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TMI Blog2017 (6) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanganer, Jaipur for Rs. 26,31,459 and after considering the cost of land at Rs. 17,83,600/-, the long term capital gains of Rs. 8,47,859 were computed. The assessee also claimed exemption u/s 54B of the Act in respect of purchase of another agricultural land of Rs. 479,333/- at village Phulera, Jaipur. The assessee accordingly worked out long term capital gains of Rs. 368,526 on which taxes were duly paid and reported in the return of income. Subsequently, the assessee filed a revised return wherein the cost of the land was taken as Rs. 1,12,769/- as against Rs. 17,83,600/- shown in the original return and deduction u/s 54B of the Act was claimed at Rs. 14,21,878/- as against Rs. 4,79,333/- shown in the original return. The Assessing Officer did not accept revised return stating that since the original return was filed beyond the time limit for filing the return u/s 139(1) of the Act, the assessee was not entitled to file a revised return under section 139 (5) of the Act. Further the Assessing Officer allowed the indexed cost of land sold at Rs. 1,12,769/- as against Rs. 17,83,600/- shown in the original return of income for the reason that the assessee was not able to prove the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by Sh. Sethi quite carefully. It is a fact that copies of bills/vouchers regarding cost of improvement were not furnished before the assessing officer. However, considering the fact that the appellant was not maintaining regular books of accounts and he was not having absolute ownership over the plots under consideration which were held jointly with other family members therefore, in my considered view there was a reasonable cause because of which these details and evidence could not be furnished during the course of assessment proceedings. According to me under rule 46A(1)(c) such additional evidence are hereby admitted. Though the appellant did not maintain proper capital account and balance sheet as well as no books of accounts are maintained therefore, claimed cost of improvement is not verifiable. However, existence of the same cannot be denied keeping in view the specific mention in sale deed bearing No. 103764 regarding 15 bigha and 1 biswa land that there is pakka boundary wall constructed in the parri pheri of the said agricultural land along with pakka constructed house. Though, the vouchers were furnished but it did not reconcile with the cost of improvement as claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce it is presumed that such cost of improvement has been incurred in the accounting year relevant to A.Y. under consideration because there were no regular books and supporting evidence regarding exact period of such incurring of cost of improvement. With this discussion and considering indexed cost of land as adopted by assessing officer at Rs. 1,12,769/- total deduction from the sale consideration is required to be made at Rs. 5,67,269/- as against such claim of Rs. 17,83,600/- and the disallowance to the extent of Rs. 12,16,331/- regarding indexed cost of land and improvement is hereby confirmed." 6. The above finding of the ld. CIT(A) though rendered in the context of quantum proceedings are equally relevant in the penalty proceedings as both the parties have relied on the same in support of their respective positions and in absence of any separate and independent findings by the AO in the penalty proceedings. The ld CIT(A) has clearly mentioned that existence of the expenditure towards the cost of improvement of land cannot be denied keeping in view the specific mention thereof in sale deed bearing registration no. 103764 wherein it is stated that there was pakka boundary wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts , an estimation approach was adopted by the lower authorities while denying the claim of the assessee towards the cost of improvement of land. In our view, the disallowance of expenditure in such peculiar facts of the case cannot be basis for levy of penalty under section 271(1)(c) of the Act. In this regard, the ld. AR has referred to the decision of Hon'ble Rajasthan High Court in case of CIT vs. Mahendra Singh Khedla 71 DTR 189 wherein it was held that where the additions made by the Assessing officer were based on estimate, penalty under section 271(1)(c) could not be levied. Similar view has been taken by the Hon'ble Rajasthan High Court in case of CIT Vs. Krishi Tyre Retreading & Rubber Industries (2014) 360 ITR 580 ( Raj). 8. In light of above discussions and in the entirety of facts and circumstances of the case, we are of the view that the penalty under section 271(1)(c) cannot be invoked in the instant case. The penalty amounting to Rs. 4,22,837 levied by the AO under section 271(1)(c) is hereby deleted. The Ground taken by the assessee is thus allowed. ITA No. 212/JP/15&ITA No.211/JP/15 In case of Vipin Jeet Singh (ITA No.212/JP/15), under similar fact pattern, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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