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TMI Blog2014 (12) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ch claim made in the Return cannot amount to the inaccurate particulars – the AO was not justified at all for levying the penalty merely because he is having different opinion on the plea of the assessee in respect of the head under which the income is to be assessed - merely because the legal claim made by the assessee is rejected by the AO that will not attract the penalty - CIT(A) has rightly deleted the penalty and no interference is called for – the order of the CIT(A) is upheld – Decided against revenue. - ITA No. 2465/PN/2012 - - - Dated:- 25-11-2014 - Shri G. S. Pannu And Shri R. S. Padvekar,JJ. For the Petitioner : Shri S.N. Doshi For the Respondent : Shri P. S. Naik ORDER Per R. S. Padvekar, JM : This appeal is filed by the Revenue challenging the order of the Ld.CIT(A)-I, Pune dated 30-07-2012 for the A.Y. 2006-07. The revenue has taken the following effective ground : On the above facts and in the circumstances of the case and in law, the Ld.CIT(A)-I, Pune has erred in deleting the penalty of ₹ 1,57,82,879/- u/s.271(1)(c) of the Income Tax Act, 1961 . 2. Facts which are revealed from the record are as under. The assessee is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier order dismissing the appeal in-limine and to consider the appeal on merits. 10. Considering the judgement of the Hon'ble Karnataka High Court in the case of K. Satish Kumar Singh (supra), we deem it fit and proper to set-aside the impugned order of the CIT(A) with directions to consider the plea of the assessee of having paid the tax due on the returned income and upon his being satisfied that the requirement of Section 249(4)(a) of the Act has been complied with, he shall admit and dispose-off the appeal on merits. Needless to say the CIT(A) shall allow a reasonable opportunity to the assessee of being heard and thereafter he shall pass an appropriate order in accordance with law. 2.1 As the Ld.CIT(A) dismissed the assessee s appeal applying the provisions of section 294(4)(a), the Assessing Officer passed the penalty order levying penalty of ₹ 1,57,82,879/-. The operative part of the penalty order in which the Assessing Officer has given the reasons are as under : 5. Before levying the penalty u/s.271(l)(c), Assessing Office has to arrive at a conclusion that there is a concealment of income or that there is a furnishing of inaccurate particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 2(14). Hence, the return of income furnished u/s. 139(1) of Income-tax Act was not giving correct classification of income. Therefore, the assessee had willfully attempted to furnish return of income so as to avoid the tax liability. The assessee has failed to discharge his civil obligation u/s.139(1), hence liable to be penalized u/s.271(l)(c) of Income-tax Act. 6.3 The ITAT, A Bench, Pune in the case of Kanbbay Software India (P) Ltd vs. DCIT vide its order dated 28th April , 2009 TTJ (Pune) 721 was of the opinion that the law as on today rests on the Supreme Court judgement in the case of Dharmendra Textile Processors and penalty u/s.271(1)(c) will be leviable since it is not necessary for tax authorities to establish 'mens-rea' of the assessee. In the said decision, it also referred what is meant by furnishing of inaccurate particulars of income which has been reproduced herein above. It further went on to elaborate that furnishing inaccurate particulars of income in its natural sense are to be viewed with the opening words employed in the deeming fiction. These read where in respect of any facts, material to the computation of total income of any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, making a claim which the appellant knew is not allowable in law, the appellant has to be held that it has filed inaccurate particulars of income. The appellant on the other hand has claimed that the Assessing Officer has erred in coming to this conclusion. According to the appellant, the claim of the appellant was as per law and in the facts of this case the penalty cannot be levied only because the AO had a different view on this issue. It was also stated that the quantum appeal was dismissed on technical reasons and therefore it cannot be said that the view of the AO has been approved by the Ld. CIT(A) while dismissing the quantum appeal. Therefore, for the decisions quoted supra, the appellant has claimed that penalty cannot be levied u/s 271(1)(c) of the IT. Act. I have carefully considered the materials available on record. From the I perusal of the assessment order, placed on record, it is evident that the appellant has claimed the income earned on sale of shares of ₹ 6,27,97,405/- under the head 'Capital Gains' as STCG and LTCG. However, the AO after considering the frequency, quantum and regularity etc. of the transactions concluded that the aforesaid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., is in fact in favour of the assessee. In the facts of this case it can be seen that the appellant is correct in claiming that the issue is debatable and therefore, for making such a claim, it cannot be held that inaccurate particulars have been filed. I have carefully examined the facts and found that the claim has been clearly made and all the .material facts were available on record before the Assessing Officer and only /because the claim is debatable, it is not correct to hold that inaccurate particulars have been filed. The decision of the Supreme Court given in the case of Reliance Petro Products Ltd. 322 ITR 128 (SC) and CIT Vs. Kanbay Software India Pvt. Ltd., relied upon by the appellant are directly applicable and are in favour of the assessee. For the aforesaid reasons, Grounds No. 1 to 2 are allowed. Being aggrieved the Revenue is in appeal before us. 4. We have heard the rival submissions of the parties and perused the record. In this case as per the facts on record, the assessee is engaged in the share transactions. The assessee filed his return of income declaring gain/profit on the share of transactions under the head capital gain to the extent of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income . We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs.Rajasthan Spg. Wvg. Mills [2009(13) SCC 448] and reitera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or for giving inaccurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under Section 276-C of the Act. The basic reason why decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra) was overruled by this Court in Union of India Vs. Dharamendra Textile Processors (cited supra), was that according to this Court the effect and difference between Section 271(1)(c) and Section 276-C of the Act was lost sight of in case of Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra). However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra), where the Court explained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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