Claim of exemption u/s 10 for agricultural land not liable to penalty u/s 271(1)(c). ITAT deleted penalty

Claim of exemption u/s 10 for agricultural land not liable to penalty u/s 271(1)(c). ITAT directed Assessing Officer to delete the penalty.

ABCAUS Case Law Citation:
ABCAUS 3214 (2019) (01) ITAT

Important case law relied upon by the parties:
Shri Prakash Raj Bhansali vs ITO

In the instant case, an appeal was filed by the assessee against the order of the CIT(A) in the matter of imposition of penalty u/s 271(1)(c ) of the Income Tax Act, 1961 (the Act).

In this appeal, the assessee was aggrieved for penalty levied with respect to denial of assessee’s claim of agricultural land which was not liable to capital gains tax.

The assessee was also aggrieved for defective notice issued by the AO without mentioning the limb under which penalty was to be imposed. Accordingly, he contended that the penalty order was not sustainable in law.  

The assessee had claimed exemption in respect of treating the profit on sale of agricultural land. On enquiry, the AO found that agricultural land was situated within the 8KM from the municipal limit. Therefore, the AO held that the assessee was liable for capital gains tax.

Accordingly, the AO levied the capital gains tax on the agricultural land sold by the assessee by declining the assesse’s claim that the land is not falling within the municipality limits which was a capital asset chargeable to tax u/s 2(14) of the Act.

The assessee accepted AO’s contention and by filing revised computation offered the gains to capital gains tax. However, AO levied penalty for decline of assessee’s claim and levied penalty u/s 271(1)(c) of the Act.

Before the Tribunal the assessee also placed on record the order of Coordinate Bench of the ITAT and contended that under the similar facts and circumstances of the case, the penalty so levied by the AO for decline of the assessee’s claim of agricultural land was deleted by the Tribunal.

Claim of exemption for agricultural land not liable to penalty u/s 271(1)(c)

The Tribunal went through the order of the Coordinate Bench wherein under similar facts and circumstances of the case, the decline of assessee’s claim of exemption u/s 10 of the Act in respect of agricultural land was held to be not liable for penalty u/s 271(1)(c ) of the Act.

As the facts and circumstances in the instant case were pari materia, therefore, following the decision of Coordinate Bench, the Tribunal directed the AO to delete the penalty.

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