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TMI Blog2012 (10) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... see was bonafide and under that facts and circumstances, section of 271(1)(c) is not applicable - A.O. is not justified in levying penalty of Rs. 2,78,660/- under section 271(1)(c) of the Act. Therefore, the same is cancelled. - decided in favor of assessee. - ITA NO. 95 (AGRA) OF 2012 - - - Dated:- 7-9-2012 - SHRI BHAVNESH SAINI, AND SHRI A.L. GEHLOT, JJ. Anil Verma for the Appellant. Km. Anuradha for the Respondent. ORDER A.L. Gehlot, Accountant Member This is an appeal filed by the assessee against the order dated 30.01.2012 passed by the ld. CIT(A)-II, Agra for the A.Y. 2007-08. 2. The effective ground raised in the appeal is in respect of penalty of Rs. 2,78,000/- levied under section 271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter). 3. The brief facts of the case are that during the assessment proceedings the A.O. noticed that the assessee has sold a property worth Rs. 82,53,000/- and earned Long Term Capital Gain of Rs. 71,79,363/-. The assessee invested in residential house Rs. 70,00,000/- and claimed exemption under section 54F of the Act. The assessee offered balance amount of Rs. 1,79,363/- for taxes. The A.O. further noticed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative submitted that due to mistake of clerical staff of the Advocate the deduction was claimed on the basis of section 54 instead of section 54F of the Act. The assessee was to invest entire sale consideration for taking deduction under section 54F. Ld. Authorised Representative submitted that however when the mistake came to the notice of the assessee, the assessee filed revised return voluntarily and extra deduction which was wrongly claimed was offered to tax. Ld. Authorised Representative submitted that there is distinction between furnishing of wrong particulars and making wrong calculation on the basis of wrong particulars furnished. If the particulars are furnished and there is a mistake in calculation that does not amount to concealment. Ld. Authorised Representative in support of his contention relied upon the judgement of Hon'ble High Court of Calcutta in the case of Udayan Mukherjee v. CIT [2007] 291 ITR 318. Ld. Authorised Representative further submitted that there are various other decisions wherein it has been held that a revised return can be filed by an assessee where there is omission or wrong statement or any inadvertent mistake. Ld. Authorised Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under the Act that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income. The expression used in clause (c) of section 271(1) is 'has concealed the particular of income' or 'furnished inaccurate particulars of such income'. The expression 'has concealed the particulars of income' and 'has furnished inaccurate particular of such income' have not been defined either in section 271(1)(c) of the Act or elsewhere in the Act. Under the circumstances, such cases are required to be decided considering the facts of the respective cases. 10. In the case under consideration, the CIT(A) heavily relied upon the judgement of Apex Court in the case of Dharamendra Textile Processors (supra). However, subsequent to this judgment, the Hon'ble Apex Court in the case of Reliance Petroproducts (P.) Ltd. (supra) has considered the judgment in the case of Dharamendra Textiles Processors (supra). The fallout of the decision in Dharamendra Textile Processors (supra) questioning the correctness of the decision in Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC) has caused great uncertainty as to the penalty law for dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer had found that the assessee's claim for deduction of the entire interest on a borrowing, which had been partly utilised for earning exempt income required disallowance of the proportionate part under section 14A. The claim of the assessee was that, being an investment company, the claim of interest need not be proportionately apportioned to exempt income from dividend, cannot justify penalty even if the disallowance itself was justified. This concurrent view of the Commissioner (Appeals), Tribunal and the High Court was upheld by the Supreme Court. 11. In view of the development of law at the stage of the Supreme Court in Reliance Petroproducts (P.) Ltd.'s case (supra), one need not take the trouble of distinguishing Dilip N. Shroff's case (supra), since it has not been overruled except for its mention of mens rea therein. Notwithstanding the ripple created by Dharamendra Textile Processors' case (supra), the High Courts have followed the long-established law, that a bona fide omission cannot justify penalty in a number of decisions. Where an addition to an income was adjusted against the value of closing stock and explanation therefore was also found to be bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment's appeal against the order of the Tribunal which had confirmed the order of the Commissioner (Appeals) who had directed that the penalty imposed under section 271(1)(c) of the Income-tax Act be cancelled and held that an addition would not automatically lead to levy of penalty unless concealment was established. : CIT v. Spencer Co. S.L.P. (C) No. 10283 of 2009." 13. The A.O. has also invoked explanation 1 to section 271(1)(c) of the Act. Explanation 1 to section 271(1)(c) of the Act have two parts, Part-A of the Explanation to section 271(1)(c) provides that if the assessee fails to offer an explanation or offers an explanation which is found by the A.O. to be false, penalty under section 271(1)(c) will apply. This Explanation can, therefore, be applied only where the assessee has either not offered any explanation or where he has offered any explanation, the same found to be false by A.O. In other words, where the assessee offers some explanation, it is only the proving by the A.O. that the explanation was false explanation, that part- A of the Explanation may be attracted. Mere non-existence of explanation offered by the assessee cannot form a basis for the satis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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