TMI Blog2012 (11) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. M. Murali O R D E R PER AMIT SHUKLA (J.M.) : This appeal has been filed by the assessee against the order dated 16-1-2012, passed by the CIT(A)-25, Mumbai in relation to penalty proceeding under Section 271(1)(1)(c) for the assessment year 2007-2008. 2. As per the grounds of appeal, the assessee is aggrieved by levy of penalty of Rs.4,04,401/- under Section 271(1)(1)(c), firstly, on account of treatment of business loss as speculation loss by the Assessing Officer and secondly, the penalty order has been passed on a dead person without impleading the legal heir and therefore, such a penalty order is liable to be held as null and void. 3. The facts in brief are that the assessee is an individual and derives business income from proprietary concern viz. Chhangani Bullion , dealing in gold and silver bar and other business of trading in MCX. The return of income was filed on a loss of (-)Rs.9,26,100/- after adjusting the loss claimed from MCX trading amounting to Rs.15,14,671/- against the profit of Rs.5,12,670/- from bullion business. The Assessing Officer during the course of assessment proceedings under section 143(3), required the assessee as to why the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly levied the penalty of Rs.4,04,401/-. 5. Before the CIT(A), the assessee raised a preliminary ground that the penalty order has been passed upon the dead person, without impleading the legal heir and therefore such a penalty order is not maintainable. On merits also, submissions were made before the CIT(A). The CIT(A) rejected both the pleas of the assessee and confirmed the penalty for the reasons given in detail in the appellate order. 6. Before us, learned AR on behalf of the assessee besides making submissions on the preliminary issues of passing of penalty order on a dead person also made elaborate submission on merits. His main contention was that there is no dispute about the incurring of the loss, except for the reason that business loss has been treated as speculative loss, this alone cannot be a ground for levy of penalty for concealment of income or furnishing particulars as stipulated in Section 271(1)(1)(c). On the other hand, learned CIT DR relied upon the findings given by the CIT(A) as given in the appellate order. 7. We have carefully considered the rival submissions and perused the material placed on record. It is undisputed fact that the assessee car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... speculation loss, does not automatically lead to concealment of income or furnishing of any inaccurate particulars. The ratio laid down by the Hon ble Supreme Court in the case of Reliance Petro Product, reported in 322 ITR 158 also applies in the instant case, wherein their Lordships after considering the judgment of CIT Vs. Dharmendra Textiles Processors (supra), as has been relied upon by the Assessing Officer as well as by the CIT (A), has observed and held as under :- A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The present is not a case of concealment of the income. That is not the case of the Revenue either. However, the learned counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense) ; the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) of section 271(1)(c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the Assessing Officer must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff v. Joint CIT* was upset. In Union of India v. Dharamendra Textile Processors**, after quoting from section 271 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 271(1)(c) of the Act. 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. Such claim made in the return cannot amount to the inaccurate particulars. x x x x We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. 8. Thus, under the facts and circumstances of the case, we hold that no penalty for concealment of income or furnishing of any inaccur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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