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TMI Blog2012 (4) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... the conduct of the assessee, the onus of the assessee stands discharged. CIT(A) was justified in deleting the penalty – Decided against the Revenue. - IT APPEAL NO. 1318 (KOL.) OF 2011 - - - Dated:- 17-2-2012 - PRAMOD KUMAR, MAHAVIR SINGH, JJ. Amitava Roy for the Appellant. Soumitra Chowdhury and Anirban Gupta for the Respondent. ORDER Pramod Kumar, Accountant Member By way of this appeal, the Assessing Officer appellant has challenged correctness of order dated 12th July 2011, passed by the CIT(A) in the matter of penalty of Rs. 5,60,000 imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), for the assessment year 2006-07. The short issue that we are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 271(1)(c), for an amount of Rs 5,60,000 being 100% of the tax sought to be evaded, for concealment of income and furnishing of inaccurate particulars. While doing so, the Assessing Officer inter alia observed that "as the assessee had deliberately, consciously and wrongly claimed exemption of income from taxation, I find it a fit case for imposition of penalty ". Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) noted that the Assessing Officer's observations about the wrong claim of exemption having been made deliberately and consciously was devoid of any basis, and these observations are in the nature of presumptions and surmises. Learned CIT(A) observed that the assessee had made a claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, incorrectness per se of the claim will not be material. As regards the fact that the assessee did not have explanation before the Assessing Officer, nothing really turns on it now because the assessee has given an explanation which has been considered on merits and the revenue authorities had reasonable opportunity to demonstrate, if they so wanted, infirmities and inconsistencies in the explanation so given. No such thing is pointed out to us. In any case, the claim is declined on the ground that the place where assessee's industrial undertaking is located has not been declared to be an 'urban area' - something which is highly technical and it cannot be against the preponderance of probabilities, particularly in the light of legal advi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty. It is quite possible that an assessee may not furnish any inaccurate particulars of income and yet he can be said to have concealed income. That can possibly be in a situation in which the assessee is hit by the deeming fiction and the assessee does not have a reasonable explanation for the legal claim made by the assessee. However, even assuming that deeming fiction under Explanation 1 to section 271(1)(c) can be triggered by a wrong legal claim, it cannot be the case that merely because there is a wrong claim, even if that be so, penalty under section 271(1)(c) can be imposed. This deeming fiction under section 271(1)(c) only shifts the onus of proof on the assessee, as this Explanation itself provides that a penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved by the Hon'ble Supreme Court in the case of CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14/30 Taxman 546H. Referring the judgment of Hon'ble Patna High Court, Their Lordships have observed as follows : "The Patna High Court emphasized that as to the nature of explanation to be rendered by the assessee, it was plain on principle that it is not the law that the moment any fantastic or unacceptable explanation is given, the burden placed on him will be discharged and presumption rebutted. We agree. We further agree that it is not the law that each and every explanation by the assessee must be accepted. It must be acceptable explanation, acceptable to a fact finding body." 8. Viewed in this perspective, undoubtedly just because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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