Principal Commissioner Of Income Tax 5 v. M/S Natraj

C/TAXAP/981/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 981 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 5 VersusM/S NATRAJ ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 MR B S SOPARKAR(6851) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIand HONOURABLE MR.JUSTICE B.N. KARIA Date : 20/08/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgment of the Income-tax Appellate Tribunal dated 22.8.2017 raising following question for our consideration. “A. Whether the Appellate Tribunal is correct in law and in fact in upholding the decision of the ld. CIT(A) and deleting the penalty of Rs.67,26,000/- u/s.271(1)(c) of the Act levied on account of concealment of income by way of wrong claim of cost of acquisition to evade long term capital gains? B. Whether 'ignorance of law' can be a valid ground to hold that the assessee has not concealed the income and penalty u/s.271(1)(c) of the Act is not leviable?” 2. Issue pertains to penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961. It was deleted by the CIT (Appeals) and confirmed by the Tribunal. Tribunal in the process observed as under :- “7. With the assistance of the Ld.AR for assessee, we notice that the Coordinate Bench of Tribunal in quantum proceedings in ITA No.3036/Ahd/2010 for AY 2007-08 order dated 04.01.2013 has granted substantial relief to the assessee against the action of the AO in quantum proceedings. A reading of the order of the Tribunal shows that the issue involved is complex and debatable in nature. 8.After perusal of the orders of the authorities below and after taking note of rival submissions, we are unable to find any infirmity in the conclusion drawn by the CIT(A). The CIT(A) has taken note of the relevant facts while adjudicating the issue in favour of assessee. As can be seen, the cause of action arose on account of modification of cost of acquisition made by the AO with regard to the fair market value as on 01.04.1981 claimed by the assessee in the return of income having regard to section 48 r.w.s. 55(2)(b) of the Act. The AO did not allow the deduction towards cost of acquisition on the ground that the assessee has not incurred any cost for acquiring the leasehold rights. We notice that the assessee had acted upon the advice received from a professional for determination of fair market value of cost of acquisition. Thus, we do not see any falsity in the claim of assessee per se. 9.Inviewofthemitigating circumstances available, the explanation offered by the assessee cannot be termed as malafide. Therefore, we decline to interfere with the order of the CIT(A) in the deleting the penalty.” 3. We gather that the issue pertains to valuation of lease-hold rights as on 1.4.1981. The Assessing Officer did not accept valuation adopted by the assessee and made corresponding additions. We notice that on merits itself substantial additions were deleted by higher authorities. Thus the issue itself was highly debatable and substantially fact based. In background of such facts the Tribunal held that this is not a fit case for penalty. No interference is needed. Tax Appeal is dismissed. 4. Nothing stated in this order will affect the Revenue's appeal against the deletion of quantum addition we are informed is pending. (AKIL KURESHI, J) K.K. SAIYED (B.N. KARIA, J)