TMI Blog2010 (1) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... Ajay Srivastav for the Appellant R. C. Jain for the Respondent ORDER Asha Vijayaraghavan, Judicial Member:- This appeal filed by the Revenue is directed against the order dated September 27, 2007 passed by the Commissioner of Income-tax (Appeals)-XXVII, Mumbai, under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2002-03. The brief facts are as follows:- "(1) The appellant is assessed in the status of a registered firm for the past several years. The appellant up to the assessment year 1996-97 carried on the business of dyeing, bleaching and processing of cloth on rented premises on monthly basis belonging to Megji Mathradas Trust. (2) While the business of the appellant was being continued a tripartite agreement dated September 15, 1994 was entered into between the landlord and the appellant of the one part and purchaser of the other part for the sale and transfer of the tenanted premises (factory premises) for a consideration of Rs. 45 crores of which Rs. 30 crores was to be paid to the appellant as a consideration for handing over quiet and peaceful possession of the tenanted premises subject to fulfilment of certain conditions, inter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the same subject matter as under:- (i) The Assessing Officer held that the transfer had taken place during assessment year 1995-96, i.e., in the year of agreement itself and assessed the long-term capital gain on Rs. 30,00,00,000 by rejecting the alternative contention of the appellant that the expenditure in connection with payment to sub-tenants, workers and legal expenses could not be allowed as they were of revenue nature and the same were not incurred during the year. In the appeal filed by the appellant, the Commissioner of Income-tax (Appeals) vide his order dated November 20, 1995 confirmed that transfer had taken place during this year. He also however held that the expenditure claimed were on capital account but the same could not be allowed as the same had not materialised. The Department did not file any appeal or cross-objection to the Income-tax Appellate Tribunal against his holding that such expenditure was on capital account. The appeal filed by the appellant to the Income-tax Appellate Tribunal against the order of Commissioner of Income-tax (Appeals), was allowed by the Income-tax Appellate Tribunal vide order dated October 7, 1999 holding that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) against the above order the Commissioner of Income-tax (Appeals) has confirmed the said disallowance mainly relying upon the decision in the case of CIT v. Radio Talkies [1999] 238 ITR 872 (Bom)". The Income-tax Officer initiated penalty proceedings under 271(1)(c) of the Act and levied penalty of Rs. 1,02,28,536. Before the Commissioner of Income-tax (Appeals), the learned authorised representative submitted that in the quantum appeal the Commissioner of Income-tax (Appeals) did not consider the decision on identical facts in the case of Bava Cherian v. ITO [1992] 43 ITD 1 (Cochin Bench) when it was held that the retrenchment compensation paid to workers in terms of the agreement to sale is an expenditure incurred in connection with transfer under section 48(i) of the Act and is therefore an allowable deduction. The learned authorised representative further submitted that:- "The appellant has all along disclosed the full particulars of such payment based on alternative submissions made before the Assessing Officer for the assessment years 1995-96, 1997-98 and 1998-99 and the claim for deduction made in the return of income filed for the assessment year 2002-03 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 48(i) and levy of penally under section 271(1)(c) of the Act. The facts which emerge from the same are summarised as under:- (a) The Income-tax Appellate Tribunal in the appeal for the assessment year 1995-96 held that closure of business was a precondition to the agreement dated September 15, 1994 which was closed in 1996 and retrenchment compensation was paid. (b) The Commissioner of Income-tax (Appeals) in the appeal for the assessment year 1995-96 observed that expenditure in question was not 'business expenditure' but the same was on capital account. (c) The Assessing Officer while computing the capital gain on the same subject-matter for the assessment year 1997-98 held that deduction under section 48(i) was permissible as claimed based on alternative submissions made in the course of assessment proceedings which was accordingly allowed in the order under section 143(3) of the Act. (d) In the assessment for the assessment year 1998-99 the Assessing Officer rejected the alternative claim for the above deduction which was carried in appeal to the Commissioner of Income-tax (Appeals) but was not disposed of as the main grounds of appeal that no transfer too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant has not concealed his income and not furnished inaccurate particulars of his income. Further, there is no finding by the Assessing Officer that the claim was not "bona fide". Merely on a difference of judicial opinion between the Assessing Officer and the appellant penalty cannot be levied. As has been held by the Supreme Court in T. Ashok Pai v. CIT [2007] 292 ITR 11 it has been held as follows (headnote):- "The word 'inaccurate' in the context of levying penalty under section 271(1)(c) signifies a deliberate omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars. The Assessing Officer is required to arrive at a finding that the explanation offered by the assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation was not only not bona fide but all the facts relating to the same which are material to the income were not disclosed by him. Thus apart from his explanation not being bona fide, it should be found as a fact that he has not disclosed all the facts which were material for the computation of his income. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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