The Income Tax Appellate Tribunal (ITAT), Pune Bench held that Capital gain arising from sale of land not receipts from business, thereby deleting penalty imposed under Section 271B of the Income Tax Act, 1961
The assessee, Lalit Sakalchand Gandhi, is an individual, a partner and director in Shatrunjay Infrastructure and Shatrunjay Parks and Resorts Ltd. A search and seizure action were conducted at his premises u/s. 132 of the Act. During the said search and seizure action certain documents and records were seized. The Assessing Officer (AO) completed assessment to the best judgment u/s. 144.
The AO initiated penalty proceedings u/s. 271B of the Act by observing that the assessee failed to get its accounts audited u/s. 44AB of the Act. The Commissioner of Income Tax (CIT(A)) upheld the order of AO in imposing penalty of Rs.1,00,000/- u/s. 271B of the Act by holding that the receipts from unexplained cash deposits, unexplained investments and sale of receipts from lands are from business. Having aggrieved, the assessee is before the Tribunal.
The Counsel for the Revenue, Arvind Desai contended that there were no sales or purchase made by the assessee during the year under consideration and the additions made on account of unexplained cash deposits, unexplained investments, unexplained other investments and unexplained profit on sale of land to an extent of Rs.15,40,26,567/- is not turnover as the investments and sale of land was in the nature of capital gain but not in the category of business income.
The Bench consisting of Inturi Rama Rao, Accountant mEmber and SS Viswanethra Ravi, Judicial Member held that “In the present case, the AO held the unexplained cash deposits, unexplained investments, interest on F.D. and unexplained profit on sale of land is held to be business income of the assessee. The only contention of the AR is that the assessee is an individual and all the said transactions as held by the AO which was confirmed by the CIT(A) is not business income. We find force in the arguments of the AR, thus, the penalty imposed by the AO u/s. 271B of the Act as confirmed by the CIT(A) is not justified.”
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