TMI Blog2019 (6) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the case. The facts of this case is covered by Hon ble Apex Court in case of CIT vs. Reliance Petro Products Pvt. Ltd. . [ 2010 (3) TMI 80 - SUPREME COURT] wherein it is held that merely making claim which is not sustainable in law by itself would not amount to furnishing of inaccurate particulars of income Coordinate Bench of the Tribunal in case cited as Shri D. Harindran vs. ITO [ 2016 (9) TMI 1462 - ITAT CHENNAI] decided the identical issue in favour of the assessee in the light of the decision of Rajasthan Spinning and Weaving Mills [ 2009 (5) TMI 15 - SUPREME COURT] and CIT vs. Gem Granites [ 2013 (11) TMI 1375 - MADRAS HIGH COURT] by holding that even if it is considered that the claim made by the assessee u/s 54/54F is incorrect, it would not tantamount to furnishing of inaccurate particulars of income Referring to ledger account of capital work-in-progress qua construction of residential property for claiming deduction u/s 54 the assessee has claimed deduction u/s 54 for raising construction of house bonafidely qua which the AO has taken different view that it does not amount to construction of house rather it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t leviable as the appellant neither concealed any income nor furnished any inaccurate particular of income. The exemption u/s 54F of the Act, on the facts was claimed by the appellant on construction of first floor of his house at Sainik Farm, on the advice of his Chartered Accountant. 5. Without prejudice to the above, otherwise also penalty levied u/s 271(1)(c) of the Act is excessive as the amount of tax levied on addition of long term Capital gain at 20% of ₹ 67,68,010/- and the ACIT levied penalty @ 30% of ₹ 67,68,010/-. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of completed assessment under section 143 (3) of the Income-tax Act, 1961 (for short the Act ) assessing the total income at ₹ 1,60,72,970/- by making addition of ₹ 67,68,010/- on account of disallowance of claim made under section 54 of the Act, penalty proceedings by way of issuance of notice u/s 274 read with section 271(1)(c) of the Act were initiated. Declining the contentions raised by the assessee that it was not a case of concealment of particulars of income or furnishing of inaccurate pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty proceedings; that at no point of time, assessee has filed inaccurate particulars of income or has concealed the particulars of income rather furnished all the details necessary for claiming deduction u/s 54 of the Act and relied upon the decision rendered by Hon ble High Court of Madras in CIT vs. D. Harindran (2018) 97 taxmann.com 297 (Madras), Hon ble Apex Court in CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158 (S.C.) , coordinate Bench of the Tribunal in D. Harindran vs. ITO ITA No.233/Mds/2016 order dated 23.09.2016, Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory-359ITR 565 and CIT vs. SSA s Emerala Meadows -73 taxmann.com 241 (kar.) (Revenue s SLP dismissed in 242 taxman 180). 8. However, on the other hand, ld. Senior DR in order to repel the arguments addressed by the ld. AR for the assessee contended inter alia that the assessee has claimed the deduction u/s 54 of the Act with malafide intention which amounts to concealment of particulars of income; that the assessee has never raised any question of invalid notice or satisfaction of the AO during the penalty proceedings nor before the ld. CIT (A) so n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly para 3.7 goes to prove that even at the time of assessment, AO was not sure enough if the assessee has concealed his income or has furnished inaccurate particulars of income and then issued the notice dated 27.12.2006 u/s 274/271(1)(c) of the Act, available at page 11 of the paper book, again with confused mind if he is going to charge the assessee for concealment of particulars of income or furnishing of inaccurate particulars of income 11. When initiation of penalty proceedings by the AO right from the stage of framing the assessment till serving of the notice u/s 271(1)(c) read with section 274 of the Act are vague and ambiguous and without application of mind rather initiated and completed the penalty proceedings in mechanical manner, we are of the considered view that the penalty proceedings are not sustainable. 12. Hon ble Apex Court in case of CIT vs. SSA s Emerala Meadows - (2016) 73 taxmann.com 248 (SC) while dismissing the SLP filed by the Revenue quashing the penalty by the Tribunal as well as Hon ble High Court on ground of unspecified notice has held as under:- Section 274, read with section 271(1)(c), of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appeals were filed and it was only after 10 years, when the appeals were listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under Section 274 r/w.Section 271 of the Act. Therefore, principles of natural justice cannot be read in abstract and the assessee, being a limited company, having wide network in various financial services, should definitely be precluded from raising such a plea at this belated stage. 17. Thus, for the above reasons, Substantial Questions of law Nos.1 and 2 are answered against the assessee and in favour of the revenue. The additional substantial question of law, which was framed is rejected on the ground that on facts the said question does not arise for consideration as well as for the reasons set out by us in the preceding paragraphs. 14. However, we are of the considered view that in the instant case, not only the notice issued to the assessee under section 274 read with section 271( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(l)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has otherwise not been rejected by the AO, shows that the assessee has claimed deduction u/s 54 of the Act for raising construction of house bonafidely qua which the AO has taken different view that it does not amount to construction of house rather it is renovation/interior designing. In the face of the ledger account of capital work-in-progress brought on record by the assessee, when we examine the assessment order it is nowhere mentioned by the AO that at any point of time, he has visited the property in question or the property claimed to have been constructed by the assessee was not having sanctioned site plan. Rather AO proceeded to reject the claim of the assessee on the basis of imagination that the construction claimed by the assessee amounts to renovation/interior designing. 20. In view of what has been discussed above, we are of the considered view that case laws relied upon by the ld. DR are not applicable to the facts and circumstances of the case and as such, AO has miserably failed to prove that the assessee has willfully furnished inaccurate particulars of income so as to attract the provisions contained u/s 271(1)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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