TMI Blog2009 (9) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... n loss in view of the provisions of the Explanation to section 73 and allowed it to be carried forward for being set off against the speculation profit of the subsequent assessment years. On the basis of these facts the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961. The Assessing Officer issued a show-cause notice. The assessee submitted its written submissions vide letter dated November 4, 2005 and explained that the assessee claimed the loss in the profit and loss account filed along with the return of income. In schedule I to the profit and loss account, share trading has been shown where the details of purchase of above stock and the value of the same closing stock has been mentioned. Therefore, the assessee has disclosed all material facts required for computation of income. The assessee has also submitted that the above loss has not been claimed on the basis of any fact which is found to be false. Neither the claim has been made by suppressing certain facts. However, the Assessing Officer did not accept the assessee's contentions and levied penalty of Rs. 5,39,620 under section 271(1)(c) of the Act. When the matter went be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemicals and Mineral Ltd. [2003] 259 ITR 212 the hon'ble Rajasthan High Court (Jaipur Bench) have held as under (page 214) : `From the foregoing discussion it follows that such a deduction could be an arguable, controversial or a debatable question. In such a situation the claim could not be said to be false. If this were not so, it would become impossible for any assessee to raise any claims or claim any deductions which are debatable. It is not certainly the intention of the Legislature to make punishable such claims or deductions under section 271(1)(c), if they are not accepted.' Affirming the decision of the Appellate Tribunal, the hon'ble court in this case has held that no penalty is leviable when the assessee has claimed deduction of an amount that was debatable. It could not be said that the assessee has concealed any income or furnished inaccurate particulars for evasion of tax. 8.3 In the case of CIT v. S. P. K. Steels P. Ltd. [2004] 270 ITR 156, the hon'ble Madhya Pradesh High Court have held that no penalty is leviable under section 271(1)(c) in a case where loss is genuine but not allowed because of the deeming provisions of the Explanation to section 73. 8.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which particulars have been concealed. This deeming provision for concealment is not an absolute one. Explanation 1 to section 271(1)(c) provides that an amount added or disallowed in computing the total income of a person falling under clause (A) or (B) of Explanation 1 shall, for the purpose of section 271(1)(c), be deemed to represent the income in respect of which particulars had been concealed. Explanation 1 refers to two situations in which presumption of concealment created by Explanation 1 is available. The first situation is where the assessee, in respect of any facts material to the computation of his total income, fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner to be false. The second situation is where the assessee in respect of any facts material to the computation of his total income, offers an explanation which he is not able to substantiate and also fails to prove that such explanation was bona fide and that all the facts relating to the computation of total income have been disclosed by him. The presumption available under Explanation 1 cannot be drawn unless the case of the assessee falls unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances are equally consistent with the hypothesis that the amount does not represent concealed income with the hypothesis that it does. If the assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the Department because there will be no material to show that the amount in question was the income of the assessee. Alternatively, treating the Explanation as dealing with both the ingredients (i) and (ii) above, where the circumstances do not lead to the reasonable and positive inference that the assessee's explanation is false, the assessee must be held to have proved that there was no mens rea or guilty mind on his part. Even in this view of the matter the Explanation alone cannot justify levy of penalty. Absence of proof acceptable to the Department cannot be equated with fraud or wilful default." In our opinion, even if the Tribunal has confirmed the addition it does not mean that the assessee has concealed the income or has furnished inaccurate particulars of such income. Since the learned Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al income be deemed to represent the income in respect of which particulars have been concealed. "Inaccurate particulars" means that the particulars are incorrect or inaccurate or not correct. That means, the particulars have not been furnished in a correct/exact manner as is required to be furnished to determine the correct income of the assessee chargeable to tax. At the time when the return was filed by the assessee, can the particulars submitted by the assessee relating to the total income, be regarded to be incorrect. The claim made by the assessee is bona fide as there are two views possible on the applicability of section 73 of the Act. Merely that the claim of the assessee was not accepted does not mean that the assessee be penalised. In view of our aforesaid discussion, we are of the view that this is not a case where the assessee has submitted inaccurate particulars of his income while submitting the income-tax return and, therefore, we confirm the order of the Commissioner of Income-tax (Appeals) deleting the penalty imposed under section 271(1)(c). In the result, the appeal filed by the Revenue is dismissed. The order pronounced in the open court on September 4, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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