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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 ..... " 2. Facts in brief, as per relevant orders are that return declaring nil income filed on 30.10.2006 by the assessee, providing education and training for professionals in insurance and finance sector, was selected for scrutiny with the service of a notice u/s 143(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act) issued on 26th October, 2007. During the course of assessment proceedings, the Assessing Officer (A.O. in short) noticed on perusal of annexure-2 mentioned in clause 22(b) of the Tax Audit Report in Form 3CD that the following prior period expenses totaling to Rs. 36,14,178/- were debited by the assessee under the different heads in the profit and loss account for the period ended 31.03.2006 relevant to assessment year under consideration: S.No. Particulars Amount (In Rs.) 1. Travelling, conveyance, hotel, boarding expenses 19,95,305 2. Telephone, postage & courier expenses 2,54,729 3. Fee & subscription 3,98,372 4. Printing & Stationery 1,42,815 5. Sales promotion expenses 33,360 6. Books & periodical 740 7. Misc. expenses 71,148 8. Web Design 1,04,972 9. Computer running expenses 30,14,178 Total 36,14,178 2.1 Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income taking into account all disallowances and correct depreciation, which should have been adjusted. Respectfully following the case laws cited by the appellant, I am of the opinion that /the penalty levied by the Assessing Officer is not justified as the Assessing Officer has not found the explanation offered by the appellant to be not bonafide and all the facts relating to the same and material to the computation of her total income has been disclosed by the appellant. The case of Reliance Petro Products (P) Ltd. of honourable Supreme Court reported in (322 ITR 158)(Supreme Court) finds in favour of assessee. Mere technical mistakes in computation of income from already audited P&L a/cs & balance sheet forming part of Tax Audit report will not penalize the assessee for concealment of income u/s 271(1)(c). Accordingly this is not a case of imposition of penalty u/s 271(1)(c). The penalty imposed by the Assessing Officer is, therefore, deleted." 4. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. DR supported the order of the AO while the ld. AR on behalf of the assessee relied upon the findings of ld. CIT(A) in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wledge of. The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities." In Webster's Dictionary, "inaccurate" has been defined as : "not accurate, not exact or correct; not according to truth; erroneous ; as an inaccurate statement, copy or transcript.". 5.1 The penalty u/s 271(1)(c) of the Act is leviable if the AO is satisfied in the course of any proceedings under the Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457, the findings in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the additions. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of clause (c) of section 271(1), and the penalty follows. On the other hand, if the assessee is able to offer an explanation, which is not found by the authorities to be false, and assessee has been able to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him, the assessee shall be out of the clutches of explanation 1 to section 271(1)(c) of the Act, and in that case, the penalty shall not be imposed. In the instant case, the assessee offered an explanation, which has not been found to be false. The ld. CIT(A) concluded that explanation of the assessee was bonafide and all the facts material to computation of income were disclosed by the assessee. In this connection, Hon'ble Supreme Court in the case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC) while considering the scope of the provisions u/s 271(1)(c) of the Act observed in the following terms: "The legal history of section 271(1)(c) of the Act traced from the 1922 Act prima facie shows that the Explanations were applicable to both the parts. However, each case must be considered on its own facts. The role of the Explanation having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation of the assessee bonafide and further concluded that all the facts material to computation of income were disclosed by the assessee. The ld. DR did not place any material before us in order to controvert these findings of the ld. CIT(A) so as to enable us to take a different view in the matter. 5.4 Even otherwise, a mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi as held in T. Ashok Pai v. CIT [2007] 161 Taxman 340 (SC). In the instant case, as concluded by the ld. CIT(A), the assessee had disclosed all the facts and the explanation of the assessee was not found to be false. Therefore, even though it had made an erroneous claim in the return which could not be justified in law, that by itself did not attract the penal provisions of the Act. In CIT v. Vidyagauri Natverlal [1999] 238 ITR 91 (Guj), the Hon'ble Gujarat High Court made a distinction between a wrong claim as opposed to a false claim. In that case, the question that arose was of unexplained cash credit. The Assessing Officer needed to make an enquiry as to whether the claim of the taxpayer was right or not. What is required to be considered was whether there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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