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2014 (7) TMI 766 - AT - Income TaxPenalty u/s 271(1)(c) of the Act Concealment or furnishing of inaccurate particulars - Depreciation on purchase of cars Held that:- The assessee is not in the business of sale and purchase of cars and therefore cars owned by it could not be part of its stock in trade - Cars were part of block of assets - any loss suffered or profit earned on sale of such cars cannot be treated as part of business activities - even if depreciation was not charged the nature of cars would not change from the part of block assets to the part of stock in trade - Revenue loss can be claimed only for business-activities carried out by an assessee as the cars were part of block asset, so loss arising out of their sale has to be computed under appropriate head and not under the head revenue loss - The assessee has stated that it was a bonafide mistake - the claim made by the assessee about the loss was not a bonafide - Two views are not possible about the claim-only one view is possible - By claiming revenue loss on sale of fixed assets the assessee had filed inaccurate particulars of income - the order of the FAA does not suffer from any legal infirmity. The decision in COMMISSIONER OF INCOME TAX Versus ZOOM COMMUNICATION PVT LTD [2010 (5) TMI 34 - DELHI HIGH COURT] followed - Mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide - If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to the dis-advantage of the assessee - If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. The persons who make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny - This would take away the deterrent effect, which these penalty provisions in the Act have - the assessee had made a claim that was wholly untenable and unsustainable - AO and the FAA had found that the assessee had failed to file any bonafide explanation Decided against assessee.
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