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TMI Blog2022 (9) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to furnishing inaccurate particulars. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. If the contention of the Revenue is accepted then in case of every Return where the claim made is not accepted by the AO for any reason, the assessee will invite penalty u/s 27I(l)(c). That is clearly not the intendment of the Legislature. The law laid down in Dilip Shroff [ 2007 (5) TMI 198 - SUPREME COURT ] as to the meanings of the words conceal and inaccurate continues to be good law because what was overruled in Dharmendra Textile Processors [ 2008 (9) TMI 52 - SUPREME COURT ] was only that part in Dilip Shroff where it was held that mens rea was an essential requirement for penalty u/s 271(l)(c). The judgment of Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT ] clearly shows the rejection of claim would not result in penalty consequences to the appellant. The penalty is therefore not sustainable and is deleted - Decided in favour of assessee. - ITA No. 497/Del/2020 - - - Dated:- 25-8-2022 - SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND MS. ASTHA CHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome declaring total loss of Rs.105.74 crores. It is revealed from the assessment order dated 30.11.2016 that it was completed on the basis of revised computation submitted by the assessee. Moreover, merely because the claim of the expenses made by the assessee is not allowable as deduction, it cannot form the basis of levy of concealment penalty. It is now well settled that a mere making of the claim which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. 7. The Ld. CIT(A) deleted the impugned penalty observing in para 5 as under :- 5.1 In the aforesaid appeal is against the penalty order u/s 271 (1)(c) of the Act. The basic facts of the case indicate that the Indian Drugs Pharmaceuticals Ltd. Co. is a wholly owned Public Sector undertaking of Govt. of India and in the Business of manufacturing of life saving medicines. The company is a sick Industrial undertaking and was under BIFR. The company incurred heavy losses, the BIFR had declared IDPL as sick units and they had also passed an order for winding up of the company in Dec. 2003 and almost entire staff was given compulsory VRS in 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would not have come in picture and the assessee would have easily enjoyed less tax liability. The explanation offered in this regard is also not convincing. The amount was apparently not allowable as deduction, still the assessee made a claim for that. Hence, from the facts of the case, the explanation offered by the assessee is not accepted and rejected. 5.5 It is however seen that the argument advanced by the Assessing Officer is not correct. The main issue required to re-examine in explanation one is that whether there was a bona-fide reason for filing the particulars which were so filed in the original return. In the appellant s case, it is clear that the company is a sick undertaking under BIFR. Almost the entire staff of the company was given VRS in 2013. This led to the situation of the accounts not been completed. These facts have not been disputed. As a result the appellant has a bona-fide explanation for furnishing the said particulars. On the merits of the case, the main contention of the assessee is that no penalty can be levied in its case because the assessee has neither concealed any particulars of income nor furnished any inaccurate particulars of such inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a penalty for concealment of income or for furnishing of inaccurate particulars, or, under the extended definition by the virtue of Explanation. 1 to sec. 271(l)(c), for a deemed concealment of income. 5.6 The judicial precedent also in this regard states that claim by the assessee which is not admissible would not make him liable to penalty u/s 271 (l)(c). The principle case of the Supreme Court in Reliance Petroproducts is quoted here under: S. 271 (1) (c) penalty cannot be imposed even for making unsustainable claims. The assessee claimed deduction u/s 26 (1) (iii) for interest paid on loan taken for purchase of shares. The AO disallowed the interest u/s 14A and levied penalty u/s 271 (1) (c) on the ground that the claim was n sustainable. The penalty was deleted by the appellate authorities. On appeal by the department to he Supreme Court, HELD dismissing the appeal: (i) S. 271 (1) (c) applies where the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income . The present was not a case of concealment of the income. As regards the furnishing of inaccurate particulars, no information given in the Return was foun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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