Commissioner of Income Tax (Appeals) has distinguished in his order. Therefore, we find that Commissioner of Income Tax (Appeals) has examined the issue and also explanations of the assessee were dealt. Therefore, we are not inclined to interfere with the order of the Commissioner of Income Tax (Appeals) and uphold the same. - Decided against assessee. - I.T.A. No. 1163/Mds/2015 - Dated:- 24-3-2016 - SHRI CHANDRA POOJARI, .....

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ssessee has raised the following grounds :- 1. The order of the Assistant Commissioner of Income Tax, Company Circle VI(3) is erroneous, arbitrary and against the settled principles of law. 2. The Assistant Commissioner of Income Tax, Company Circle VI(3) failed to appreciate that the Appellant has not concealed any income in order to attract penalty in terms of Section 271 (1) (c) of the Income Tax, 1961. 3. The Assistant Commissioner of Income Tax, Company Circle VI(3) failed to appreciate tha .....

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land sold was situated outside the specified limits of the notified distance of 8 Kms from Chennai limit and 5 Kms from Chengalpattu municipality limit. The Central Government Notification is binding on the Assessing Officer 5. The Assistant Commissioner of Income Tax, Company Circle VI(3) erred in concluding that the land is an urban land by placing reliance on a report obtained from an Inspector of Department of Town Planning Authority the Central Government Notification. 6. The Assistant Com .....

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) (c) . 3. The Brief facts of the case the assessee is a limited company and in the business of manufacturer of paper was incorporated on 26.11.1982 and filed return of income on 07.12.2006 with total income of ;47,543/-. Subsequently, return of income was processed u/s.143(1) of the Act and the case was selected for scrutiny and notice was issued. In compliance to notice, ld. Authorised Representative of assessee appeared from time to time and produced information and explanations. The Assessi .....

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d from cultivator for use of agricultural land during the financial year 2005-06. The Assessing Officer based on the assessees submissions called an enquiry and Inspector of the Income Tax Department made enquiry with Department of Town Planning Authority to verify the nature of property. The report obtained bythe Department is as under:- The Engineer verified the survey numbers in the town planning master Book, and said that the lands come under urbanization lands and all activities can be made .....

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produce any documentary evidence of situation of land outside the specified area. Further based on report and verification of town planning master book, the survey numbers of land specified in the sale deed fall under the category of urbanised land and any sort of activity can be carried on the land without obtaining conversion certificate, and also no onus of proof was submitted that agricultural operations carried with supporting lease agreement or land user confirmation. On perusal of the Re .....

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red the submissions, findings, notification and Government report and treated the land as non agricultural land and assessed total income of ;1,30,78,287/- and passed u/s.143(3) of the Act dated 31.12.2008. Subsequently, Assessing Officer initiated penalty proceedings and called for the explanations and the ld. Authorised Representative of the assessee reiterated the submissions in assessment proceedings and explained that the land was sold as a agricultural land and agricultural operations are .....

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ctory and lack reasonable cause on agricultural land operation with any authentic confirmation and levied penalty of ;29,36,625/- u/sec. 271(1 )(C) of the Act dated 29.06.2009. Aggrieved by the penalty order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). 4. In the appellate proceedings, the ld. Authorised Representative argued that order of the Assessing Officer is erroneous and assessee has not conceled any particulars as the character of the land changed due to .....

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Development of Town Planning Authority instead of Central Government notification. The assessee company has not preferred an appeal against the order u/s.143(3) of the Act and paid taxes though income was disclosed under agricultural income. The ld. Authorised Representative relied on decision of Co-ordinate Bench and the catena of judgments of High Court and addition of income in assessment proceedings will not attract levy of penalty as there is no intention to conceal the income. The ld. Com .....

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is no certificate or evidence of the property fall outside the distance of 8kms from Municipal limits of Chennai. The property was sold to M/s. Hiranandani Realtors (P) Ltd for real estate activities and used for agricultural operations by cultivation and received income of ;17,500/- and offered as income from other source and the land was used for agricultural purpose before sale to builder. The assessee could not substantiate its claim with any documentary evidence of situation of land outsid .....

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the municipality or outside the municipality or even a remote village is treated as capital asset and taxes are levied. With these observations, the CIT(A) has confirmed the penalty order of the Assessing Officer as no authentic proof of agricultural lands and agricultural operations are proved. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the assessee assailed an appeal before Tribunal. 5. Before us, the ld. Authorised Representative reiterated the submissions of assessm .....

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pality. The Assessing Officer is bound to accept the Government notification instead relied on the Report of Department of Town Planning Authority. The property was sold to builder but subsequent conversation by the builder is outside purview of taxation. The assessee company has accepted the addition and paid the taxes to buy peace with the department and avoid protracted litigations and also not filed Appeal against order u/s.143(3) of the Act. The ld. Counsel drew attention to the paper book .....

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n in the case of Shri. K. Kumaran vs. ITO in ITA No.1452/Mds/2009, dated 1.6.2011 were it was observed at para 7 as under:-. 13. Now coming to the apprehension of the Commissioner of Income-tax that the land might be liable for capital gains taxation, the only ground relied on by him is the order issued by the Tamil Nadu Government in G.O. No.287 dated 8-7- 2004, stating that the area is urbanisable land . The Government Order has only stated that the land is urbanisable; that is in near future .....

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activities and schemes. That has nothing to do with the administration of Income-tax law. The Central Board of Direct Taxes has not issued any notification declaring Egathur and Navalur villages as notified areas for the purpose of section 2(14) of the Income-tax Act, 1961. Therefore, only in the light that the villages might be declared as urban areas in future, it is not possible to hold that the land sold was not agricultural land . and prayed for deletion of penalty levied by the Assessing .....

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