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TMI Blog2014 (12) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... . In further appeal ITAT held that the same was not allowable as business loss. From the above we note that the issue was debatable and it cannot be said that the assessee had any malafide intention. It is a settled law that penalty cannot be imposed unless the conduct of the assessee is contumacious. It is also not the case that assessee’s case was a bogus claim which was prima facie liable to be disallowed. The assessee was under bona fide belief that the loss on fire will be allowed as business loss. If the AO does not agree with the assessee and hold that loss cannot be allowed as business loss it cannot lead to a conclusion that the assessee has furnished inaccurate particulars of income or has concealed any income. See CIT vs Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the difference between the insurance value received by the appellant and WDV of the assets destroyed by the fire as on the date of fire was treated as business loss of ₹ 3139870/-. The AO did not all the loss as a business loss by resorting to the provisions of section 45(1A) of the I.T.Act. Satisfaction was recorded by the AO in the order u/s 143(3) for initiation of penalty proceedings u/s 271(1)(c) against the addition made by disallowing loss on fire of ₹ 3129870/-. The appellant preferred an appeal before the Commissioner of Income Tax (Appeals)-IV/Kolkata who allowed the claim of the assessee to treat the loss on sale of fire to be allowable as a business loss on the basis of the decision of the Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be said that the addition is on debatable issue even though it has been confirmed finally by the Honourable Tribunal, Kolkata. On a debatable issue penalty cannot be imposed but there has to be a finding of fact that the appellant has concealed his income or furnished inaccurate particulars of income which is not the case. Penalty cannot be imposed merely because it is lawful to do so and penalty is not automatic. The A/R has cited case laws on the issue that merely because and addition has been sustained, it does not warrant of penalty automatically and further has also relied upon case to support the contention that where two view are possible no penalty can be imposed. I am in acceptance with the submission made by the assessee and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business loss by referring to provision of section 45(1A) of the Act. On appeal the ld. CIT(A) allowed the loss as business loss. In further appeal ITAT held that the same was not allowable as business loss. From the above we note that the issue was debatable and it cannot be said that the assessee had any malafide intention. It is a settled law that penalty cannot be imposed unless the conduct of the assessee is contumacious. It is also not the case that assessee's case was a bogus claim which was prima facie liable to be disallowed. The assessee was under bona fide belief that the loss on fire will be allowed as business loss. If the AO does not agree with the assessee and hold that loss cannot be allowed as business loss it cannot lead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 7.2. We would also like to place reliance on the decision of Hon'ble Apex Court in the case of Hindustan Steel Ltd vs State of Orissa 83 ITR 26 (SC) which held as under : "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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