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TMI Blog2012 (4) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act in response to a show cause notice - After considering the reply to SCN, the AO levied penalty @100% of the tax evaded on the income as a result of aforesaid disallowances of Rs. 36,14,178/- and Rs. 2,17,344/- on the ground that the assessee furnished inaccurate particulars of income - Held that :- mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, is no ground for levying penalty, especially when there is nothing on record to show that any material particulars were concealed or furnished inaccurate - appeal of revenue dismissed - IT Appeal No. 1472 (Delhi) of 2011 - - - Dated:- 17-2-2012 - R.P. Tolani, A.N. Pahuja, JJ. Akhilesh Gupta for the Appellant. Ms. Renuka Jain Gupta for the Respondent. ORDER A.N. Pahuja, Accountant Member This appeal filed on 24th March, 2011 by the Revenue against an order dated 13th January, 2011 of the learned CIT(A)-XXX, New Delhi, raises the following grounds:- 1. "On the facts and in circumstances of the case and in law, the learned CIT(A) has erred in deleting the penalty of Rs. 12,96,013/- imposed u/s 271(1)( c ) of the Income-tax Act, 1961 vide Assessing Officer's order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd donation and assessed loss of Rs. 3,60,884/- as against loss of Rs. 3,67,884/- in the revised computation of income. Inter alia, the AO concluded that admission by the assessee of aforesaid clerical mistakes, on being confronted implies that the assessee furnished inaccurate particulars of income in the return filed originally. Accordingly, the AO initiated the penalty proceedings u/s 271(1)( c ) of the Act In response to a show cause notice dated 6th February, 2009 before levy of penalty, the assessee submitted written submissions vide letter dated 2nd June, 2009. After considering the detailed reply of the assessee, the AO levied penalty of Rs. 12,96,013/- @100% of the tax sought to be evaded on the income as a result of aforesaid disallowances of Rs. 36,14,178/- and Rs. 2,17,344/- on the ground that the assessee furnished inaccurate particulars of income. 3. On appeal, the learned CIT(A) cancelled the penalty, holding as under:- "6. I have carefully considered the contentions of the appellant and the order of the AO and the case laws cited by the appellant. The appellant had not concealed any of the income. I find support from submission of the appellant that since it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donation and assessed loss of Rs. 3,60,884/-. Inter alia, penalty proceedings u/s 271(1)( c ) of the Act were initiated. Subsequently, the AO levied a penalty of Rs. 12,96,013/-u/s 271(1)( c ) of the Act on the ground that the assessee furnished inaccurate particulars of income in the original return, having not offered the amount of 38,31,522/- [36,14,178+2,17,344] for disallowance. On appeal, the ld. CIT(A) cancelled the penalty on the ground that it was the first year when the new procedure of on line filing of return was introduced and due to confusion, mistakes were committed by the assessee while filing the return, inter alia, in claiming depreciation. Immediately when the AO pointed out mistakes, the assessee revised the computation of income. Accordingly, while accepting the explanation of the assessee bonafide and all the facts material to the computation of total income having been disclosed by the assessee, the ld. CIT(A) while referring to decision in CIT v. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC) cancelled the penalty. Not even a whisper has been made in the penalty order as to which specific particulars were furnished inaccurate or were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof, he may direct that such person shall pay by way of penalty a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by a reason of the concealment of particulars of his income. Explanation 1 to section 271(1)( c ) of the Act mentions that where in respect of any facts material to the computation of the total income of any person under the Act, such person fails to offer an explanation or offers an explanation which is found by the AO or the CIT (Appeals) or the Commissioner to be false, or 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 purpose of clause ( c ) of section 271(1), be deemed to represent the income in respect of which particulars have been concealed. In other words, the necessary ingredients for attracting Explanation 1 to section 271(1)( c ) are that ( i ) the person fails to offer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty is not only discretionary in nature but such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. Some of those factors apart from being inherent in the nature of penalty proceedings as has been noticed in some of the decisions of this court, inheres on the face of the statutory provisions. Penalty proceedings are not to be initiated, as has been noticed by the Wanchoo Committee, only to harass the assessee. The approach of the Assessing Officer in this behalf must be fair and objective. ** ** ** The term "inaccurate particulars" is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the Explanations are taken recourse to, a finding has to be arrived at having regard to clause (A) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Textile Processors [2008] 306 ITR 277 / 174 Taxman 571 (SC) concluded that a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. In the case under consideration, there is nothing to suggest that the assessee furnished any inaccurate particulars or concealed the particulars. Moreover, it has been concluded long back by their Lordships of the Hon'ble Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, that merely because taxing provisions provide for a power to impose penalty that does not entitle the authorities to impose a penalty for every breach, howsoever venial or technical it may be. In order to impose penalty, the authorities must see the conduct and deliberate intention on the part of the taxpayer in concealing his true income. In our view, no such case seems to have been made out in the appeal before us. 6. In view of the foregoing, we are of the opinion that mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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