TMI Blog2022 (7) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... e findings of the Ld. CIT(A) in this regard and find no infirmity in the same. - Decided against revenue. - ITA No. 329/Ahd/2020 - - - Dated:- 22-6-2022 - Ms. Annapurna Gupta , Accountant Member And And Shri TR Senthil Kumar , Judicial Member For the Appellant : V. K. Singh , Sr. D. R. For the Respondents : S. L. Poddar , A. R. ORDER Per Annapurna Gupta , Accountant Member The present appeal has been filed by the Revenue against the order passed by the Commissioner of Income Tax (Appeals)-10, Ahmedabad, (in short referred to as CIT(A)), dated 21-02-2020, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the Act ) pertaining to Assessment Year (A.Y) 2011-12 confirming the levy of penalty u/s. 271(1)(c) of the Act. 2. The Registry has marked the appeal as delayed by 43 days since it was to be filed by April 2020 but was filed on 15th June 2020.We have however noted that due to the pandemic of Covid-19, the limitation prescribed for filing appeals was extended till further orders' by the Hon'ble Supreme Court vide its order dated 23/03/2020 in Suo Moto Writ Petition (Civil) No. (s) 3/2020.And the same was ultimately extended upto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gains and thereafter having claimed exemption of the same u/s. 54F of the Act by investing the long term capital gains in a residential house, when, as per the AO the long term capital gain had in fact been claimed on a depreciable business asset, and was therefore in the nature of short term capital gain as per section 50 of the Act and the assessee was not therefore entitled to exemption u/s. 54F of the Act which was allowed as per law only on long term capital gains. The relevant portion of the order is as under: Therefore, considering the facts of the case, the sale consideration received on account of sale of godown is to be treated as Short Term capital Gain in view of provisions of sec. 50 of the IT. Act and therefore, no claim of reduction of indexed cost of acquisition as well as claim of exemption u/s. 54F shall be available. I, therefore, add Rs. 30,00,000/- to the total income of the assessee under the head Short Term Capital Gain being the amount of sale consideration received on account of sale of godown treating it as business assets in view of the above discussion and no indexed cost of acquisition as well as claim of exemption u/s. 54F is allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the asset. (b) that the assessee had not deposited the amount not utilized for construction of the new asset in the capital gain account scheme before the date of furnishing of return of income u/s. 139(1) of the Act as per the provisions of Section 54F of the Act. (c) that the assessee had claimed deduction u/s. 54F of the Act on account of purchase/construction of two residential house properties which is not allowable. 8. The satisfaction for initiation of penalty proceedings was initiated by the A.O. in the original order passed wherein he had made addition of the entire consideration received as short term capital gain and denied u/s. 54F to the assessee. In the order giving effect to the Ld. CIT(A) wherein he found that the assessee was not eligible to claim exemption u/s. 54F, no satisfaction for initiation of penalty was recorded. However the A.O. proceeded/went ahead with the penalty proceedings on the basis of the satisfaction recorded in his initial assessment order. 9. Clearly what emerges from the above is that while the Assessing Officer had recorded satisfaction of the assessee having furnished inaccurate particulars of income/concealed particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denial of claim under law cannot lead to the levy of penalty. The ld. CIT(A) at Para 7 of the order had noted main arguments of the assessee against the levy of penalty as under: 7. The only effective ground is against the penalty of Rs. 2,92,210/- levied by the AO u/s. 271(1)(c) of the Act. Before this office, the appellant has filed submissions vide his letter dated 19-8-2019 and 14-2-2020. The main argument of appellant are as under: 1. It is a known fact that in India it takes more than 3 years to complete the construction of property. It is completely out of control of the appellant that construction is completed. Once the payment is made it proves his bonafide to invest in property. 2. The agreement for purchase of property could not be executed because the construction was not complete. 3. That penalty is levied in respect of income which has been adjudicated by CIT(A) in his favour. 4. That notice for penalty and order levying penalty are not digitally signed. 5. That registration of document is not mandatory for claiming deduction under section 54 of the Act and placed reliance on the decision of Hon'ble Delhi High Court in the case of Balr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfy that the mandatory requirement under Section 54 (1) is fully complied with within the time limit prescribed therein. In the given circumstances the explanation given by the appellant is bonafide. Accordingly, I delete the penalty of Rs. 2,92,210/- levied by the Assessing Officer. 16. As is evident from a perusal of the above, the Ld. CIT(A) deleted the penalty levied on the disallowance of exemption u/s. 54F of the Act noting that the assessee had furnished all particulars relating to the claim of exemption by way of investment in residential properties, that the claim was made under the bonafide belief that all investment would be made within the period specified but could not be done so for reasons beyond his control as the construction was not completed in time and noting that on the requirement of investment in capital gains account scheme there was a judgment of the Hon'ble Karnataka high court holding the requirement to be merely procedural and directory in nature. The Ld. CIT(A) accordingly deleted the penalty on the ground that all particulars with respect to the claim having been truly furnished, mere disallowance of claim in law would not tantamount to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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