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TMI Blog2015 (1) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court in the case of Reliance Petro Products (2010 (3) TMI 80 - SUPREME COURT ) supports the case of the assessee, i.e., a claim which is not sustainable in law by itself would not lead to furnishing of inaccurate particulars of income. Thus the penalty levied on the disallowance made u/s 94(7) of the Act is liable to be deleted. - Decided in favour of assessee. - I.T.A. No. 1354/Mum/2013 - - - Dated:- 9-1-2015 - Shri Vijay Pal Rao (JM) And B. R. Baskaran (AM),JJ. For the Petitioner : Shri H P Mahajani For the Respondent : Shri Neil Philip ORDER Per B. R. Baskaran, Accountant Member: The appeal filed by the assessee is directed against the order dated 17.01.2013 passed by Ld CIT(A)-6, Mumbai and it relates to the assessment year 2005-06. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the penalty of ₹ 36,14,604/- levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (the Act). 2. The facts that led to levy of penalty are discussed in brief. During the course of assessment proceedings, the AO noticed that the assessee has purchased units of mutual fund and sold them after the receipt of dividend, which le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee had incurred those expenses in connection with a new project of making a special Diary on Mahatma Gandhi. Hence, the AO disallowed expenditure claim to the extent of ₹ 36,62,414/-. In the quantum appeal proceedings, the Ld CIT(A) confirmed both the disallowances. There after, in the penalty proceedings, the assessing levied minimum penalty of ₹ 36,14,604/- on both disallowances discussed above. The Ld CIT(A) also confirmed the penalty levied by the assessing officer. Aggrieved, the assessee has filed this appeal before us. 6. We heard the parties and perused the record. The assessee has challenged the order passed by Ld CIT(A) in quantum assessment proceedings by filing appeal before the ITAT and the Tribunal, vide its order dated 12-08- 2011, has confirmed the disallowance made u/s 94(7) of the Act. However, the matter relating to the disallowance of expenses was restored to the file of the assessing officer. The assessee has challenged the order of the Tribunal by filing appeal before the Hon ble High Court of Bombay and the High Court has also confirmed the disallowance made u/s 94(7) of the Act, vide its order dated 07-09-2012 reported in (20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment. However, in the assessment proceedings, the assessee has contended that the amended provisions shall not apply to the transactions concluded before the Bill came into an Act, i.e., the date of receipt of assent of Hon ble President of India. 9. Before us, the Ld A.R submitted that the penalty u/s 271(1)(c) of the Act was levied by the AO for furnishing inaccurate particulars of income . He further contended that the transactions entered into by the assessee would not attract penalty, since the assessee had furnished all the details and hence there was no question of furnishing of inaccurate particulars of income. He further submitted that a claim which is not sustainable in law, by itself would not amount to furnishing of inaccurate particulars of income as per the decision of Hon ble Supreme Court rendered in the case of CIT Vs. Reliance Petro Products Pvt Ltd (322 ITR 158). He further placed reliance on various case laws on which identical views have been expressed. 10. On the contrary, the Ld D.R placed strong reliance on the order of Ld CIT(A). He submitted that the assessee has furnished return of income after expiry of about one year from the date of conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed in computing the total income would represent income in respect of which particulars have been concealed. 12. As we noted earlier, the matter in any event stands concluded in favour of the respondent by the judgment of the Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (supra) where the Supreme Court considered a similar situation. The respondent therein had disclosed all the facts and there was no concealment of income. The Supreme Court negated an identical submission. The judgment considers and interprets the judgment of the Supreme Court in Union of India Ors. vs. Dharamendra Textile Processors Ors. (supra). The Supreme Court after setting out Section 271 (1)(c) in paragraph 10 held as under :- 10. ................................................................. A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the learned counsel for the Revenue suggested that by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. 20. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. 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 ). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the assessing officer for any reason, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the section and delivered the judgment in ignorance thereof merely because that part is not in terms noted in the judgment. 12. In the present case, it is not the case of the revenue that the assessee has failed to furnish all particulars of income. As noticed earlier, the assessee has indicated in its return of income that it was conscious of the provisions of sec. 94(7) of the Act. The assessee had attached a note also in this regard expressing its view about the applicability of the provisions of sec. 94(7) of the Act. In the assessment proceedings, the assessee has contended that the amended provisions should not be applied on the transactions concluded prior to the date of receipt of assent of Hon ble President of India. Thus, in our view, the assessee was under bona fide belief that the amended provisions will not be applicable for the transactions concluded atleast upto the date of receipt of assent of the Hon ble President to Finance (No.2) Bill , 2004. In our view, the said belief cannot be altogether rejected, since the said claim of the assessee is a debatable one. Even otherwise, we are of the view that the decision of Hon ble Supreme Court in the case of Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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