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TMI Blog2012 (12) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... in Zoom Communication Pvt. .Ltd (2010 (5) TMI 34). Decision in favour of assessee. - ITA No.4192/Del/2011 - - - Dated:- 20-7-2012 - SHRI G.D. AGRAWAL, AND SHRI RAJPAL YADAV, JJ. Appellant by : Shri Salil Agarwal, Advocate and Shri S.Gupta, CA. Respondent by : Shri K.V.K. Singh, Sr. DR. ORDER PER G.D.AGRAWAL, VP : This appeal of the assessee is directed against the order of learned CIT(A)-XXI, New Delhi dated 24th August, 2011 for the AY 2002- 03. 2. Ground No.1 of the assessee s appeal reads as under:- That ld.CIT(Appeals) has erred both on facts and in law in confirming the action of the learned Assessing Officer in levying penalty of Rs.97,99,303/- u/s 271(1)(c) of the Income Tax Act, 1961. 3. The other grounds raised by the assessee are only arguments in support of above ground No.1. 4. At the time of hearing before us, it was stated by the learned counsel that during the accounting year relevant to the assessment year under consideration, the assessee acquired the hotel, viz., Laxmi Vilas Palace, Udaipur under the disinvestment process of India Tourism Development Corporation Ltd. (ITDC). Till 25th February 2002, the business of the hotel was car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said facts were stated by the assessee to the Assessing Officer in the reply dated 21.02.2005 in which the assessee had also supplied the permanent account number of ITDC and had requested the Assessing Officer that the department can make necessary verification from ITDC. He further submitted that merely because the assessee withdrew the appeal from the ITAT and accepted the loss determined by the Assessing Officer, it would not amount to concealment of income. Even after the assessment by the Assessing Officer, the net result was loss. The assessee had filed the return late, therefore, it was not entitled to carry forward of loss. In this view of the matter, the assessee had withdrew the appeal from the ITAT. That the Hon ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. 322 ITR 158 (SC) has stated that the assessee cannot be penalized for furnishing of inaccurate particulars unless the details furnished by the assessee are found to be incorrect, bogus or false. It is not the case of the Revenue that the assessee furnished any inaccurate or false details. Therefore, the aforesaid decision of Hon ble Apex Court would be squarely applicable. He also stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The facts of the present case thus are clearly distinguishable. 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. 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 licence to unscrupulous assessees to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer disallowed the expenditure which was incurred by ITDC during which, the hotel was run by them on the ground that the assessee could not produce the bills, vouchers etc. The assessee explained during the course of assessment proceedings itself that these details are in the possession of ITDC and not the assessee. The relevant portion of the assessee s reply dated 21.02.2005 addressed to ACIT, Circle-18(1), New Delhi reads as under:- The supporting bills, vouchers etc. are not available with us and they were with India Tourism Development Corporation Ltd., Government of India because they pertain to the period when the company was with them. The PAN of India Tourism Development Corporation Limited is AAACI0825J and they are being assessed at Circle 11(1), C.R.Building, New Delhi. 10. However, the Assessing Officer, without making any verification or enquiry from ITDC, disallowed the expenses. Non-production of the vouchers may be justified for disallowing the expenditure claimed by the assessee but, it cannot be held to be an act of concealment, specially when the assessee had a reasonable cause for its inability to produce the same. So far as the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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