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TMI Blog2012 (12) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... Per: Vijay Pal Rao: This appeal by the assessee is directed against the order dated 31.3.2010 of CIT (A) arising from the penalty order u/s 271(1)(c) of the Income Tax Act for the assessment year 2003-2004. 2. The assessee is a banking company carrying on the business of banking activities in India. In the computation of income the assessee claimed deduction of Rs. 9,30,11,643/- as exempt interest u/s 10(15) of the Income Tax Act. The AO called for the details of such income for examination. The assessee vide letter dated 16.7.2005 furnished the details of interest claimed as exempt u/s 10(15) of the Income Tax Act. From the details, it was noticed by the AO that the said interest consisting of Rs. 4,63,59,643/- being interest of notified bonds issued by various infrastructure companies both public sector and private sector and exempt u/s 10(15)(iv)(h) and section 10(23G). However, the balance amount of Rs. 4,66,52,000/- was found being dividend from UTI MIP which is not exempt during the assessment year under consideration i.e. 2003-2004. When the Assessing Officer pointed out the assessee that the dividend amount of Rs. 4,66,52,000/- is not exempted, the assessee vide its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing decisions: 1. Sunilchandra Vohra vs. ACIT (2009) 32 SOT 365 2. Sands Advertising Communications (P) Ltd. vs. DCIT (2010) 37 SOT 179 3. CIT vs. Siddhartha Enterprises 322 ITR 80 6. On the other hand, the learned DR has submitted that there is no explanation on behalf of the assessee rather it was a deliberate attempt to conceal the income. He has referred the assessment order and submitted that the assessee has not admitted the wrong claim when the AO asked the assessee to submit the details for examination. But only when the AO detected from the details filed by the assessee that the dividend income of Rs. 4,66,52,000/- from UTI MIP is not exempt income. The assessee after a lapse of considerable time, vide letter dated 21.12.2005 admitted the said income and took the excuse of over sight. The learned DR further contended that the assessee has concealed the information as well as income which is assessable to tax. He has further submitted that the assessee is not a lay man or an ordinary person who may take a plea of lack of knowledge of law or awareness of law or change of law. The learned DR has submitted that the assessee is availing the facilities of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y years and, further, the assessee s main business is dealing in the financial matters and the business decision as taken by the assessee keeping in view the provisions of the Income Tax Act. The assessee is managed by the body of experts particularly in the field of finance and fiscal. Apart from this, the assessee is also availing the services of the professionals and tax experts in day to day affairs and particularly for tax matters, therefore, it is not expected from the bank like assessee that they were not aware of the changes in the Income Tax Act which had direct bearing on the day to day affairs and financial results of the assessee. The claim of the assessee declaring the dividend from UTI MIP as exempt income and included the same under the head interest income exempted u/s 10(15) is a patently illegal and wrong claim and there is no possibility of two views on this point. More significant is the fact that the assessee was not filed the details of the income which was claimed as exempted u/s 10(15) of the Income Tax Act along with the return of income. Rather on the query from the Assessing Officer to furnish the details for examination, the assessee did not come out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to the disadvantage of the assessee. 20. The court cannot overlook the fact that only a small percentage of the income-tax returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a license to unscrupulous assessees to make wholly untenable and unsustainable claims without th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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