2010 (6) TMI 501

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..... enalty is set aside - ITA No. 1548/Mum/06 - - - Dated:- 25-6-2010 - D K Agarwal Judicial Member J. Pramod Kumar Accountant Member J. Appellant by : Shri Vijay Mehta Respondent by : Shri Virendra Ojha ORDER Per Pramod Kumar: 1. The short issue that we are required to adjudicate in this appeal is whether or not the CIT(A) was justified in upholding the penalty of Rs. 6,39,040 imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961. The assessment year involved is 1999-2000. 2. The issue in appeal lies in a very narrow compass of facts. The assessee is a company engaged in the business of, inter alia, investment, horse breeding, and horse racing. In the course of assessment proceedings, the Asses .....

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..... dominant purpose of all his activities is to acquire and maintain the race horses and that the activity of leasing mares for breeding, entering into lease options and all other activities are wholly incidental to the main activity of owning and maintaining the race horses . As to whether the dominant purpose of all the activities is to own and maintain race horses or not is essentially a subjective area, and the perceptions may differ. Merely because the assessee has a different perception of the situation than the Assessing Officer, even though, in the ultimate analysis, the stand of the Assessing Officer is to be upheld, it cannot be said that the assessee has concealed any particulars. The expression furnishing of inaccurate particula .....

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..... ulars of income. Inaccurate , as we have noted above, is something factually incorrect and interpretation of law can never be a factual aspect. The development of law is a dynamic process which is affected by the innumerable factors, and it is always an ongoing exercise. In such circumstances, a bona fide legal claim by the assessee being visited with penal consequences only because it has not been accepted thus far by the tax authorities or judicial authorities is an absurdity. In any event, as we have noted above, the connotations of expression particulars of income do not extend to the issues of interpretation of law and as such making a claim, which is found to be unacceptable in law, cannot be treated as furnishing of inaccurate par .....

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