Principal Commissioner Of Income Tax 5 v. Anilkumar Kanaiyalal Patel

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 471 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 5VersusANILKUMAR KANAIYALAL PATEL ========================================================== Appearance:MR M.R.BHATT SR. ADVOCATE WITH MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIand HONOURABLE MR.JUSTICE B.N. KARIA Date : 09/05/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1.The Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 31.10.2017 raising the following substantial question of law for our consideration; “(A)Whether the Appellate Tribunal is correct in law and fact by upholding the decision of the CIT(A) and deleting the penalty of Rs.26,46,390/- levied on account of not offering capital gain out of sale of agricultural land situated within 8 KM from municipal limit of Ahmedabad City by considering that the assessee under bona fide belief and due to ignorance of law has not offered the same for taxation, applicability of section 271(1)(c) r/w. Section 274 of the Act arises or not ? (B)Whether the Appellate Tribunal is correct in law and facts by relying its own decision in ITA No.667/Ahd/2014 and ITA No.1975/Ahd/2014 and deleting the penalty of Rs.26,46,390/- levied on account of not offering capital gain out of sale of agricultural land situated within 8 KM from municipal limit of Ahmedabad City, by considering that in the said transaction three co-owners were involved and all these persons have not offered the said transaction for taxation due to bona fide intention and due to ignorance of law, the act of all the co-owners including assessee should be treated as same and said to be bona fide and due to ignorance of law or not ?” 2.The issue pertains to penalty imposed by the Assessing Officer u/s.271(1)(c) of the Income Tax Act, 1961, which was deleted by the Tribunal relying on its own order in case of a co-seller of the land. Such order of the Tribunal was carried by the Revenue before the High Court in Tax Appeal No.1051 of 2017, which was dismissed by making the following observations; “2. The issue pertains to penalty under section 271(1)(c) of the Act. The assessee had filed the return of income, in which, he had not offered to tax capital gain arising out of sale of agricultural land. When this was noticed by the Assessing Officer, the assessee corrected his position and unconditionally offered to pay tax on such income. Simultaneously, other coowners of the land who had similarly not disclosed the income in their returns, also paid their taxes. 3. In the penalty proceedings, the defense of the assessee was that he was under bonafide impression that such income was not assessable to capital gain since it was arose out of sale of agricultural land. He claimed that he was guided by his Chartered Accountant and carried such mistake and belief. This defense was accepted by the Accountant and carried such mistake and belief. This defense was accepted by the Tribunal and penalty was dropped. 4. The explanation of the assessee was thus found reasonable and accepted by the Tribunal and viewed from attendant circumstances including the fact that the other coowners also promptly corrected their position vis-a-vis taxability of income. 5. No question of law arises. Tax Appeal is dismissed.” 3.In the result, the Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) PRAVIN KARUNAN