Income Tax Appellate Tribunal - Pune
A.C.I.T. vs Shri Malhotra Mukesh Satpal, Shri ... on 31 May, 2006
Equivalent citations: (2008)113TTJ(PUNE)401
ORDER
C.L. Sethi, Judicial Member
1. All these appeals have been filed by the revenue in the matter of penalty levied Under Section 271(1)(c) by the A.O. in respect of above mentioned three assessees.
2. The issue involved in these appeals is common and identical based on identical facts and as such, these were heard together and a common order is being passed for the sake of convenience.
3. We shall first take the ITAs No. 185 and 186/PN/03 in connection with the assessee namely Shri Malhotra Satpal Sitaram.
3.1 These two appeals filed by the revenue are directed against two separate orders of CIT(A), both dated 29.11.2002 deleting the penalty amounting to Rs. 4,34,080/- and Rs. 6,00,000/- imposed by the A.O Under Section 271(1)(c) for the A.Y. 1997-98 and 1998-99.
3.2 The facts borne out from the orders of the authorities below may be summarized as under.
3.3 In the return of income filed for the A.Y. 1997-98, the assessee had declared income from salaries, income from other sources and income from capital gain. On going through the details of computation of capital gain, it was noticed by the A.O. that assessee had not shown any capital gain on sale of agricultural land at Bakori, Dist. Pune. The assessee's contention was that the land was situated outside 8 Kms. from Municipal limits and as such, the land in question is not an asset as per the provisions of Section 2(14) of IT. Act and thus being agricultural land, the gain thereon was not liable to tax. The A.O. stated that that the land in question was purchased by the assessee on 17-10-94 along with four other persons jointly for a sum of Rs. 12 lacs. The A.O. further stated that this land was given on lease immediately after to M/s. Weikfield Agro Products Pvt. Ltd. on 24-11-94, and land was being used by the said company for the purpose of Mushroom cultivation. The lease money received by the assessee from this land was treated as non-agricultural income by assessee himself. Therefore, during the course of assessment proceedings, the assessee was asked by the A.O to explain as to why the land in question should not be treated as agricultural land and why the gain on the said land is not liable to tax.
3.4. In the course of assessment proceedings, the assessee submitted that that the land in question was agricultural land as would be evident from 7/12 Extracts as well as on the basis of certificate of Dr. S.K. Goyal, Commissioner of Agriculture. He further stated that the land in question was used for agricultural purpose as the land in question was used for cultivating mushroom, which is treated as agricultural activity. Therefore, the land in question is required to be treated as agricultural land as per provisions of Section 2(14) of IT. Act. However, in the course of assessment proceeding, the assessee submitted before the A.O that the capital gain from the land in question may be treated as taxable income subject to that no penalty Under Section 271(1)(c) of the Act would be imposed. The A.O. completed the assessment Under Section 143(3) on 29.12.2000 making addition of Rs. 10,55,200/- on account of capital gain on sale of the land in question. The A.O also initiated penalty proceedings Under Section 271(1)(c) for concealing the particulars of income as the assessee did not disclose capital gain on land at Bakori neither in the computation of capital income nor the same was proved to be exempted under any provisions of IT. Act.
3.5 In reply to show cause issued Under Section 271(1)(c), the assessee furnished as under:
The assessee received the copy of the Assessment Order for the A.Y. 1997-98 alongwith notice issued Under Section 274 r.w.s. 271(1)(c) of the Act. In the body of the Assessment order it has been stated "penalty proceedings Under Section 271(1)(c) are initiated as assessee has disclosed capital gain on the sale of land at Bakori neither in computation of taxable income nor the same has been shown as claimed to be exempt under any provisions of Income Tax Act. Therefore this extent the assessee has concealed the particulars of Income.
It may kindly be noted and appreciated the assessee has filed the return of income alongwith statement of income and receipt and payment account for the F. Y. 97-97. It may further kindly be noted and appreciated that receipt and payment account the assessee has already shown receipt of Rs. 11,00,000/-.Thus the assessee has disclosed the transactions in the receipt and payment account forming part of the Statement of income. Thus there was no intention on the part of the assessee not to disclose this transaction.
It may further kindly be noted and appreciated that the assessee had been carried bonafide belief that the transaction pertaining to such land is exempt under the provisions of the Income Act, since the land is agricultural land. The assessee has submitted various documents and papers at the time of hearing in support of his claim that the land is agricultural land and has also discussed reasons as to why the transaction is not considered while computing the income for the purpose income tax Act. The assessee was carrying bonafide belief that therefore the receipt from such transactions need to be considered in computation of the income.
It may further be noted and appreciated that after discussing with your goodself and also arguing the matter at length in support of claim of such exemption pertaining to such transaction the assessee has surrendered the said claim in order to buy the peace of mind and to avoid possible future litigation in that respect.
It may kindly be noted that as per knowledge and belief of the assesses, the income which is not qualifying for exemption Under Section 2(14) or Under Section 54 of the Act has already been compiled and offered for taxation, which would support the contention of the appellant that there was no malafide intention of not disclosing the exempted income.
On this background and under these circumstances and under these circumstances it may kindly be noted and appreciated that assessee did not claim the exemption separately while preparing the statement of income nor the same has been shown as taxable income. The mistake if any on the part of the assessee is inadvertent mistake and the same is at the most technical mistake of not claiming the said receipt as exempt under the Income Tax Act. It may also kindly be noted that merely because the assessee has surrendered the claim after elaborate argument and discussion it would not turn out that the assessee was not carrying bonafide belief that the receipt from such transaction was exempt under the Income Tax Act and is not taxable in the hands of the assessee. It is therefore submitted that keeping in view the entire facts and circumstances and the fact that assessee has voluntarily surrendered the claim, the penalty initiated Under Section 271(1)(c), may kindly be dropped as there is no concealment on the part of the assessee pertaining to such transactions and oblige.
3.6 The A.O. did not agree to the contention of the assessee and after considering the explanation of the assessee, the A.O imposed a penalty amounting to Rs. 4,34,080/- by discussing and observing the issue as under:
4. There is no reasonable explanation by the assessee as to why this land has been treated as agricultural land. The land in question has been purchase by the assessee on 17.10.1994 and immediately has been give on lese to M/s. Weikfield Agro Products Pvt. Ltd. M/s. Weikfield Agro Products Pvt. Ltd. constructed building on the land for the purpose of cultivation of mushroom. No land is required for the purpose of cultivation of mushroom. Therefore, the activity carried out by M/s. Weikfield Agro Products Pvt. Ltd. cannot be called as agricultural activity. The reason as to why the activity of M/s. Weikfield Agro Products Pvt. Ltd. cannot be treated as agricultural activity has also been discussed in para one of the Assessment Order. The relevant reasoning which has also been filed by various High Courts.
The primary sense in which the term agriculture is understood is agar = field and cultra = cultivation i.e., the cultivation of the field, and if the term is understood only in that sense agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby tilling of the land, sowing of seeds, planting and similar operations on the land. They would be the basis operations and would required the expenditure of human skill and labour upon the land itself CIT v. Raja Benoy Kumar Sahas Roy (1957) 32 ITR, 508 (SC).
'If the term 'agriculture' is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term 'agriculture' receives a wider interpretation both in regard to its operations as well as the results of the same. Nevertheless, there is present all throughout the basic idea that there must be at the bottom of its cultivation of land in the sense of tilling of the land, sowing of the seeds, planting and similar work done on the land itself CIT v. Raja Benoy Kumar Sahas Roy (1975) 32 ITR 466, 510-11 (SC) in order to constitute agricultural income, under Section 2 (IA)(b) of the 1961 Act two conditions have to be satisfied viz (i) the land must be used for growing all of any of the commercial crops, and ii) that the income should be derived from such land by agriculture [Consolidated Coffee Estates 91943) Ltd. v. C. Agri IT (.
Once the revenue earned by the assessee from this land is not treated as agricultural income, the question of treating the land as agricultural income does not survive. To this extent, therefore, the assessee has concealed the particulars of income. As the explanation given by the assessee for treating the land as agricultural land is not satisfactory therefore explanation (1) to Section 271(1)(c) is clearly applicable to the facts of this case. It is found that the assessee has not claimed the receipts as exempt either in the note attached by the assessee in the statement of income nor in Part V of return of income furnished by the assessee on 29.10.97. Therefore, the mere fact that the assessee has shown the receipt of Rs. 11 lakhs in the receipt and payment account does not mean that the assessee has made proper disclosure in the return of income.
5. Offer of disclosure of this income during the course of assessment proceeding is not voluntary as claimed by assessee in the letter of offer dated 28.2.2000. This offer was made only when assessee was called upon to explain as to how the land in question is agriculture land vide questionnaire dated 17.2.2000. The relevant portion of this questionnaire is reproduced herewith:
i) Whether you have carried out any agricultural operation on this land. If yes, kindly furnish details of agricultural operation carried out and furnish details of all receipts and expenses. Produce vouchers on the date of hearing.
ii) It is found that this land which is situated at Gat No. 323 (formerly bearing survey No. 139) has been given by you on lease to M/s. Weikfield Agro Products Pvt. Ltd. and the lease money has been offered for tax. In view of this, since income derived from this land is non-agricultural income, kindly explain how the land can be considered as a capital asset. You are also required to furnish 7/12 extract of this land for the year 1996-97, 1997-98 and 1998-99.
Thus disclosure of income is not voluntary. The same has been made only when assessee had been left with no other option. There exist no reason to treat the land as agriculture land as already explained.
6. Having gone through these facts of the case, it is held that the assessee has concealed particulars of income by not disclosing capital gain on sale of land at Village Bakori amounting to Rs. 10,85,200 in the return of income. Penalty Under Section 271(1)(c) is clearly leviable in this case. The amount liable is computed as under:
Income Concealed 10,85,200 Tax sought to be evaded 4,34,080 Minimum penalty leviable 4,34,080 Maximum penalty leviable 13,02,240 Penalty of Rs. 4,34,080 is hereby imposed.
3.7 Being aggrieved with the A.O's order imposing penalty Under Section 271(1)(c), the assessee carried the matter in appeal before the CIT(A).
3.8 The various contentions and submissions raised by the assessee before the CIT(A) had been discussed by the CIT(A) in his order mainly at para 4 to 7. After considering the assessee's submission, the CIT(A) deleted the penalty by observing and holding as under:
8. I have gone through the facts of the case and 1 find that the appellant had leased out the land owned by him to the company which constructed a building on the land for the purpose of cultivation of mushroom. In the light of the all available decisions of Hon'ble Supreme Court, mushroom cultivation cannot be considered as agriculture as the basic activities relating to agriculture such as tilling of land etc. are not required for purpose of cultivation of mushroom. It is also a fact that, as pointed out by the appellant, the term agriculture is being loosely accepted and applied in different case and for different purposes by different authorities of the State Government.
9. It is on record that the fact relating to agricultural activities, as is required under Income-tax law in the light of various Supreme Court decisions, has not been undertaken on land owned by the appellant and the issue has become final after the appellate order having been passed on the assessment order and the assessee not having raised the issue therein. However, the appellant has been able to demonstrate that his explanation, though not acceptable to the department and not relevant for the assessment, was bona fide and all the facts relating to the same and material to the computation of total income has been disclosed by him. This is further evidenced by the observations of the A.O. on page 2 of the assessment order, an extract of which is quoted above. In the light of these facts, the appellant's case falls within the explanation 1(B) which reads as under:
such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him The penalty imposed by the A.O. is, therefore, not sustainable as the appellant has been able to discharge his onus that explanation offered by him was bona fide. In fact, this has been demonstrated by the appellant as brought out in the penalty order in page-5 itself. The facts in this case are not similar to the decision of CIT v. K.P. Madhusudanan 246 ITR 218 relied upon by the A.O. In view of the above facts, the penalty levied is deleted.
Hence, the revenue is in appeal against CIT(A)'s order in deleting the aforesaid penalty imposed by the A.O Under Section 271(1)(c) of the Act. 3.9 The Learned Departmental Representative submitted that the A.O was very much justified in imposing the penalty Under Section 271(1)(c) of the Act in as much as that the conduct of the assessee in not offering the capital gain on the sale of land in question was not at all bona fide and honest one. She further submitted that since no agricultural activity were carried out by the assessee on the land in question, no question could or did arise to treat the land in question as agricultural land by the assessee and claimed the same as exempted on the ground that the agricultural land in question does not come within the ambit of capital asset defined Under Section 2(14) of the Act. She further contended that the activity of growing mushroom could not by any stretch of imagination to be treated as agricultural activity. The capital gain offered by the assessee for taxation in the course of assessment proceedings was not at all voluntary but the same was made only when assessee left with no other option. The Ld D.R. further contended that in the light of provisions contained in Section 271(1)(c) read with Explanation -1 thereto, it was the burden of the assessee to prove that the explanation offered by him as to why capital gain was not included in the return of income was honest and bona fide one and that the assessee has disclosed all the material facts and particulars related thereto. In this connection, it was further submitted by the Ld. D.R. that the assessee has not been able to substantiate his explanation by adducing any positive evidence. She further contended that that the assessee's belief that the land in question was agricultural land was not all bona fide and honest one because of the reason that there was no any reasonable basis for forming such a belief. In support of the revenue's case that the penalty is exigible in the present case, the Id D R has relied on the following decisions:
1. C.I.T v. Jeevan Lal Shah 205 ITR 244 (S.C)
2. C.I.T v. K.P. Madhusudanan 246 ITR 218 (Kerala)
3. K.P. Madhusudhanan v. C.I.T 251 ITR 99 (S.C.)
4. Western Automobiles (India) v. C.I.T 112 ITR 108(Bom)
5. Krishna Kumari Chamanlal and Anr. v. CIT 217 ITR 645(Bom) 3.10 The Ld Counsel for the assessee, on the other hand, submitted as under:
i. That all the material facts and particulars relating to the sale of land in question were disclosed and furnished before the A.O. ii. The character of the land was agricultural when the same was purchased as evident from 7/12 extract of revenue record.
iii. Since the land was used for the cultivation of mushroom crop, for plantation of fruit trees and cultivation of other incidental crops, the assessee bonafidely believed that it was an agricultural land and capital gain arising there-from is exempt from tax in as much as the land in question did not fall within the ambit of capital asset as defined Under Section 2(14) of the Act.
iv. The assessee was given to understand that mushroom production is an agricultural activity in the light of the opinion of the authority of Agricultural Department of the State Government of Maharashtra.
v. That further evidences in the nature of a letter from the authorities of the Central Government also support the assessee's view that the mushroom production is an agricultural activity. These letters or papers are as follows -
a) The letter from Horticulture Commissioner, Government of India, Ministry of Agriculture, to the effect that mushroom production is an agricultural activity.
b) Letter from NABARD that Hi-tech floriculture is an agricultural activity. The assessee's belief is that floriculture is similar to mushroom in as much as in floriculture, flowers are cultivated in places kept in climate controlled green houses.
c) An income-tax assessment order in the case of floriculture in which the Income Tax Officer had treated floriculture as an agriculture activity.
v. That the assessee had agreed to the addition to buy the peace with an understanding that no penalty Under Section 271 (1)(c) would be imposed on the assessee.
vi. In the light of the afore-said explanation, the assessee has been able to discharge its burden that lay upon it under Explanation 1 to Section 271(1)(c) by establishing that the explanation of the assessee was bona fide and the assessee has disclosed all material facts and particulars to the Department.
vii. That the explanation offered by the assessee to the A.O was not found to be false.
viii. That in the year in which the land was purchased, the A.O has himself treated the land to be used for agricultural purposes by allowing the deduction Under Section 54B to the assessee.
ix. Based on the facts and circumstances prevailing in the case and the evidence produced by the assessee, the assessee had reason to have a bona fide belief that the land sold was in agricultural in nature, and merely because the views of the assessee are not accepted by the AO in assessment cannot be a basis to hold that the explanation offered by the assessee was false and not bona fide one.
3.11 We have considered the rival contentions of both the parties and have carefully perused the orders of the authorities below. We have deliberated upon the applicable provisions of law as well as the judicial precedents cited at the bar.
3.12 In this appeal before us, the question arises for our consideration is as to whether the explanation offered by the assessee for not disclosing the capital gain on the land in question was false or bona fide one and whether the assessee has disclosed all the material facts and particulars relating thereto as contemplated under Explanation 1 to Section 271(1)(c) of the Act. In other words, the question for consideration before us is as to whether assessee has been able to discharge the burden that lay upon it under Explanation 1 to Section 271(1)(c) of the Act, so that the assessee should be exonerated from the imposition of penalty Under Section 271(1)(c) of the Act.
3.13. In order to appreciate the rival contentions, the provisions of Section 271(1)(c) and Explanation-1 thereto needs to be examined. The relevant portion of Section 271(1)(c) and the Explanation 1 thereto may be set out as below:
Section 271(1) If the Assessing Officer or the Commissioner (Appeals) or Commissioner in the course of any proceeding under this Act, is satisfied that any person -
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - in addition to tax, if any, payable by him, sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of its income or furnishing of inaccurate particulars of such income.
Explanation 1. - Where in respect of any facts material to the computation of the total income of any person under this Act, -
(A) such person fails to offer an explanation or offers an explanation which is found by the [Assessing] Officer or the [Commissioner (Appeals)] [or the Commissioner] to be false, or (B) such person offers an explanation which he is not able to substantiate [and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of Clause (c) of this Sub-section, be deemed to represent the income in respect of which particulars have been concealed.
3.14. As to the scope and effect of the Explanation-1 to Section 271(1)(c), we may refer to the following decisions:
3.15. The Hon'ble Supreme Court in the case of B.A. Balasubramaniam and Bros. Co. v. CIT has held that after the incorporation of the Explanation in Section 271(1)(c) of IT. Act, 1961, the view which had been taken earlier in CIT v. Anwar Ali no longer holds field and it is for the assessee to prove that there had been no concealment of income where the income shown in the return is less than the assessed income. In this case, the Hon'ble Supreme Court had affirmed the decision of the Hon'ble High Court by holding that the High Court was correct in holding that as the income returned was less than 80% of the income assessed, the explanation to Section 271(1)(c) became applicable and the income tax officer was justified in imposing penalty because the assessee had not been able to discharge the onus which was on it under the Explanation to Section 271(1)(c) of the Act. In this case, the Hon'ble Supreme Court had referred to his earlier three decisions namely, viz., CIT v. Mussadilal Ram Bharose ; CIT v. K.R. Sadayappan , and CIT (Addl.) v. Jeevan lal Sah .
3.16 The Hon'ble Supreme Court in the case of CIT v. Mussadilal Ram Bharose has held that the Explanation in Section 271(1)(c) raised only a presumption that can be rebutted with reference to the facts of the case. In this case, it was observed that where the total income returned by the assessee is less than 80% of the total income as assessed, the then Explanation to Section 271(1)(c) of the Act, 1961 shift the burden to the assessee to show that the difference was not owing to fraud or gross and willful neglect on his part. This onus is rebuttable. If, in an appropriate case, the Tribunal or the fact finding body is satisfied on relevant and cogent material on record, and draws an inference thereupon that the assessee was not guilty of any gross or willful neglect or fraud, then, in such a case, the assessee cannot come within the mischief of the section and suffer penalty. The burden placed upon the assessee is not discharged by any fantastic explanation. Nor is it the law that any and every explanation by the assessee must be accepted. It must be an explanation acceptable to the fact finding body.
3.17 It is also pertinent to note that that the Hon'ble Supreme Court in the case of K.P. Madhusudanan v. CIT pointed out that where penalty is exigible with reference to the Explanation to Section 271(1), the mere fact that the A.O. has not specifically invoked the same would not justify cancellation of penalty. The decision of Hon'ble High Court in this case reported in CIT v. K.P. Madhusudanan was affirmed. The Hon'ble High Court in this case had pointed out that the assessee had kept out certain entries relating to alleged hand loans and offered explanation for the same as fanciful and vague, so that the Tribunal was not justified in excusing penalty. It was in this context that the Hon'ble High Court found that the mere offer of income and the fact that the notice issued by the A.O. did not invoke the Explanation to Section 271(1)(c) cannot justify cancellation of penalty. In this case, the Hon'ble Supreme Court went further and held that the decision of the Supreme Court in Shadilal Sugar and Shree General Mills Ltd. v. CIT is no longer good law after the insertion of Explanation to Section 271(1)(c) of the Act. In this case, the Hon'ble Supreme Court has overruled the decision of Hon'ble Bombay High Court in CIT v. B.M. Shah and CIT v. Dharamchand L. Shah .
3.18 In additional CIT v. Jeevan Lal Shah , the Hon'ble Supreme Court was dealing with penalty initiated on re-assessment, which was prompted by some information in the possession of the Department. The assessee himself offered higher income disclosing certain deposits and interest, which he had not disclosed earlier. It was further held herein that Anwar Ali's case (1970) 76 ITR 676 (SC) is no longer good law after the Explanation in Section 271(1)(c) is inserted and that in cases where Explanation is attracted, levy of penalty or otherwise would depend upon the principles enunciated in Mussadilal Ram Bharose's case and CIT v. K.R. Sadayappan . The matter was, therefore, remanded to the Tribunal for a decision consistent with those guidelines.
3.19 In the case of Raghuvir Son v. ACIT (2002) 258 ITR 239, the Hon'ble Rajasthan High court has deliberated upon the scope and effect of Explanation 1 to Section 271(1)(c) by observing and holding as under:
The provisions of the Income-Tax with effect from April 1, 1976, relating to levy of penalty for concealment of income has been materially altered.
It clearly postulates that where any amount is added in computing the total income of the assessee and in the penalty provision the assessee fails to offer an explanation or offers an explanation which is found to be false or where on furnishing an explanation he is not able to substantiate the same and fails to prove that such explanation is bona fide then for the purpose of Clause (c), the said addition made or deduction has to be deemed to represent the income in respect of which particulars have been concealed.
The Explanation in force with effect from April 1, 1976, is clear in itself as to its operative field. It does not provide a rule of rebuttable presumption to start with further enquiry in which such rebuttable presumption could be displaced, whether by leading new evidence or form existing material. But it clearly comes into operation when enquiry into the correctness of the additions made or deductions disallowed during the course of assessment proceeding is completed by calling for an explanation from the assessee. On particular conclusion reached, the operative part of legal fiction comes to life and not otherwise. Thus, it is a deeming provision for reaching a conclusion and not for starting an enquiry with a presumption against the assessee.
In this connection further distinction is clearly noticeable between the two clauses of Explanation 1. Clause (A) refers to case where no explanation is furnished by the assessee about such additions made or deductions disallowed, or if explanation is furnished by the assessee, it is found that to be false. Finding an explanation to be false is akin to a fact disproved in contrast to a fact "not proved" as defined in the Evidence Act. In such event the conclusion that is to be arrived at is that the amount added or disallowed in computation is deemed to represent the income in respect of which particulars have been concealed.
Clause (B) comes into the picture only when some explanation is furnished by the assessee. It does not come into the picture where the assessee does not furnish any explanation because such a case is governed by Clause (A). Clause (B) comes into operation, where the explanation furnished by the assessee in respect of the additions or disallowance of any amount, he is unable to substantiate the same that is to say where the explanation furnished by the assessee is placed in the category of a fact 'not proved', which denotes that the fact in enquiry is neither proved nor disproved. This 'not proved' state by itself can invite the operation of the Explanation. If in addition to failure to substantiate the explanation, the assessee also fails to prove that the explanation furnished by him was bona fide, and that he has disclosed all material facts necessary for assessment then Explanation 1 operates....
For giving effect to the legal consequence on certain existing state of affairs, which has been ordained by a statute, does not require any specific notice of intention to invoke the statutory provision. The statutory provision in question comes into operation by its own force once the conditions mentioned in Clause (A) or Clause (B) come into existence. It does not depend on the option of the assessing authority to invoke by specific mention to reach the conclusion envisaged by law once the conditions mentioned in Clause (A) or Clause (B) of the Explanation 1 to Section 271(1)(c) are established.
3.20. On careful reading of the afore-said provisions of Section 271(1)(c) read with Explanation 1 thereto and in the light of judicial precedents discussed above, the law on the subject of penalty imposable Under Section 271(1)(c) read with Explanation thereto can be spelt out in the prepositions as under:
i) Wherever there is a difference between the returned and assessed income, there is a inference of concealment, as a rule of law as would be clear from Explanation 1 to Section 271(1)(c) of the Act. However, the Explanation 1 to Section 271(1)(c) raises only a presumption that can be rebutted by the assessee with reference to the facts of the case.
ii) The responsibility for rebutting such inference of concealment drawn under Explanation 1 to Section 271(1)(c) is squarely on the assessee.
iii) The assessee is required to offer an explanation for the difference between the returned and assessed income.
iv) Absence of any Explanation, by itself, would attract penalty as is clear from Clause (A) of Explanation 1 to Section 271 (1)(c) of the Act.
v) The explanation of the assessee, where offered, should not be found to be false, so that the penalty would not be exigible. In other words, the explanation of the assessee if found to be false would attract penalty as envisaged in Clause (A) of Explanation 1 to Section 271 (1)(c) of the Act.
vi) Merely because the assessee is not able to substantiate its explanation, penalty would not automatically be attracted if (i) such explanation is found to be bona fide and (ii) all the facts relating and material to the computation of total income has been disclosed by the assessee.
vii) Where there is nothing to suggest, gross or willful neglect or fraud and the explanation offered by the assessee is found to be bona fide, the Explanation 1 to Section 271 (1)(c) itself would not then help the revenue to justify the penalty.
viii) The burden placed upon the assessee to rebut the presumption raised under Explanation-1 to Section 271(1)(c) would not be discharged by any fantastic or fanciful explanation. It is not the law that any and every explanation by the assessee must be accepted.
ix) Mere offer of income by the assessee cannot justify cancellation of penalty. Though it cannot be laid down as a principle of universal application that whenever an addition is made on a concession, penalty is not to be levied, the factual position in each case has to be considered and the background in which the agreement is made for the addition has to be taken note of.
x) Where penalty is exigible with reference to the Explanation to Section 271(1)(c), the mere fact that the AO has not specifically invoked the same would not justify cancellation of penalty.
3.21. In this view of the matter, it is thus clear that so long as the assessee gives a bona fide explanation and unreservedly gives all the documents and information without withholding any information relating to the computation of assessee's total income, the assessee's explanation unless found to be false, would deserve acceptance for the purpose of penalty imposable Under Section 271(1)(c), so that penalty should not be exigible. In other words, if an assessee offers an explanation, which is not found to be false, he can save himself from penalty even if he were not able to substantiate his case as long as the explanation of the assessee is bona fide and as long as he places all the relevant facts material to the computation of his total income irrespective of the fact that the same explanation was not accepted for the purpose of assessment.
3.22. Having said so, we shall now revert to the facts of the present case, to decide as to whether the assessee's explanation was found to be false by the A.O, or even if the assessee were not able to substantiate his case, whether the assessee's explanation was bona fide and the assessee has disclosed all material facts and information relating to the capital gain arising from sale of land in question, so that penalty should be imposed or not.
3.23. The land in question having Gat No. 323 at Bakori was purchased by the assessee on 17.10.94 jointly along with four other persons, namely, (1) Shri Baldevraj Sitaram Malhotra, (2) Shri Mukesh Satpai Malhotra, (3) Shri Puneet Satpal alhotra and (4) Shri Ashwini Baldevraj Malhotra for a sum of Rs. 12 lakh. This land was subsequently sold by the assessee and other joint owners for a sum of Rs. 55 lakh during the year under consideration having assessee's share of Rs. 11 lakh in the sale consideration. The capital gain arising from sale of this land was not disclosed by the assessee in the return of income filed by him. After purchasing the said land on 17.10.94, this land was given on lease by all the joint owners to M/s Weikfield Agro Products P Ltd with effect from 24.11.94. The lease income derived by the assessee has been duly reflected in the taxable income of the assessee. Since capital gain arising from the sale of this land was not shown by the assessee in the return of income, the AO issued a notice to the assessee to show cause as to why gain on sale of land in question should not be taxed as capital gain in his hand. The assessee submitted a written submission on 28.2.2000 to the AO, which is extracted as under:
The land at village Bakori has been used for carrying on Agriculture operation which is evident from 7/12 extract enclosed separately. It may also kindly be noted and appreciated that assessee along with order co-owners has also entrusted the work of plantation of various trees as is evident from the bill dated 4-10-95 issued in the name of Wekfield Agro products. We are enclosing copy of the same for your honours kind perusal and ready reference. It may also kindly be noted appreciated that no accounts have been maintained by the assessee in this respect and as such details cannot be furnished in respect of receipt and expenses incurred for carrying out such activities. It may however kindly be noted and appreciated the receipted were just sufficient to meet the expenses. In fact there was negligible income earned by the assessee in the initial year. In this respect, elaborate note have already been brought on your record at the time of hearing under the head ' Note on Bakori land purchase/leased/sell. We are enclosed the said copy for your kind perusal and ready reference.
This land however has been given on lease to Weikfield Agro Products Pvt. Ltd for carrying out the agriculture production namely Mushroom. In this respect, it has been clarified that as per the certificate issued by Dr. S.K. Goyal, Commissioner of Agriculture, MS Pune dt 21.2.00 the mushroom are an agricultural produce classified as vegetables. We are enclosing copy of the said certificate for your kind perusal and record. It has also been clarified that as per the dictionary meaning of Agriculture it is the science or art of cultivating the soil, harvesting crops and raising live stock. It is also the science or art of production of plants and animals useful to man and in varying degrees. The preparation of these products for mans use and their disposal (as by marketing). We are enclosing the relevant page of the dictionary from Webster's at page 44 giving such meaning. The lease rent however was not claimed as exempt for the concerned year since the concerned company did not set up the agricultural activities in the year under consideration. It is therefore submitted that the said factor will not have much bearing on this issue. The assessee could obtain 7/12 extract for the FY 91-92 to 95-96. The extract for 96-97 and 98-99 are not readily available.
Please find enclosed herewith copy of agreement for receipt of payment of Rs. 1 lac as advance received for agreement to sale of land at Bakori (& not Wagholi as stated in your letter) to Weik field Agro Products Ltd. In this respect all the relevant details as required have already been brought n your record. It may kindly be noted that no possession had been given in the year under consideration of such land on receiving of such advance and as such there is no income accrued or earned by the assessee pertaining to such transaction. It is submitted that since the land is agricultural land the same is not taxable since it is situated beyond the prescribed limit stated in terms of provisions of Section 2(14) of the Act.
At the time of hearing before your honour the issue regarding claim of exemption pertaining to the consideration of Rs. 11 lacs has been discussed in detail. It has been brought to the kind notice of your honour that the exemption is claimed in terms of provisions of Section 2(14) of the Act. It is however felt that your honour is not satisfied with the details submitted in support of such claim. On discussion it has been decided by the assessee to surrender the claim of exemption on the condition that no penalty would be initiated by the department Under Section 271(1)(c) and except imposing the relevant amount of tax and interest if any payable thereon, no other action will be taken by the dept. The assessee has decided to surrender the claim with a view to buy peace of mind and to avoid possible litigation in this respect. The amount of Rs. 11 lacs claimed as exempt may be treated as forming part of the income subject to the conditions mentioned above.
3.24 The aforesaid submission of the assessee was not found acceptable to the A.O. As the AO was of the view that there was no agricultural operation carried out on the land in question and mere plantation of tree itself cannot be a basis for treating the use of land as for agricultural purposes. The AO further stated that immediately after the purchase, the land was given on lease to M/s Weikfield Agro Products (P) Ltd on and from 24.11.94 for production of Mushroom. The AO also stated that the dominant purpose for acquiring this land was not to use the same for agricultural purposes, but for other purposes. The AO also did not give any consideration to 7/12 extracts by saying that it was never the case of the assessee that the land in question was used for the purpose of production of those crops mentioned in 7/12 extracts, but the assessee's case was that Mushroom were produced on the land by his lessee, i.e. M/s Weikfield Agro Products (P) Ltd. The AO further stated that once the lands were leased on 24.11.94 by the assessee to M/s Weikfield Agro Products (P) Ltd, the question of use of this land by the assessee himself for the purpose of producing crops mentioned in 7/12 extracts did not arise. He, therefore, held that 7/12 extracts submitted by the assessee cannot be relied upon. The certificate issued by the Commissioner of Agriculture, Pune certifying that Mushroom is an agricultural activity was also not accepted by the AO, in view of the decisions of various Courts that in order to constitute agricultural income, the land must be used for growing all or any of the commercial crops and the income should be derived from such land by way of agriculture. Mushroom activity was not treated to be of agricultural activity by the AO. The AO, therefore, computed the capital gain arising from the sale of the land in question and added the same to the total income of the assessee.
3.25 Now, the first question arises as to whether the assessee had disclosed all the facts material to the computation of his total income as far as the issue involved in this appeal is concerned. In the assessment order itself, the AO had stated that the assessee had attached a Note along with the statement of taxable income, reading as under:
During the year the assessee has sold agricultural land situated at village Bakori, Dist. Pune for Rs. 11 lacs. Since this was agricultural land and such land is situated outside 8 Kms from municipal limit (notified area/town) the gain arising therefrom is treated as exempt. (The copy of sale deed is enclosed). When above referred land was purchased in AY 95-96 the capital gain exemption was claimed in terms of provisions of Section 54B of the Act.
As the land at Bakori was sold within a period of three years the exemption claimed earlier in AY 95-96 is revoked and offered for taxation as per provisions of Section 54B.
3.26 On reading the said note as well as the assessee's written submissions filed before the AO on 28.2.2000, it is clear that the transaction of selling the land in question has been disclosed by the assessee to the AO. The consideration amount for which the land was sold was also furnished. In the Note, the assessee has claimed that since this land was agricultural land and is situated outside 8 Kms from rnunicipal limit, the assessee is claiming capital gain arising from the sale of this land as exempted. The assessee further stated that as the land in question has been sold within the period of 3 years from the date of its acquisition, the exemption claimed earlier in assessment years 95-96 against purchasing the said land Under Section 54B is withdrawn or revoked and offered for taxation as per the provisions of Section 54B of the Act. From the explanation submitted by the assessee before the AO on 28.12.2000, it is also clear that the assessee had submitted a certificate issued by one Dr. S.K. Goyal, Commissioner of Agriculture, M.S., Pune dt 21.2.2000 in support of the contention that Mushroom are agricultural produce classified as vegetables. From the written submission filed by the assessee on 28.02.2000, it is also seen that the assessee had also submitted elaborate Note on this land to the AO, a copy of which was enclosed with the assessee's submission filed on 28.2.00 for the AO's perusal and ready reference. Therefore, in this background, we may say that the assessee has furnished or placed all facts material to computation of his capital gain before the AO in the course of assessment proceedings. On perusal of the AO's order passed Under Section 271(1)(c) of the Act, it is also clear that it is not the AO's case that the assessee has not furnished all the relevant facts material to computation of his capital gain.
3.27 On perusal of assessment order as well as penalty order, it is also clear that the assessee has not been able to substantiate his claim that the land sold during the year under consideration was in the nature of agricultural land. We have already stated above that mere failure to substantiate the claim or explanation is by itself not sufficient to attract penalty Under Section 271(1)(c), unless it is proved that the explanation offered by the assessee is false and not bona fide, and the assessee has failed to disclose or furnish all the facts material to the computation of his income. Therefore, now we have to see as to whether the assessee's claim that the land sold was an agricultural land was a bona fide one or otherwise a false, so that penalty would be imposed or not.
3.28 At this stage, it is first necessary to see as to how capital gain has been computed by the AO. The capital gain computed by the AO is as under:
Sale consideration received Rs. 11,00,000/- Less: Cost of acquisition (l/5th share) Rs 14,800/- Short term capital gain Rs. 10,85,200/-
This sum of Rs. 10,85,200/- was included in the assessee's total income on account of short term capital gain arising to the assessee from the sale of land in question. On perusal of the said computation of capital gain, we find that the AO has taken the cost of acquisition at Rs. 14,800/- being 1/5th share of the assessee. It is not in dispute that this land was purchased for a sum of Rs. 12 lakh jointly along with four other persons and the assessee's share in the purchase consideration including other expenses was of Rs. 2,56,000/-. As against the actual cost of acquisition of Rs. 2,56,000/-, the AO has deducted cost of acquisition of Rs. 14,800/- only. The reason given by the AO for taking the cost of acquisition at Rs. 14,800/- as against actual cost of acquisition of Rs. 2,56,000/- is that this land was purchased by the assessee out of capital gain of Rs. 24,33,313/- that arose to the assessee in the assessment year 95-96. At this stage, it is pertinent to note that the assessee had a capital gain of Rs. 24,33,313/- in the assessment year 95-96 out of which the assessee had purchased this land in question. The purchase consideration of this land in question was allowed as deduction Under Section 54B of the Act in the assessment year 95-96. Section 54B provides for the cases where capital gain on transfer of land used for agricultural purposes is not to be charged. The conditions for applicability of Section 54B(1) are that a capital gain arises from the transfer by the assessee of a capital asset being land, and such land was being used by the assessee or a parent of his for agricultural purposes in the two years immediately preceding the date of transfer, and the assessee has within a period of two years after the date of the transfer, purchased any other land for being used for agricultural purposes, which is referred to as new asset. If these conditions are satisfied, then where the amount of capital gain is greater than the cost of new asset, it is the difference between the amount of capital gain and the cost of new asset that will suffer tax Under Section 45 as capital gain of the previous year, and if the new asset is made subject of a transfer within a period of three years of its purchase, its cost of acquisition shall be taken at nil, or, where the amount of the capital gain is equal to or less than the cost of the new asset, capital gain arising from the transfer shall not be charged to income-tax and if the new asset is made subject of a transfer within a period of three years of its purchase, then, for the purpose of computing capital gains on such subsequent transfer of the new asset, the cost of new asset shall be reduced by the amount of the capital gain on the transfer. Therefore, it is clear that if the assessee makes a transfer of the new asset within a period of three years from the date of its purchase, the benefit obtained by him Under Section 54B is offset by taking cost of the new asset as reduced by the amount of capital gain exempted Under Section 54B of the Act. The exemption Under Section 54B is available to the assessee only when the land used for agricultural purposes is sold, and the assessee has within a period of two years after the date of the transfer of this agricultural land purchased any other land for being used for agricultural purposes. It is, thus, clear that the former asset as well as the new asset being the land are to be used for agricultural purposes. In the assessment year 95-96, the AO has allowed benefit of exemption Under Section 54B on the purchase of the land in question, which has been sold during the year under consideration, implying thereby that this land purchased by the assessee on 17.10.94 was treated as a land for being used for agricultural purposes. In other words, the AO has recognized the land in question as the land for being used for agricultural purposes and has allowed the exemption Under Section 54B of the Act in the year of its purchase. Since the land has now been sold in the year under consideration within a period of three years of its purchase, the cost of acquisition of this and has been reduced by the AO from Rs. 2,56,000/- to Rs. 14,800/- as per Clause (i) or (ii) of Sub-section (1) of Section 54B of the Act. It is not in dispute that the deduction allowed Under Section 54B on account of purchase of this land in question has not been withdrawn by the department, but rather the AO has invoked Clauses (i) or (ii) of Section 54B(1) by reducing the cost of acquisition of the land in question while computing the Short term capital gain at Rs. 10,85,200/- arising from the sale consideration of Rs. 11 lakh in the year under appeal. In other words, the AO even in the year under consideration has acted upon the provisions of Section 54B of the Act and computed the capital gain accordingly. It is thus clear that as the AO himself has allowed the cost of the land in question as deduction Under Section 54B of the Act from the amount of capital gain arising on the sale of earlier land used by the assessee for agricultural purposes for the reason that the assessee has purchased this land in question for being used for agricultural purposes within a period of two years after the date of transfer of the first asset which was being used for agricultural purposes, the land in question was treated by the AO as a land for being used for agricultural purposes while granting deduction Under Section 54B in the assessment year 95-96. Therefore, in the light of the fact that the department has itself treated the land in question as the land used for agricultural purposes while allowing the assessee's claim Under Section 54B in assessment year 95-96 and the AO has reduced the cost of acquisition by an amount of deduction already allowed Under Section 54B while computing the capital gain on transfer of the land in question, the assessee's claim that the land in question is to be treated as agricultural land being situated beyond 8 kms. from the municipality cannot be said to be false or non bona fide one. Mere rejecting the assessee's claim of treating the land in question as agricultural land for the reason that it was not found to be satisfactory and then assessing the gain arising therefrom to tax in the assessment is by itself not sufficient to attract penalty Under Section 271(1)(c) of the Act, when the assessee's claim has not been established to be false and non bona fide one, and it is not established as well that the assessee has failed to place all the facts material to the computation of capital gain arising from the sale of the land in question.
3.29 Moreover, in the light of the fact that the land in question was classified as agricultural land in revenue records being 7/12 extracts and the assessee's claim of treating the land as of agricultural in nature is supported by the certificate given by one Dr. S. K. Goyal, Commissioner of Agriculture, Government of Maharashtra, Pune and the Horticulture Commissioner, Government of India, Ministry of Agriculture, certifying that Mushroom production is an agricultural activity, we are of the considered view that the assessee's claim of treating the land of agricultural in nature and thus not offering the gain "arising on sale thereof cannot be said to be false and non bona fide one. It is the case where the assessee's claim is found to have not been substantiated without there being any material or evidence on record to show and establish that the assessee's claim was false and not a bona fide one. We do not find that the assessee has given any fantastic or fanciful explanation, which do not deserve to be accepted as bona fide one. Therefore, on this count also, we hold that the assessee has been able to rebut the presumption of concealment of income or of furnishing inaccurate particulars of income drawn against him under Explanation 1 to Section 271(1)(c) of the Act. It is further to be noted that a view that no penalty Under Section 271(1)(c) is exigible in the present case has been taken by us not for the reason that the assessee has agreed for the addition in the course of assessment proceedings after an explanation was sought for by the AO, but we have taken this view for the reason that the assessee's claim, though not found to be acceptable for the purpose of assessment, is not a false and non bona fide one. We have considered the factual position of the case and find that the assessee has agreed for the addition for the reason that 7/12 extracts and certificate from concerned authority may not be sufficient to support the assessee's case.
3.30 For the reasons given above, we, therefore, hold that the CIT (A) was justified in deleting the penalty levied by the AO Under Section 271(1)(c) in respect of the addition of short term capital gain arising to the assessee from the sale of land |n question.
4. Now, we proceed to take the appeal filed in the case of Shri Malhotra Satpal Sitaram for the assessment year 98-99. In this case, an addition of Rs. 20 lakh being short term capital gain arising from sale of a land situated at village Bakori was added to the assessee's total income by the AO in the assessment completed Under Section 143(3) of the Act. It is stated by the AO that on scrutiny of the return of income, he found that the assessee had claimed the income of Rs. 20 lakh on the sale of land at village Bakori as exempted from tax as the land sold was of agricultural in nature and, therefore, the assessee was asked to explain as to why the land was treated as agricultural land and to furnish certain details, being copy of the purchase and sale deed, 7/12 extract in respect of the land from the date of its purchase till the date of its sale and how this land was used during this period. The assessee submitted its reply on 18.10.2000, which is reproduced here as under:
The land at village Bakori has been used for carrying on Agricultural operation which is evident from 7/12 extract. It may also kindly be noted and appreciated that assessee had also entrusted the work of plantation of various trees as is evident from the bill dated 4-10-95 issued in the name of Weikfield Agro products. We are enclosing copy of the same for your honours kind perusal and ready reference. It may also kindly be noted appreciated that no accounts have been maintained by the assessee in this respect and as such details cannot be furnished in respect of receipt and expenses incurred for carrying out such activities. It may however kindly be noted and appreciated the receipts were just sufficient to meet the expenses.
This land however has been given on lease to Weikfield Agro Products Pvt. Ltd for carrying out the agriculture production namely Mushroom. In this respect, it has been clarified that as per the certificate issued by Dr. S.K. Goyal, Commissioner of Agriculture, MS Pune dt 21.2.00 the mushroom are an agricultural produce classified as vegetables. We are enclosing copy of the said certificate for your kind perusal and record. It has also been clarified that as per the dictionary meaning of Agriculture it is the science or art of cultivating the soil, harvesting crops and raising live stock. It is also the science or art of production of plants and animals useful to man and in varying degrees. The preparation of these products for mans use and their disposal (as by marketing). We are enclosing the relevant page of the dictionary from Webster's at page 44 giving such meaning.
We may further bring to your notice that the said land was given on lease to M/s Weikfield Agro Products P Ltd only upto 21st March, 1997.
It is also submitted that since the land is agricultural land the same is not taxable since it is situated beyond the prescribed limit stated in terms of provisions of Section 2(14) of the Act.
After considering the assessee's explanation, the AO held that in view of the matter already discussed by him in the assessee's case in the assessment year 97-98 and in view of the fact that the land in question has been given by the assessee on lease to M/s Weikfield Agro Products P Ltd for the purpose of cultivation of Mushroom, the land in question cannot be considered as of agricultural in nature and, thus, the gain derived by the assessee on sale thereof is chargeable to tax under the head capital gain. The AO, therefore, charged the sum of Rs. 20 lakh being sale consideration of the land in question to tax while completing the assessment and also initiated penalty proceedings Under Section 271(1)(c) for furnishing inaccurate particulars of income with regard to the income arising to the assessee from the sale of the land in question. The AO ultimately imposed penalty equal to 100% of the tax sought to be evaded on the capital gain of Rs. 20 lakh, vide his order dt 25.4.01. While imposing the penalty Under Section 271(1)(c), the AO has stated that the explanation offered by the assessee for treating the land as agricultural land was not bona fide and the assessee had no reason to treat the land as agricultural land. The AO invoked Explanation 1 to Section 271(1)(c) for the purpose of imposing penalty Under Section 271(1)(c) and has held that the onus on the assessee to establish that the explanation offered was bona fide has not been proved.
4.1 On appeal, the CIT (A) deleted the penalty by holding that the assessee has been able to discharge his onus that the explanation offered by him was bona fide and all the relevant facts material to the computation of total income of the assessee has been disclosed by him.
4.2 We have heard both the parties and have carefully perused the orders of the authorities below and the materials on record.
4.3 In the assessment, the AO has stated that the land in question was sold for Rs. 20 lakh and the whole of the sale consideration was treated as capital gain because for the reason that the cost of this land was allowed as deduction Under Section 54B of the Act from the capital gain arising from the sale of some other land for being used for agricultural purposes and sold during the assessment year 95-96. In the order of penalty Under Section 271(1)(c), the AO has stated that this land was purchased by the assessee on 9.1.95 through three purchase agreements for a sum of Rs. 4,89,000/- and the cost of acquisition in the hands of the assessee for the purpose of capital gain was taken to be Nil as per provisions of Section 54B of the Act. It is, thus, clear that at the time of purchase of this land, the land was treated for being used for agricultural purpose by the AO and he, thus, allowed the deduction Under Section 54B of the Act. The facts and circumstances of the case in the assessment year 98-99 are identical as to that of the assessment year 97-98 and that position has been accepted by the AO in the assessment order as well as in the penalty order. Therefore, in the light of the view taken by us in the assessment year 97-98, and particularly in view of the fact that this land was treated as land for being used for agricultural purposes in the year of its purchase by the AO himself while granting deduction Under Section 54Bof the Act and the assessee's claim that the land in question was of agricultural land is supported by the view expressed by the Agricultural Department of the State Government of Maharashtra, Horticulture Commissioner, Government of India, Ministry of Agriculture, New Delhi and further by classification of the same as agricultural land in revenue record being 7/12 extracts. In this view of the matter, therefore, we are of the considered view that no penalty Under Section 271(1)(c) is exigible in the present case as the assessee's explanation is found to be bona fide and all the material facts were produced by the assessee. We uphold the order of the CIT (A) in deleting the penalty levied Under Section 271(1)(c) of the Act for this assessment year 98-99 also.
5. With regard to ITA No. 183/PN/03 and 184/PN/03, in respect of two assesses, namely, Shri Malhotra Mukesh Satpal and Shri Malhotra Baldevraj Satpal for the assessment year 97-98, it is seen that the land involved in these appeals is one and the same which was involved n the case of Shri Malhotra Satpal Sitaram in the assessment year 97-98, inasmuch as these two assessees were joint owners of the land, which was jointly purchased by these two assessees, namely, Shri Malhotra Mukesh Satpal, Shri Malhotra Baldevraj Satpal along with Shri Sitaram Satpal Malhotra, Shri Puneet Satpal Malhotra and Shri Ashwini Baldevraj Malhotra.
6. In the case of Shri Malhotra Baldevraj Satpal the cost of acquisition was taken at NIL as against purchase consideration of Rs. 2,56,000/- while computing the short term capital gain at Rs. 11 lakh being the sale consideration in this assessee's hand by the AO, as it was found by the AO that the cost of acquisition of this land was allowed as deduction Under Section 54B and, as such, the cost of acquisition was reduced by the amount of deduction allowed Under Section 54B of the Act. In the case of Shri Malhotra Mukesh Satpal, the cost of acquisition of this land was taken at Rs. 1,28,000/- as no deduction Under Section 54B did arise in this assessee's case in the year of its purchase. For the reasons given by us in the case of Shri Sitaram Satpal Malhotra, the explanation offered is found to be bona fide in these two assessees' case also and the assessees' explanation in these cases also cannot be said to be false and mala fide. Therefore, following our order given hereinabove in the case of Shri Malhotra Satpal Sitaram for assessment year 97-98, we hold that the CIT (A) was justified in deleting the penalty Under Section 271(1)(c) in the case of these two assessees also for the assessment year 97-98, and we do not find any infirmity in the order of the CIT (A).
7. In the result, all these four appeals filed by the Revenue are dismissed.