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TMI Blog2023 (11) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... ain" instead of "Profit and Gains of Business", as was being done earlier?" Background facts 3) The brief background facts are that the respondent-assessee is a Private Limited Company engaged in the business of trading in shares as well as engaged as investor in shares/stocks. 4) For the Assessment Year 2002-2003, the respondent had filed a return declaring an income of Rs.4,98,84,560/- on 31.01.2002 under the head "Capital Gains". 5) During assessment proceedings, it was noticed by the Assessing Officer that the respondent-assessee had shown income comprised of income from sale of long term investments in listed shares and as per Section 112, income tax thereon was paid. 6) So, the Assessing Officer reopened the case on the ground that the income declared from capital gains was to be assessed under the head "profit and gains of business" as the respondent-assessee was running the business of investment and trading of shares. The order dt.31.8.2008 of the assessing Officer imposing penalty under section 271 (1) (c) of the Act 7) The quantum appeal before the Commissioner of Income Tax (Appeals) (in short the "Appellate Authority") and the further appeal before the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me were assessed as "income from business and profession" by the Assessing Officer, and this cannot be said to be a case of concealment of income or furnishing of inaccurate particulars of income. 15) It also held that merely changing the heads of income, cannot lead to levy of penalty under Section 271(1)(c) of the Act. 16) The Tribunal placed reliance on the judgments of the Supreme Court in Cement Marketing Co. of India Ltd. vs. Assistant Commissioner of Sales Tax 124 ITR 15 = (1980) 1 SCC 71; CIT vs. Reliance Petroproducts (P) Ltd. 322 ITR 158 (SC) and the decision of the Delhi High Court in CIT vs. Amit Jain (2013) 351 ITR 74 (Delhi). Contentions of counsel for the Income Tax department/appellant 17) Standing Counsel for the Income Tax Department contended that the view taken by the Assessing Officer in the case of the respondentassessee had been upheld by the Income Tax Appellate Tribunal and the High Court of Himachal Pradesh in the quantum appeal filed by the assessee-respondent, ITA no.33 of 2008 decided on 18.06.2010 reported in 235 CTR 273; and the High Court had given a finding that the revenue authorities were entitled to treat the profits realised from sale of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Leave to the Supreme Court directly from the orders of the Assistant Commissioner of Sales Tax. Though, the Supreme Court dismissed the appeal on merits, however, it set aside the levy of penalty, holding that penalty cannot be imposed under Section 43 of the M.P. General Sales Tax Act, 1958 and Section 9 (2) of the Central Sales Tax Act, 1956 on the ground that the assessee had filed false returns by not including the amount of freight in the taxable turnover disclosed in the returns; that it is difficult to see how the assessee could be said to have filed false returns when what the assessee did namely- not including the amount of freight in the taxable turnover, was under a bonafide belief that the amount of freight did not form part of the sale price, and was not includible in the taxable turnover. The Court held that it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It held that it was a highly arguable contention which requires serious consideration by the Court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover, could not be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court held that the explanation shifts the burden of proof to the assessee in the situation covered by it. If the assessee fails to establish that his failure to return the correct income was not on account of any fraud or gross or wilful neglect on his part, the presumption will become a finding and it would be open to the authority to levy penalty. 24) Counsel for the Revenue-Department contended by placing reliance on this decision that the finding of the High Court in the quantum appeal filed by the assessee is suggestive of concealment of particulars of income/furnishing of inaccurate particulars of income by the respondentassessee and, therefore, levy of penalty is justified. 25) We may firstly point out that the Explanation 1 as it stood w.e.f 1.4.1964 had ceased to be on the statute book after it's deletion much before the instant assessment was made. So the ratio of the said decision has no application to the instant case. 26) Secondly, we have perused the order dt. 18.06.2010 in ITA no.33 of 2008 passed by the High Court of Himachal Pradesh in the assessee's own case and have noticed that the High Court merely recorded that the revenue authorities were entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. 11. The Learned Counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India vs. Rajasthan Spg. & Wvg. Mills [2009(13) SCC 448] and reiterat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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