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TMI Blog2012 (9) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... m capital loss of ₹ 1,06,03,428/- from SUN F C Money Value Fund should not be disallowed to the extent of dividend receipt of ₹ 97,90,628/- as per provisions under Section 94(7) of I.T. Act. The assessee filed letter dated 17-2-2006 and accepted that the short term capital loss should be disallowed to the extent of dividend receipt of ₹ 97,90,628/- as per provisions of Section 94(7) of the Act. The Assessing Officer completed the assessment by disallowing the loss of sale of units by adjusting the dividend income against the short term capital loss. In view of above, the Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act. 4. On behalf of the assessee it was contended that the dividend was earned in earlier year and short term capital loss is for different year and there was a mistake not to adjust dividend against short term capital loss, but the Assessing Officer did not accept the said contention of the assessee and levied the penalty @ 100% of the tax sought to be evaded which comes to ₹ 30,56,747/-. The Assessing Officer stated that the assessee has furnished inaccurate particulars of income and concealed its income wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions of the assessee but did not agree. He has stated that the assessee has made a false claim which was not in accordance with law. Thus, the assessee has deliberately concealed the income and furnished inaccurate particulars of income. Hence, Explanation 1 to Section 271(1)(c) can be triggered if there is a wrong legal claim and penalty under Section 271(1)(c) can be imposed. Learned CIT(A) has stated that it cannot be said that the assessee was not aware of the fact that the assessee had earned a dividend of ₹ 97,90,628/- and the same was to be reduced from loss on sale of such units. Learned CIT(A) has stated that the assessee deliberately not reduced the dividend income earned against the short term capital loss. He has stated that the assessee has tried to cover up its false claim by making a claim that units were redeemed and not sold, hence, not amounts to transfer. In view of above, learned CIT(A) has confirmed the levy of penalty under Section 271(1)(c) of the Act. Therefore, the assessee is in further appeal before the Tribunal. 7. At the time of hearing learned AR submitted that the assessee disclosed the purchase of units and receipt of dividend in its boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the penalty may be deleted. 8. On the other hand, learned DR supported the orders of the authorities below and submitted that the assessee disputed the disallowance of short term capital loss to the extent of the dividend receipt and filed appeals upto the Tribunal. He submitted that the Tribunal in ITA No.347/Mum/2007 by its order dated 27th October, 2010 confirmed that the transfer under Section 94(7) of the Act includes redemption. Therefore, it cannot be said that the assessee was under a bonafide mistake that the units which were redeemed could not be considered as sale or transfer within the meaning of Section 94(7) of the Act. Learned DR also submitted that the assessee has a duty to state correct particulars and also to compute its income properly as per law. He submitted that only during the course of assessment proceedings, the assessee s representative accepted to disallow the loss claimed by the assessee to the extent of the dividend receipt on the units. He submitted that levy of penalty is justified. Learned DR relying on the decision of the Hon ble Supreme Court in the case of Union of India Ors. Vs. Dharamendra Textile Processors Ors., reported in 306 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide claim of the assessee or the assessee has deliberately/intentionally furnished inaccurate particulars of income. If the assessee has consciously furnished the inaccurate particulars of income or concealed the particulars of income, there is no dispute to the fact that the penalty under Section 271(10(c) of the Act is attracted. However, if the claim for deduction made is bonafide claim and there is no intention to hide particulars of income, we are of the considered view that the provision of Section 271(1)(c) of the Act are not attracted. 11. We observe that the assessee has furnished requisite details of the purchase and sale of the said units as well as receipt of dividend income and also the short term capital loss incurred thereon. The Hon ble Supreme Court has held in the case of Union of India Ors Vs. Dharamendra Textile Processors Ors. (supra), that penalty under Section 271(1)(c) is only a civil liability to compensate for loss of revenue. The Hon ble Apex Court in the said case has also held that nexus of wilful concealment is not required to be proved by the revenue. Thus, the case of penalty is to be evaluated under the provision of Explanation 1 to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. But in the case under consideration we find that the assessee has furnished full detail and has not concealed any particulars of income or has furnished any inaccurate particular of income. Further, we noticed that there were no such specific requirements in the return form applicable to the year under consideration. Such requirement of the column in the return has been inserted by amendment in return form, ITR-6, at page 17, Schedule CG capital gain S.N.3(d) which is applicable from assessment year 2007-08. In the case of Reliance Pretroproducts Ltd. (supra) the Hon ble Supreme Court held that where there 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 particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly the penalty levied was cancelled. Not only this, we also observe that the Hon ble jurisdictional High Court in ITA No.3899/2010 (CIT Vs. M/s Aditya Birla Nova Limited), vide order dated 14th August, 2012, after considering the decision of the Hon ble Apex Court in the case of Union of India Ors. Vs. Dharamendra Textile Processors Ors. (supra) and the decision of CIT Vs. Reliance Petroproducts Pvt. Ltd. (supra), has held that the levy of penalty even where a claim for deduction is not upheld, even though the assessee has disclosed all material facts and has not suppressed any material facts, the levy of penalty is not justified. In the said case, the assessee claimed deduction of ₹ 9,94,399/- on account of diminution in the value of shares held by it. The same were disallowed on the ground that the shares were held as investments, and profits and losses on the sale thereof were to be considered under the head capital gains . Therefore, the quantum proceeding was concluded against the assessee. The Assessing Officer levied penalty under Section 271(1)(c) of the Act. The Hon ble jurisdictional High Court held that it was not the case of the department that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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