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TMI Blog2013 (11) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars. The term "inaccurate particulars" is not defined - Supreme Court in Reliance Petroproducts Pvt., Ltd.[2010 (3) TMI 80 - SUPREME COURT], by no stretch of imagination, making an incorrect claim in law would tantamount to furnishing inaccurate particulars – Decided against the Revenue. - ITA.No. 340/2007 - - - Dated:- 25-9-2013 - Dilip B Bhosale And B Manohar, JJ. For the Appellant : Sri K P Kumar, Sr Counsel For the Respondent : Sri K V Aravind, Adv JUDGEMENT:- PER : Dilip B Bhosale This appeal, under Section 260-A of the Income Tax Act, 1961, is directed against the order dated 15.09.2006 rendered by the Income Tax Appellate Tribunal, Bangalore, (for short the Tribunal ) in ITA No.3026/Bang/2004. By this order, the Tribunal confirmed the order dated 23.07.2004 passed by the Commissioner of Income Tax (Appeals)-IV, Bangalore, (for short "the Appellate Authority") in penalty proceedings under Section 271(1)(c) of the Act, for the Assessment year 2002-03. 2. When hearing of the appeal commenced, we noticed that the substantial questions of law framed in the memorandum of appeal were not happily worded and hence, with the assistance of learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued under Section 143(1) of the Act was made. In view thereof, the assessee informed the Assessing officer to pass such order vide letter dated 05.05.2003. Despite such request, according to the assessee, no order at any point of time was passed by the Assessing officer in respect of the Assessment year 1998-99. Thereafter, the assessee filed return of income for the Assessment year 2002-03 on 31.10.2002. In the return for 2002-03, the assessee claimed set off of the loss carried forward of Assessment year 1998-99. The assessee filed the return of income on 31.10.2002 declaring profit under Section 115JB at Rs.18,97,490/-. The same was processed and the case was selected for scrutiny with the previous approval of the Commissioner of Income Tax (International Taxation), Bangalore. In the meanwhile, the assessee filed revised return on 12.05.2003 declaring total income of Rs.31,75,180/-. In the footnote, it was made clear that income of the Assessee s company was enhanced in view of the counting of commission from 3% to 5%. In other words, in view of the counting of commission at the rate of 5%, the income of Rs.31,75,180/- was shown in the place of Rs.18,97,490/-, as was shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessed income. Had the assessee not claimed the setoff, it would have been liable to pay interest under sec.234C to the extent of Rs.2,99,965/-. Further, had the return been not taken up for scrutiny, the assessee would have walked away with the benefit of Rs.8,55,049/- as set off business loss, which was clearly not allowable. Such commission of error cannot be termed bonafide, accidental or unintentional, especially to carry forward of the business loss for the A.Y.98-99. Further, the assessee had claimed a set-off of Rs.1,35,32,414/- on account of business loss pertaining to A.Y.98- 99 in its original return of income, whereas in its revised return, the assessee had claimed a deduction of only Rs.85,50,497/- which clearly shows that the asseessee had applied its mind while furnishing the revised return and it was not the case of simply copying the amount of carry forward of loss from the original return". The assessee carried the order passed by the Assessing officer dated 06.02.2004 in appeal before the Appellate Authority, bearing Appeal No.ITA 219/R-19/CIT (A) IV/2003-04. The Appellate authority allowed the appeal vide judgment and order dated 23.07.2004 and cancelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke in claiming set off of loss when the law does not allow it though as mentioned earlier the mistake is in consonance with the intimation u/s 143(3) received from the Assessing Officer. The decision of Supreme Court in Hindustan Steel Ltd. V State of Orissa 83 ITR 26 (SC) would be applicable to a case like this since the furnishing of inaccurate particulars, if any, if at best technical in nature. The assessee has shown reasonable cause for filing his return of income as he did and having regard to Sec.273, penalty should not have been levied." The order of the Appellate Authroity was thereafter carried in further appeal before the Tribunal by the Revenue in ITA No.3026/Bang/2004. The Tribunal confirmed the order passed by the Appellate Authority. It is against this backdrop, the questions as framed in the beginning of the judgment fall for our consideration in the present appeal. 4. At the outset, we would like to reproduce Section 271 of the Act to the extent it is necessary, which reads thus:- 271.(1) If the [Assessing] Officer or the[***][Commissioner (Appeals)][or the Commissioner] in the course of any proceedings under this Act, is satisfied that any person - ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise." (emphasis supplied) The Supreme Court, then, in the judgment, proceeded to observe that merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c) of the Act. Further, the Supreme Court observed that "if we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the AO for any reason, the assessee will invite penalty under Section 271(1)(c) of the Act. That is clearly not intendment of the Legislature". 7. Thus, it appears to us that the power to levy penalty or not is discretionary in nature and that has to be exercised by AO on the facts and circumstances of each case. In order to expose the assessee to the penalty unless the case is strictly covered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the Supreme Court made the following observations, which read thus: "Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out." 10. In T.Ashok Pai (supra) the Supreme Court, while examining the expression "inaccurate particulars" as occurred in Section 271(1)(c) after looking into dictionary meaning the word inaccurate observed thus: "The term "inaccurate particulars" is not defined. Furnishing of an assessment of value of the property may not by itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 4.4.2003 whereby the assessee was clearly informed that he was not entitled to carry forward the business loss since the return of income for the assessment year 1998-99 was filed belatedly. It is true that a letter dated 4.4.2003 was addressed to the assessee and that he was informed accordingly. It is also true that the assessee requested by his letter dated 5.5.2003 to pass order in respect of the assessment year 1998-99 to enable the assessee to challenge the order, and despite such written request, no assessment order was passed for the year 1998-99. It is in this backdrop, revised return was filed in which the assessee claimed set off of the loss carried forward of the assessment year 1998-99. As observed earlier, merely because the assessee claimed set off of the loss carried forward would not mean that there was concealment of income as alleged or such claim would amount to furnishing inaccurate particulars. 12. The term "inaccurate particulars" is not defined. Claiming of set off of the loss carried forward, in the present case, in our opinion, would not by itself amount to furnishing inaccurate particulars. As a matter of fact, the particulars that were furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X
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