2013 (3) TMI 650 - HC - Income Tax

Penalty u/s 271(1)(c) - concealment - Held that - The respondent-assessee had in its return of income filed a note with its computation of income disclosing all details about the sale of US 64 units, the loss and resultant carry forward. Further, all details were disclosed in its return of income as is evident from the fact that the assessing officer gathered information about the carry forward loss and sale of units from return filed by the respondent-assessee. The Tribunal correctly held that the from the aforesaid facts at the highest it can be said that the claim of the assessee was not sustainable in law but there was no furnishing of inaccurate particulars or concealment of income on the part of the respondent-assessee. Thus, the penalty was set aside.

Summary

Issues:
1. Wrong claim made by the assessee regarding setting off of loss against other income under Section 10(33) of the Income Tax Act.
2. Justification of the ITAT in deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act.
3. Determination of whether the wrong claim made by the assessee constitutes filing of inaccurate particulars or concealing of income.

Issue 1:
The case involved appeals by the revenue for the assessment year 2004-05, where common questions of law were raised for consideration. The first issue was whether the ITAT was correct in holding that the assessee's claim of setting off loss against other income under Section 10(33) was not filing inaccurate particulars. The assessing officer disallowed the loss on the sale of US 64 units, initiating penalty proceedings under Section 271(1)(c) of the Income Tax Act. The CIT (A) upheld the penalty, but the Tribunal, in the impugned order, found that the assessee had disclosed all details about the sale of US 64 units and the resultant loss in its return of income. The Tribunal concluded that while the claim may not have been sustainable in law, there was no inaccurate particulars or concealment of income by the assessee. The Tribunal's decision was supported by a Supreme Court case, and thus, the penalty was set aside.

Issue 2:
The second issue pertained to the justification of the ITAT in deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act. The Tribunal based its decision on the fact that the assessee had disclosed all relevant details in its return of income, and there was no deliberate attempt to conceal income or provide inaccurate particulars. The Tribunal's decision was upheld, citing a Supreme Court case as precedent. Consequently, the penalty was set aside, and the appeals by the revenue were dismissed.

Issue 3:
The final issue was whether the wrong claim made by the assessee constituted filing inaccurate particulars or concealing income. The Tribunal found that while the claim may not have been legally sustainable, there was no evidence of inaccurate particulars or income concealment by the assessee. The Tribunal's decision was supported by a Supreme Court case, and as it was based on factual findings, the proposed question of law was not entertained. Ultimately, all three appeals were dismissed with no order as to costs.

This judgment highlights the importance of disclosing all relevant details in income tax returns, even if a claim may not be legally sustainable. It also emphasizes that mere unsustainability of a claim does not automatically imply inaccurate particulars or concealment of income, as evidenced by the findings in this case and supported by legal precedents.