IN INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA No. 233/Mds/2016 Assessment Year : 2011-12 Shri D.Harindran, v. Income Tax Officer, No.4/212A, MGR Salai, Business Ward III (3), Palavakkam, Chennai 600 034. Chennai 600 041. PAN : AGEPH2310N (Appellant) (Respondent) Appellant by : Shri D.Anand, Advocate Respondent by : Shri A.V.Sreekanth, JCIT Date of Hearing : 01.09.2016 Date of Pronouncement : 23.09.2016 ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of assessee is directed against order of CIT(A) -15, Chennai dated 18.12.2015 and pertains to Assessment Year 2011-12. 2 I.T.A. No.233/Mds/2016 2. Shri D.Anand, learned counsel for assessee submitted that assessing officer levied penalty under Section 271 (1) (c) of Act. On appeal by assessee, CIT(A) has also confirmed same. Referring to penalty order, learned counsel for assessee submitted that assessee claimed exemption under Section 54/54F in respect of capital gain arising on sale of land at Injambakkam. It is not in dispute that assessee has furnished all details of transaction for sale of 10.03 grounds on 06.12.2010 for Rs.4,00,00,000/-. In fact, assessee acquired this property by means of registered settlement deed from his father Shri P.V.Devakumaran on 19.11.2010. assessing officer disallowed claim of assessee under Section 54/54F while computing capital gain in assessment proceeding. During course of penalty proceeding, assessing officer observed that assessee purchased nanja land to extent of 6.95 acres from M/s.Conclave Constructions Private Limited by means of registered sale deed dated 06.03.2011 for total consideration of Rs.3,27,06,437/-. Referring to copy of return and other material available on record, learned counsel for assessee submitted that assessee disclosed purchase of agricultural land in return and claimed statutory deduction under Section 54/54F of Act. This Rs.3,27,06,437/- includes cost of land and development 3 I.T.A. No.233/Mds/2016 carried out by assessee. existence of residential house is evidenced from copy of property tax payment receipt produced before assessing officer. assessing officer found that assessee has furnished inaccurate particulars in claiming exemption under Section 54/54F of Act. 3. According to learned counsel, it is not in dispute that assessee has disclosed source of inheritance of property from his father. It is also disclosed before assessing officer that investment made in residential house. assessee has also produced copy of property tax paid by assessee to Vadakadampadi Panchayat as proof for existence of residential house in land purchased by assessee. Therefore, it cannot be said that assessee has furnished inaccurate particulars. assessee has furnished all details of investment made out of sale proceeds of land and claimed exemption under Section 54/54F. If assessing officer find that assessee is not eligible for exemption under section 54/54F, according to learned counsel, it does not mean that assessee has furnished inaccurate particulars of his income. gain arose to assessee on transfer of capital asset is available before assessing officer. Therefore, it is for assessing officer to examine whether assessee is eligible for exemption under Section 4 I.T.A. No.233/Mds/2016 54/54F of Act. After examining claim of assessee, if assessing officer finds that assessee is not eligible for deduction under Section 54/54F of Act in respect of investment made out of sale proceeds of capital asset, it does not mean that assessee has furnished inaccurate particulars. Making claim before assessing officer under statutory provision cannot be considered to be as furnishing inaccurate particulars of income or concealing any part of income. Placing reliance on judgment of Apex Court in case of CIT Vs. Reliance Petroproducts Pvt.Ltd. reported in [2010] 322 ITR 158 (SC), learned counsel for assessee submitted that making claim before assessing officer after furnishing all relevant materials does not in any way amounts to furnishing of inaccurate particulars or concealing any part of income. Therefore, CIT(A) is not justified in confirming penalty levied by assessing officer. learned counsel has also placed his reliance on judgment of Madras High Court in case of CIT Vs. Gem Granites (2013) 86 CCH 160. Copy of which was filed by learned counsel for assessee. 4. On contrary, Shri A.V.Sreekanth, learned department representative submitted that it is not in dispute that assessee inherited 10.03 grounds of land along with superstructure measuring approximately 200 square feet from his father Shri P.V.Devakumaran by 5 I.T.A. No.233/Mds/2016 means of settlement deed dated 19.11.2010. assessee sold said property on 06.12.2010 for total amount of Rs.4 crores. assessee claimed before assessing officer that he invested Rs.3,27,06,437/- in residential house property and claimed exemption under Section 54/54F of Act. assessing officer found that what was purchased by assessee is not residential house property, it is agricultural land. assessing officer on verification found that there was well for irrigation together with room with asbestos roof. Referring to property tax said to be paid by assessee, learned department representative submitted that property tax was paid for super structure and there was no building in nature of residential house. Therefore, assessing officer found that assessee has furnished inaccurate particulars for purpose of claiming deduction under Section 54/54F. Accordingly, assessing officer levied penalty under Section 271(1)(c) of Act. CIT(A) on examination found that assessee made investment in agricultural land having known that investment was not made in residential property, assessee made false claim before assessing officer under Section 54/54F in assessment proceeding. Therefore, CIT(A) has rightly confirmed penalty levied by assessing officer. 6 I.T.A. No.233/Mds/2016 5. We have considered rival submissions on either side and also perused material available on record. Admittedly, assessee acquired 10.03 grounds of land along with superstructure from his father Shri P.V.Devakumaran by means of settlement deed dated 19.11.2010. assessee has also sold land subsequently on 06.12.2010 for consideration of Rs.4 crores. assessee further claimed before assessing officer that he invested sale proceeds in residential house and claimed deduction under Section 54/54F. assessing officer found that assessee invested funds in agricultural land and not in residential house and therefore not eligible for exemption under Section 54/54F of Act. fact remains that assessee has furnished all details of sale and purchase of properties and claimed deduction under Section 54/54F of Act. question arises for consideration is when assessee furnished all particulars of sales and investment and claimed exemption under Section 54/54F, whether assessee has furnished inaccurate particulars of income. 6. We have carefully gone through provisions of Section 271(1)(c) of Act. Section 271(1)(c) in categorical terms says that Assessing Officer may levy penalty if he is satisfied that assessee has concealed particulars of his income or furnished inaccurate 7 I.T.A. No.233/Mds/2016 particulars of such income. In case before us, assessee has furnished all details of transaction of sale of property. In other words, sale of property for Rs.4 crores was disclosed before assessing officer. assessee has also computed capital gain and disclosed capital gain before assessing officer. assessee claims exemption under Section 54/54F in respect of investment made by him in another landed property. assessee claims that investment was made in residential house. revenue claims that assessee invested in agricultural land. It is not case of assessing officer that assessee has concealed any part of sale proceeds and thereby concealed capital gain accrued to him. In those circumstances, making statutory claim under Section 54/54F of Act, cannot be said that assessee has concealed any particulars of his income. Similarly, it cannot also be said that assessee has furnished inaccurate particulars of his income. If it cannot be said that assessee has furnished inaccurate particulars of income or concealed any part of income, this Tribunal is of considered opinion that levy of penalty under Section 271 (1) (c) is not justified. 7. We have also carefully gone through judgment of Apex Court in case of Reliance Petroproducts Pvt.Ltd. cited supra. Apex Court after considering provisions of Section 271(1)(c) found 8 I.T.A. No.233/Mds/2016 that in order to expose assessee to penalty under Section 271(1)(c), case shall be strictly covered by provisions of Section 271(1)(c). Unless case is strictly covered by provisions of Section 271(1)(c), penalty provision cannot be invoked. Apex Court has further found that by no stretch of imagination, making of incorrect claim in law tantamount to furnishing inaccurate particulars. 8. We have also carefully gone through judgment of Madras High Court in Gem Granites (supra). Madras High Court after referring to Apex Court judgment in Rajasthan Spinning and Weaving Mills found that conditions stated in 271(1)(c) must exist for levying penalty. 9. In view of this judgment of Apex Court and Madras High Court, even if it is considered that claim made by assessee under Section 54/54F is incorrect, it would not tantamount to furnishing of inaccurate particulars of income. Penalty can be levied only in respect of concealing particulars of income or furnishing inaccurate particulars. Making claim before assessing officer under statutory provisions cannot be considered by any stretch of imagination that assessee has concealed any part of income or furnished inaccurate particulars of income. This Tribunal is of considered opinion that 9 I.T.A. No.233/Mds/2016 merely because claim made by assessee under Section 54/54F was disallowed by assessing officer in assessment proceeding, that cannot be reason to conclude that assessee has furnished inaccurate particulars of his income or concealed any part of his income. Therefore, this Tribunal is of considered opinion that penalty levied by assessing officer under Section 271(1)(c) is not justified. Accordingly, orders of lower authorities are set aside and penalty levied by assessing officer is deleted. 10. In result, appeal of assessee is allowed. Order pronounced on 23rd September, 2016 at Chennai. Sd/- Sd/- (A. Mohan Alankamony) (N.R.S. Ganesan) Accountant Member Judicial Member Chennai, Dated, 23rd September, 2016. sp. Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT, 5. DR 6. GF. D.Harindran v. Income-tax Officer, Business Ward–III (3), Chennai