S. 271(1)(c): Apart from falsity of the explanation, the department must have cogent material or evidence from which it could be inferred that assessee has consciously concealed particulars of income or deliberately furnished inaccurate particulars of income

As held by Hon’ble Supreme Court in the case of CIT vs. Khode Easwar 83 ITR 369 the penalty proceedings being penal in character, the Revenue itself has to establish that the receipt of the amount undisputedly constitute income of assessee. Apart from falsity of the explanation given by assessee, the department must have before levying penalty, cogent material or evidence from which it could be inferred that assessee has concealed particulars of income or had deliberately furnished in accurate particulars in respect of the same and that the disputed amount is taxable receipt. No doubt, in the original assessment proceedings A.O. can take an opinion that claim of capital gains cannot be allowed and has to be taxed under the head “Business” but that is not enough for considering penalty proceedings. Assessee has not found the explanation of assessee to be false in assessment.

He only deferred on the basis of the memorandum and articles of assessee company and also the fact that very high price was received by assessee at the time of sale. These factors may be enough for bringing amount to tax as business income but cannot establish that assessee has consciously “concealed particulars of income or deliberately furnished in accurate particulars of income”. Ld. CIT(A) also in our opinion, has wrongly considered that assessee has falsified accounts ignoring the fact that at the time of purchase way back in 3-4 years before, assessee could not have imagined that price will go up and assessee would get a good price for the land purchased. The fact that assessee has shown lands as assets in the books of accounts consistently cannot be brushed aside just because A.O. took a different view which was upheld by ITAT. On the facts of the case, we are of the opinion that it is only a difference of opinion on a debatable issue which does not lead to furnishing of inaccurate particulars (CIT vs. Reliance Petro Products (2010) 322 ITR 158 (SC), Sidhartha Enterprises 322 ITR 82 (P&H) & Rajeev Bhatara 360 ITR 121 (P&H) followed)