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M/s. Shourie Duplicators Pvt. Ltd. Versus Income Tax Officer, Ward-8 (2) , New Delhi

2016 (9) TMI 202 - ITAT DELHI

Penalty u/s 271(1)(c) - exemption from the capital gain claimed - compensation received against tenancy rights - Held 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. - Further, the assessee has offered explanation as why it claimed exemption from t .....

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n 271(1)(c) of the Act is also not attracted in the case of assessee. - Decided 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 .....

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e 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 bonafide explanation and all the facts relating to the claim made in the computation of income has been disclosed during the course of assessment proceedings. Therefore, no penalty u/s 271(1)(c) should be levied. The same should be deleted. 4. The appellant further conten .....

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of income on 28/03/2007 declaring income of ₹ 2,17,594/- which was processed under section 143(1) of the Income Tax Act, 1961 (in short the Act ). The case was selected for scrutiny and notice under section 143(2) of the Act was issued and assessment proceedings were completed u/s. 143(3) of the Act on 29/12/2008. In the assessment order, the Assessing Officer observed that during the year under consideration, there was no business operations as the factory of the company had been compulso .....

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emark that compensation received would be utilised for purchase of industrial land in specified area. According to the Assessing Officer, the transfer of the factory took place in April 2005, whereas the assessee did not acquire any alternate capital asset till the date of completion of the assessment proceeding and, therefore, the assessee was not eligibel for deduction under section 54D of the Act. Further, the Assessing Officer also observed that the assessee had not made any investment in sp .....

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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 .....

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ere was deliberate attempt on the part of the assessee to conceal its income or furnish inaccurate particulars of its income. The learned Commissioner of Income-tax (Appeals) upheld the penalty levied by the Assessing Officer. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. Before us, the learned counsel of the assessee addressing the grounds of appeal, submitted that penalty levied was wrong and bad in law as the assessee had completely discl .....

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the assessee has disclosed all the facts in respect of compensation received against tenancy rights for compulsory acquisition of the factory and utilization of the compensation for the purposes of the specified in the Income Tax Act in due course. He further submitted that the company vigorously pursued demand for allotment of alternate land in specified industrial area for setting up of the factory which would have resulted in exemption under capital gains. The learned counsel referred to the .....

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licy, however, nothing could materialize and the issue is still pending. He further submitted that the assessee company has filed a case for enhancement of compensation, which is also pending in court. He 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. Acc .....

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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 Tribunal Ahmedabad bench in the case of Aspi Ginwala, Shriram engineering and Manufacturing indus .....

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bed and therefore the assessee was entitled for exemption under section 54 EC of the Act. 4. The learned counsel also relied on the Hon ble Supreme Court decision in the case of CIT Vs. Reliance Petroproducts Ltd. (2010) 322 ITR 158 (SC). Further, the learned counsel submitted that assessee had offered explanation which is not found by the Assessing Officer or by learned Commissioner of Income Tax (Appeals) to be false and the assessee offered its explanation to prove its bonafide and therefore .....

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e to carry on its business operations during the year under consideration because of the compulsory acquisition and therefore it had to shift the furniture and fixtures and the records to a different rented premises and the assessee had paid to security guard, one peon and one clerical staff, who was engaged for interaction with the various government agencies and for getting compensations as well as interaction with the Delhi government offices. He further submitted that in the penalty proceedi .....

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e 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 attem .....

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the assessee s paper book, and which has also been referred by the Assessing Officer in the assessment order, the assessee has clearly mentioned the fact of compensation received against tenancy rights under the head income from capital gains and also mentioned the fact that as why the assessee was making a claim for exemption from the capital gains tax. The facts in respect of exemption sought from capital gains tax were also disclosed by the assessee in the notes to account, which are availab .....

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efore us that the assessee was under bona fides impression that the assessee would be allotted industrial land and amount of compensation would be utilized against purchase of the land but despite by making persistence efforts with the respective authorities, the assessee could not get the industrial land. The learned counsel has referred to the pages of the paper book showing the correspondence with the respective government authorities for allotment of the industrial land to the assessee. We f .....

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issioner industries, government of Delhi for allocating alternate land for setting up of the factory. The learned counsel also submitted that till date the assessee has not been allotted the land. The assessee has also justified its bonafide in claiming exemption by making investment in REC bond, which is though beyond the prescribed time limit, but the assessee was entitled for exemption in respect of the amount invested in view of the decision of the Tribunal in the case of Aspi Ginwala, Shrir .....

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ssessee 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 reli .....

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ncerned authorities. However, the bonds were not available. Various entities approached CBDT. Taking into consideration the hardship faced by the various entities, the CBDT vide circular no. 142/9/2006 TPL dated 30.6.2006 extended the time for purchasing the specified bonds upto 31.12.2006. The assessee approached the appropriate authorities to buy the bonds; however they were not available. Therefore, it was an impossible task for the assessee to comply with the conditions of the sec. 54EC. The .....

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ies of the FDs are placed at pages 7 & 8 of the compilation. Copies of the letters issued by Rural Electricity Corpn. Ltd along with the copy of bond certificate is placed at pages 9 of the compilation. In this allotment, it is clarified that the assessee applied for the purchase of the bonds on 27.1.2007 and they are allotted on 31.1.2007. 500 bonds for a consideration of ₹ 50 lacs were allotted. The bond certificates is also placed at page 10 of the compilation. 11.1 From these facts .....

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ds 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 t .....

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f 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 Ltd (supra), while dealing the word particular held that: 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as : &qu .....

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e assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under s. 271(1)(c) of 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. 10. It was tried to be suggested that s. 14A of the Act specifically excluded th .....

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at the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in it .....

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