TMI Blog2016 (9) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favour of assessee - ITA No. 1871/Del/2012 - - - Dated:- 29-7-2016 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. K.V.S.R. Krishna, Advocate For The Respondent : Smt. Anima Barnwal, Sr. DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against the order dated 19/12/2011 of learned Commissioner of Income-tax (Appeals)-XI, New Delhi for assessment year 2006-07. In the impugned order, learned Commissioner of Income-tax (Appeals) has sustained the penalty levied under section 271(1)(C) of the Act by the Assessing Officer. The grounds of appeal raised by the assessee are as under: 1. The Ld. CIT(A) ought to hrave deleted the penalty imposed by the AO u/s 271(1)(c) of ₹ 28,46,000/- as there is no concealment of income or furnishing of inaccurate particulars of income. 2. The CIT(A) has failed to appreciate that the appellant has disclosed the complete transaction in the audited accounts as well as filed explanation which were not found to be false or unsubstantiated. The penalty u/s 271(1)(c) should have been deleted. 3. The appellant contends that it has provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 54EC of the Act. The Assessing Officer further observed that the assessee out of the compensation amount received, invested ₹ 1,01,00,000/- in the fixed deposit account with Federal Bank and lateron, part of it was invested in Rural Electrification Corporation Bond Ltd (REC Bond Ltd). The Assessing Officer confronted the above facts to the assessee, however, in absence of any reply thereof held the entire amount of compensation received of ₹ 1,21,16,261/- as long-term capital gains taxable under section 45 of the Act. The Assessing Officer also observed that the assessee received interest of ₹ 5,95,947/- on FDR and after claiming expenses, an income of ₹ 2,17,594/- was offered for taxation. According to the Assessing Officer, interest on FDR was assessable under the head income from other sources and being no business operations, no expenses were allowable. In view of the observation, the Assessing Officer held that whole of the interest on FDR of ₹ 5,95,947/- was taxable under the head income from other source . The assessee could not succeed before the learned Commissioner of Income-tax (Appeals) and no further appeal was filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further submitted that in view of the above reasons the assessee kept the compensation proceeds in fixed deposits with federal bank and did not use them for any other purpose on the ground that same will have to be paid as and when the alternative industrial land is allotted to the company. According to the learned counsel, in view of above, the assessee was under bonafide impression that within the stipulated time, the compensation would be invested in the purchase of another industry unit and whereby the capital gains would be exempt. The learned counsel of the assessee, further submitted that the bonafide of assessee company was also evidenced by the fact that it had invested a sum of ₹ 50 Lacs, under 54EC Bonds issued by REC on 26/01/2007, but the Assessing Officer rejected the claim on the ground that it was invested beyond the time stipulated under section 54EC of the Act. The learned counsel submitted that during the period from June 2006 to January 2007, there was no capital gain Bonds which are available in the market and therefore the company could only invest a sum of ₹ 50 Lacs on 26/01/2007. The learned counsel invited our attention to the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty levied might be deleted. 7. On the other hand, learned Senior Departmental Representative, relying on the authorities below, submitted that despite fully aware that the assessee was not eligible for the claim of exemption from the capital gain, the claim was made deliberately to avoid payment of tax, and so, the assessee furnished inaccurate particulars and concealed income, thus liable for levy of penalty under section 271(1)(c) of the Act. 8. We have heard the rival submissions and perused the material on record including the paper book filed by the assessee. The Assessing Officer as well as the learned Commissioner of Income-tax (Appeals) has held that there appeared to be deliberate attempt on the part of the assessee to conceal its income or furnish inaccurate particulars of income and, therefore, provisions of section 271(1)(c) were clearly attracted in case of the assessee. However, from the facts and circumstances of the case, we find that there was a complete disclosure by the assessee in respect of both the claim of exemption from the capital gain tax and interest income under the head income from other sources. In the computation of income, which is availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for exemption in respect of the amount invested in view of the decision of the Tribunal in the case of Aspi Ginwala, Shriram engineering and Manufacturing industries versus ACIT, circle -5, Baroda (2012) 52 SOT 16( Ahm.), wherein the Tribunal has observed as under: 10. The Id. Counsel of the assessee reiterated its contentions raised before the lower authorities here before us. It was further submitted that no bonds were available at the time of filing of the return. Even upto 31.12.2006, the bonds were not available. The bonds were available only on 22.1.2007. Immediately after five days i.e. 27.1.2007 the assessee applied for purchase of bonds and on 31.1.2007 the bonds were allotted to the assessee. Therefore, this was an impossible task to the assessee to buy the bonds within the specified time as the bonds were not available. Reliance was placed on the decision of the Tribunal reported in 81 ITD 163. Attention of the Bench was drawn on paras 15 to 20 of the order of the Tribunal where in similar circumstances, the claim of deduction u/s 54F was allowed. On the other hand, the Id. DR placed reliance on the order of the CIT(A). 11. We have heard the rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief that compensation proceeds received by it and deposited in the federal bank would be utilized towards purchase of alternate industrial land and accordingly the claim for exemption from the capital gains tax was made. Further we find that the explanations given by the assessee are not false in any manner and the assessee has not filed any inaccurate particulars of income. 11. Further, we find that interest income from fixed deposit was duly disclosed by the assessee in the profit and loss account. The assessee offered the income under the head profit and gains of business and claimed expenses against the said income from interest, whereas according to the Assessing Officer the interest income is taxable under the head income from other sources and the expenses claimed against the same were not allowable. But again we do not find that any of the particulars filed by the assessee are inaccurate leading to concealment of income. It is a matter of claim which has not been allowed by the Assessing Officer and not of detail supplied by assessee in the return are found to be incorrect or false. We find that the Hon ble Supreme Court in the case of CIT versus reliance Petroproducts L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under s. 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under s. 271(1)(c). That is clearly not the intendment of the legislature. 12. In the instant case also, we find that the assessee has disclosed all particulars of income in respect of the claim of exemption from the capital gain as well as income from interest on FDR and the expenses claimed against their on and no particulars filed has been found to be incorrect or inaccurate by the authorities below. 13. Further, the assessee has offered explanation as why it claimed exemption from the capital gain, under bona fide belief that the alternative land would be allotted to the assessee and the amount of compensation would be utilized against that within the time prescribed. This expl ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
