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2018 (10) TMI 723

Levy of penalty u/s. 271(1)(c) - AO has assessed surplus from sale of property at Badlapur under the head ‘Income from business’ as aginst assessee’s admission under the head ‘Income from long term capital gain’ - Held that:- once addition on which penalty was imposed u/s 271(1)(c) has been deleted, then there is no reason to levy penalty for furnishing inaccurate particulars of income - No penalty - Decided against the revenue. - I.T.A No.2946/Mum/2017 - Dated:- 5-10-2018 - Shri Joginder Singh (JUDICIAL MEMBER) And Shri G Manjunatha (ACCOUNTANT MEMBER) For The Appellant : Shri Nitin Waghmode For The Respondent : None ORDER Per G Manjunatha, AM : This appeal filed by the revenue is directed against the order of the CIT(A)-33, Mumbai dated 0 .....

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the matter in further appeal before the ITAT. The ITAT, Mumbai Bench G vide its order dated 25-05-2016 in ITA No.6692/Mum/2013 held that surplus from sale of property at Badlapur is assessable under the head Income from long term capital gain as claimed by the assessee as against the AO s treatment under the head Income from business . 3. The assessee has filed appeal against penalty order passed by the AO u/s 271(1)(c) before the CIT(A). Before the CIT(A), the assessee has filed order passed by the ITAT deleting addition made by the AO by treating surplus from sale of property at Badlapur under the head, Income from business or profession . The Ld.CIT(A), after considering relevant submissions of the assessee and also by considering the o .....

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of income/expense is determinative in deciding the taxability of income or allowability of an expense. 11. If we consider the surrounding circumstances and conduct of the assessee to verify the true nature of Badlapur Land ignoring the accounting entries in books of accounts then it borne out that: a) The assessee had acquired land at Badlapur in the year 1988 to 1990 and there was no development and construction activity undertaken by the assessee on Badlapur land from last 20 years. No builder/businessman keeps the land undeveloped for such a long period of time. b) The assessee has capitalised the interest cost and other expenses to the Cost of Badlapur Land, which is inconsistence with treatment to a Capita! Asset. c) The capitalizatio .....

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e. inventory, .inadvertently reported by the assessee in its books of accounts. Thus, it is the exact and true nature of transaction which decides the taxability or otherwise of airy income or altowability of an expenses rather than mere entry in books of accounts. in this regard we piace reliance upon the following decisions: a) CIT Vs. Hitashi Estates Ltd [313 ITR 393](Deihi) b) CITVs. Pai Provision Stores [203 Taxman 196](Kamataka) c) Fort Propones Pvt. Lto Vs. CIT [203 ITR 232] (Bombay) 13. in view of the above facts and circumstances as well as legal position, we direct the AO to is treat the gains on sale of Badlapur Land as LTCG in place of business income. 10. Once the addition based on which penalty u/s. 271(1)(c) of the Act was im .....

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