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TMI Blog2016 (1) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained concealed income of ₹ 1,900/-. - Decided in favour of assessee Short term capital loss on sale of car - Held that:- From going through the facts and judicial pronouncement we find that assessee was possessing only one car and the same was sold during the financial year 2000-01. There was no other asset in the block of asset relating to motor car and, therefore, after deduction of sale value from the purchase value there arose a short term capital loss. There is no dispute on the part of the Revenue on the value of purchased car and sale value of car. Assessee has claimed the short term capital loss at ₹ 3,21,440/- against the business income. Certainly all the facts relating to these transactions of purchase and sale of car were duly disclosed in the books of account of the assessee and the addition made by the Assessing Officer was on account of merely wrong claim made by the assessee. Penalty u/s 271(1)(c) of the Act is imposable where the assessee has concealed particulars of his income or furnished inaccurate particulars of such income. Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. (2010 (3) TMI 80 - SUPREME COURT ) has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search certain documents were found and seized. Notice u/s 153A of the Act was issued on 7.4.2005 and served on assessee. In response to the notice assessee furnished the return of income on 30.10.2005 showing total income of ₹ 86,080/-. Assessee has offered ₹ 98,082/- as additional income in the return filed in response to the notice u/s 153A(a) of the Act. Assessment u/s 143(3) r.w.s. 153A of the Act was framed on 29.12.2006 after making certain additions and returned income of the assessee shown as per his return of income. Income of the assessee was assessed at ₹ 4,09,430/-. In the quantum appeal before CIT(A) appeal of the assessee was partly allowed. No further appeal of quantum addition confirmed by CIT(A) was preferred before the Tribunal. Thereafter on 26.3.2012 the ITO, Wd-8(2), Surat passed order u/s 271(1)(c) of the Act levying penalty of ₹ 1,01,483/- on the additions sustained by ld. CIT(A). 3. Aggrieved, assessee went in appeal before CIT(A) who dismissed the appeal of assessee by confirming the penalty u/s 271(1)(c) of the Act. Ld. AR submitted that penalty u/s 271(1)(c) of the Act of ₹ 1,01,483/- was confirmed by ld. CIT(A) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtainly disclosed by the assessee in its return of income on estimate basis because the house property was not rented during the year and assessee has disclosed his income at ₹ 500/-. The AO further estimated this income at ₹ 27,500/- and finally ld. CIT(A) reduced the addition from ₹ 27,500/- to ₹ 1,900/- . Certainly there was no deliberate concealment on the part of the assessee and the addition confirmed is only on the basis of estimate arrived at by taking value from other sources, which in this case was the municipal ratable value and certainly such type of addition do not come under the clutches of section 271(1)(c) of the Act. We, therefore, delete the penalty u/s 271(1)(c) of the Act calculated on the sustained concealed income of ₹ 1,900/-. 9. Regarding second concealment on account of claim of short term capital loss on sale of car ₹ 1,35,297/-, ld. AR submitted that there was only one car in the block no.III and the same has been sold during the FY 2000-01. After deduction of sale value from the book the short term capital loss has been arose. There was no dispute regarding sale value of the car and short term capital loss from sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) has undergone a substantial change after the insertion of Explanation (1) to section 271(1)(c) w.e.f 01.04.1976. Explanation (1) to section 271(1)(c) raises a presumption that as and when an amount is added or disallowed in computing the total income the same shall be deemed or represent the income in respect of which particulars have been concealed. Further w.e.f. 10.09.1986 amendment has been made in Explanation 1-B to section 271(1)(c). After, this amendment further onus has been placed on the assessee to prove that the explanation furnished by him was bonafide. The position now is that unless and until the assessee substantiates the explanation and proves that such an explanation was bonafide the addition made to his income shall deemed to represent the concealed income. 6.1.2 On the analysis of the provisions of section 271(1)(c) it is observed that the Explanation 1 to section 271(1) provides for the situation where no explanation for the failure is offered by the assessee or where the explanation that has been offered is found to be false or where the assessee is not able to substantiate the explanation offered by him. In all these cases, the amount added or dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the assessee in regard to the items in question was not believed to be true. The position of law on or after April 1, 1976, is that where in respect of any item of credit. (a) the assessee fails to offer an explanation or (b) the assessee offers an explanation which the taxing officer considers to be false, or (c) the assessee offers an explanation but no material or evidence to substantiate it, he shall be deemed to have concealed such income within the meaning of section 271 (1)(c). What sections 68, 69,69A, 69B and 69C deem for the purpose of assessment was injected for the purpose of penalty by operation of a deeming provision. A proviso was added to the new Explanation. It concerns cases where the assessee offers an explanation which he is not able to substantiate. Consequentially, the provisions are intended to save such amount from imposition of penalty although the same had been added to the assessee's income in the assessment. If the assessee'sexplanation is found to be bonafide and all the facts relating to the same and material to the computaticn of his tots/ income have been disclosed by him. 6.1.6 The views similar to the above decision of Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income, director's report etc. filed along with return of income. In the quantum order, the AO declined assessee's claim of set off. Nowhere AO has alleged that assessee's claim is mala-fide. Thus, it was a simple case of denial of assessee's claim of set off of business loss against the capital gain. In this regard, Hon'ble Supreme Court in the case of Reliance Petro Products (P) Ltd. (supra) while confirming the order of Hon'ble High Court deleting the penalty imposed u/s 271(1)(c) for denial of assessee's claim of deduction of interest expenditure, has categorically observed that By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars . Accordingly, it was held that decline of 4 ITA-4435/Del/2009 assessee's claim of interest against the loan utilized for making investment in tax free securities, will not amount to furnishing of inaccurate particulars so as to attract penalty u/s 271(1)(c) of the Act. Hon'ble Supreme Court in this case after considering the proposition of law laid down in the case of Dilip N.Shroff - 291 ITR 519 (SC) and Union of India v. Dharmender Textile Proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(c). Accordingly, order of the ITAT Chandigarh Bench deleting penalty imposed u/s 271(1)(c) was upheld by the Hon'ble Court. 8. Hon'ble Madhya Pradesh High Court in the case of CIT Vs. S.P.K. Steels Pvt. Ltd. - 270 ITR 156 upheld the order of the Tribunal deleting the penalty u/s 271(1)(c) by observing that assessee being engaged in the business of commission agency, Explanation to Section 73 was applicable and thus, loss on account of trading in shares was disallowed, it was held that for such disallowance penalty u/s 271(1)(c) is not leviable as the assessee has filed preliminary details along with the return. 9. Hon'ble Jurisdictional High Court in the case of CIT v. Siddhartha Enterprises - 322 ITR 80 observed that where the assessee's claim for set off on account of capital gains against profit of business was disallowed by the AO and AO imposed penalty for furnishing inaccurate particulars of income, the CIT(A) deleted the same and Tribunal upheld the order of the CIT(A) by observing that entire facts have been disclosed by the assessee in the documents filed along with the return and the mistake has been committed by the counsel of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the purchase value there arose a short term capital loss. There is no dispute on the part of the Revenue on the value of purchased car and sale value of car. Assessee has claimed the short term capital loss at ₹ 3,21,440/- against the business income. Certainly all the facts relating to these transactions of purchase and sale of car were duly disclosed in the books of account of the assessee and the addition made by the Assessing Officer was on account of merely wrong claim made by the assessee. Penalty u/s 271(1)(c) of the Act is imposable where the assessee has concealed particulars of his income or furnished inaccurate particulars of such income. Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 has held that mere making a claim which is not sustainable in law in itself will not amount to furnishing of inaccurate particulars regarding income of the assessee. The facts of the case of assessee are quite similar to the facts take up by the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. (supra) as the assessee made a wrong claim of short term capital loss against the business income. Assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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