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TMI Blog2019 (4) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... mb of s. 271(1)(c) is not struck off, even as, admittedly, the satisfaction recorded by the AO in the assessment order is for furnishing inaccurate particulars of income. The same was, in view of our acceptance of the assessee s appeal on the principal issue, not pressed nor, consequently, responded to by the Revenue. The impugned penalty is accordingly directed to be deleted. - Decided in favour of assessee. - I.T.A. No. 207/Asr/2018 - - - Dated:- 24-4-2019 - Sh. Sanjay Arora, Accountant Member And Sh. N. K. Choudhry, Judicial Member For the Appellant : Sh. Sachin Malhotra (Adv.) For the Respondent : Sh. Charan Dass (D.R.) ORDER PER SANJAY ARORA, AM: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-1, Jalandhar, ('CIT(A)' for short) dated 27.03.2018, confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter) in its case for Assessment Year (AY) 2014-15 vide order dated 22/5/2017. 2. The brief facts of the case are that the assessee, a cooperative-society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment had been made during the current year, within a gap of a few months of making the claim for the immediately preceding year. Penalty was accordingly imposed by him at the minimum rate prescribed under the Act, i.e., at 100% of the tax sought to be evaded, at ₹ 14.61 lacs. The same stood confirmed in appeal as there was no bona fide reason for the assessee to have claimed an expense, already claimed, again, relying on the decision in CIT v. Zoom Communications Pvt. Ltd . [2010] 327 ITR 510 (Del), also reproducing therefrom. Aggrieved, the assessee is in second appeal. 3. We have heard the parties, and perused the material on record. 3.1 Explanation 1 to section 271(1)(c) provides for penalty where in respect of facts material to the computation of his income, any person fails to offer any explanation or offers one which is found to be false, or one which he is otherwise unable to substantiate and prove the bona fides of such explanation as well as the disclosure of all the relevant facts, by deeming him to have concealed the particulars of the income added or disallowed in the computation of his total income. The burde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny case, u/s. 14A in-asmuch as dividend income is tax-exempt, i.e., is not includible in the total income. The assessee s case was that the investment in shares was a part of its business, with its claim for interest having been in fact accepted in the past by the appellate authorities. The assessee, the Apex Court opined, can at best be said to have made a claim which was not sustainable in law. Impliedly, the assessee had taken a possible view, even if the same did not stand or may not have stood the test of judicial scrutiny. This proposition gets captured in the dictum that no penalty can be levied where the matter is debatable. The Apex Court in RPPL (supra) does not contradict the law laid down by the Apex Court per a host of decisions, some of which stand cited supra. It could in law even otherwise not as, where not in agreement, would have to refer the matter to a larger Bench, with in fact some decisions afore-referred being by its larger benches. 3.2 Continuing further, admission of a mistake itself implies that the assessee has no explanation, so that Explanation 1 to section 271(1)(c) would, for sure, get attracted. A mistake , howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erating in a competitive environment, so that the recoupment of loss/es, particularly considering that it is a Government institution, is itself a challenge inas- much as it would first be required to break even; (f) the assessee is well served by statutory and tax auditors as well as legal professionals; (g) the claim of gratuity is not a regular claim of expenditure but subject to section 40A(7), being, rather, the subject matter of reporting in Form 3CD by the Auditors. There is, clearly, no immediate and, as it appears, even probable tax impact. The losses of such institutions are usually met by Government through budgetary support. Further, in the given circumstances, the filing of the return of income and matters connected therewith; including its finalization, can reasonably be expected by the Management which has no stake in tax avoidance, to be taken care of by the professionals. As it appears to us, the provision for gratuity was made, as is usually the case for year-end provisions, at the time of finalizing the accounts for the immediately preceding year, i.e., AY 2013-14, at the instance of the auditor and/or the tax profes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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