Commissioner Of Income Tax v. Reliance Petroproducts Pyt. Limited,_ (2010) 322 Itr 158

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No. 345 of 2014Date of decision: 17.8.2015 Manpreet Kaur, Prop. M/s Lily's Creation Boutique .....- Appel Commissioner of Income Tax, Patiala ....mesponden CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’ BLE MR. JUSTICE SHEKHAR DHAWAN 1. Whether Reporters of local papers may be allowed to see the judgment?2. To be referred to the Reporters or not?3. Whether the judgment should be reported 1n the Digest?2. To be referred to the Reporters or not?3. Whether the judgment should be reported 1n the Digest? Present: Mr. Deepak Aggarwal, Advocate for the appellant.Ms. Savita Saxena, Advocate for the respondent.Ms. Savita Saxena, Advocate for the respondent. Ajay Kumar Mittal,J, 1.The assessee has preferred this appeal under Section 260A ofthe Income Tax Act, 1961 (in short, “the Act’) against the order dated17.5.2013, Annexure A.3 passed by the Income Tax appellate Tribunal 'B'Bench, Chandigarh (in short, “the Tribunal”) in ITA No.1223/CHD/2012for the assessment year 2006-07, claiming following substantial questions of law:- 1) Whether in the present facts and circumstances of the case,the learned ITAT was justified in confirming the action of theauthorities below in levying the penalty under Section 271(1)(c) on the disallowance of exemption under Section 54 forconstruction wherein the exemption under section 54 wasthe learned ITAT was justified in confirming the action of theauthorities below in levying the penalty under Section 271(1)(c) on the disallowance of exemption under Section 54 forconstruction wherein the exemption under section 54 was allowed for purchase of plot, however the exemption undersection 54 is available for the construction of residentialhouse and not for the purchase of plot?section 54 is available for the construction of residentialhouse and not for the purchase of plot? 11) Whether in the present facts and circumstances of the casethe learned ITAT was justified 1n confirming the action of theauthorities below in levying the penalty under section 271(1)(c) on the disallowance of exemption under section 54 forconstruction?the learned ITAT was justified 1n confirming the action of theauthorities below in levying the penalty under section 271(1)(c) on the disallowance of exemption under section 54 forconstruction? ? A tew facts relevant for the decision of the controversy;involved as narrated in the appeal may be noticed. The appellant filed herreturn of income on 30.10.2006 declaring income amounting to.L2,02, 180/as per detail given below:- 1) Salary derived from M/s Malwa Gas ServiceLT;*%2**7911) Boutique incomLT1,61,680/-11) Boutique incomLT1,61,680/- 111)Capital gain after claiming exemption under section 54FNil The Assessing officer passed order dated 31.8.2010, Annexure A.1 undersection 143(3) of the Act making additions on various counts anddisallowed the claim of exemption under section 54 of the Act on theincome under the head ‘Capital gains’ generated from transfer of residentialhouse on the ground that she had failed to furnish any evidence in respect of expenditure incurred on construction. She failed to prove that the amountincurred on construction was actually utilized. It was recorded by theassessing authority that the assessee had sold a residential house on15.2.2006 for <a27 lacs and after claiming exemption under Section 54F ofthe Act thereby claiming to have utilized in construction the whole of thesale proceeds upto 15.10.2006, net capital gain had been declared at nil, ITA No.345 of 2014 The Assessing officer passed order dated 31.8.2010, Annexure A.1 undersection 143(3) of the Act making additions on various counts anddisallowed the claim of exemption under section 54 of the Act on theincome under the head ‘Capital gains’ generated from transfer of residentialhouse on the ground that she had failed to furnish any evidence in respect of expenditure incurred on construction. She failed to prove that the amountincurred on construction was actually utilized. It was recorded by theassessing authority that the assessee had sold a residential house on15.2.2006 for <a27 lacs and after claiming exemption under Section 54F ofthe Act thereby claiming to have utilized in construction the whole of thesale proceeds upto 15.10.2006, net capital gain had been declared at nil, ITA No.345 of 2014 Since the assessee had furnished inaccurate particulars of income in respectof long term capital gain, penalty proceedings under section 271(1)(c) of theAct had been initiated. Aggrieved by the order, the assessee went 1n appealbefore the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide orderdated 19.5.2009, the appeal was partly allowed. The issue of disallowanceof exemption under Section 54 of the Act was decided against theappellant. Thereafter, the Assessing Officer passed order under Section 271(1)(c) of the Act. Against the penalty order, the assessee went 1n appealbefore the CIT(A) which was dismissed vide order dated 24.9.2012,Annexure A.2. Aggrieved by the order, the assessee filed appeal before theTribunal. Vide order dated 17.5.2013, Annexure A.3, the Tribunal partlyallowed the appeal. The issue of penalty under Section 271(1)(c) ondisallowance of exemption claimed under Section 54 amounting to >48,92,979/- was upheld. Hence the instant appeal by the assessee. 3]We have heard learned counsel for the parties.4 Learned counsel for the assessee-appellant submitted that therewas no furnishing of inaccurate particulars with regard to claim underSection 54F of the Act. In such a situation, levy of penalty was unjustified.Support was drawn from judgments of the Apex Court 1n|Commissioner ofIncome Tax, Madras vs.Khoday Eswarsa and Sons,(1972) 83 ITR 369 and Commissioner of Income Tax vs. Reliance Petroproducts Pyt. Limited,(2010) 322 ITR 158. 4]On the other hand, learned counsel for the revenue submittedthat no evidence of construction was produced and the Assessing Officer,CIT(A) and the Tribunal had concurrently recorded a finding of fact that the ITA No.345 of 2014 assessee had failed to produce bills or vouchers, proof of construction, thedate of completion of construction in the absence of which levy of penaltywas justified. 6]After hearing learned counsel for the parties, we do not findany merit in the appeal. TdThe Tribunal while affirming the findings of the AssessingOfficer and the CIT(A) had recorded that the assessee had failed to producebills or vouchers. She had also failed to produce any proof of constructionand the date of completion of construction during the assessmentproceedings. Merely reflecting the expenditure incurred on construction 1nthe balance sheet alongwith the income tax return was not sufficient toestablish the claim. It was noticed in para 16 as under:- ITA No.345 of 2014 assessee had failed to produce bills or vouchers, proof of construction, thedate of completion of construction in the absence of which levy of penaltywas justified. 6]After hearing learned counsel for the parties, we do not findany merit in the appeal. TdThe Tribunal while affirming the findings of the AssessingOfficer and the CIT(A) had recorded that the assessee had failed to producebills or vouchers. She had also failed to produce any proof of constructionand the date of completion of construction during the assessmentproceedings. Merely reflecting the expenditure incurred on construction 1nthe balance sheet alongwith the income tax return was not sufficient toestablish the claim. It was noticed in para 16 as under:- “16. The third addition made in the hands of the assessee wason account of disallowance of exemption claimed under section54 of the Act. The assessee in the return of Income had claimeddeduction under section 54F of the Act which during the courseof assessment proceedings was revised to the claim ofdeduction under section 54 of the Act. The assessee had claimedto have invested Ly8,32,000/- in the purchase of plot on2.6.2005 and in respect of investment in construction of theproperty atLy24,30,000/-. The Assessing Officer allowed theinvestment made in plot at v8,23,000/- as allowance undersection 54 of the Act. However, the exemption claimed inrespect of expenditure incurred on construction was denied bythe Assessing Officer as the assessee had failed to furnish anyevidence in respect of the same during the assessmentproceedings. The balance long term capital gains was brought totax by the Assessing Officer. The ClT(appeals) upheld theadditions as the assessee had failed to discharge the onus tosubmit the requisite proof in respect of expenditure made on construction of house. Merely because the amount spent onexpenditure made on construction of the property was reflectedin the balance sheet filed alongwith the return of income doesnot establish the claim of the assessee as the assessee had failedto produce bills or vouchers or any proof of construction, dateof completion, proof of construction during the assessmentproceedings. The additional evidence was furnished by theassessee before the CIT(Appeals). Penalty under Section 271(1)(c) of the Act had been levied on account of said disallowancemade under section 54 of the Act. We find no merit 1n the claimof the assessee that it is not exigible to levy of penalty undersection 271(1)(c) of the Act on the aforesaid disallowance as theclaim made by the assessee vis a vis the cost of construction 1nthe immovable property was found to be a false claim and theassessee has failed to discharge the onus of establishing that ithad undertaken the aforesaid construction of the 1mmovableasset. Merely because the assessee had reflected certain amountof expenditure claimed to be on account of construction ofproperty in its balance sheet does not entitle the assessee to theclaim of deduction under section 54 of the Act being the amountspent on construction of the asset on sale of residential property.In the entirety of the facts and circumstances where the claim ofthe assessee was found to be false, the assessee is lable topenalty under section 271(1)(c) of the Act. Upholding the orderof the ClT (appeals) we confirm levy of penalty under sectio271(1)(c) of the Act on account of disallowance of deductionclaimed under section 54 of the Act. Thus ground Nos. | and 2raised by the assessee are allowed and ground No.3 raised bythe assessee 1s dismissed.” § The assessee had failed to substantiate the averments made in the appeal in support of her claim. The findings recorded by the authorities are pure findings of facts. Learned counsel for the assessee was unable to ITA No.345 of 2014 § The assessee had failed to substantiate the averments made in the appeal in support of her claim. The findings recorded by the authorities are pure findings of facts. Learned counsel for the assessee was unable to ITA No.345 of 2014 point out any illegality or perversity in the said findings which may call forinterference by this Court. The judgments cited by the learned counsel forthe appellant being based on individual fact situation involved therein donot come to the rescue of the appellant. Thus, no advantage can be derivedby the appellant from the said pronouncements. No substantial question oflaw arises. The appeal stands dismissed. (Ajay Kumar Mittal)Judge| August 17, 20151<"1 (Shekhar Dhawan)Judge