TMI Blog2019 (9) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... has after disallowance of the impugned amount duly noted in the assessment order that penalty proceedings u/s. 271(1)(c) of the Act is initiated . Consequent to amendment in section 271 by insertion of section 271(1B) duly applicable in the extant assessment year, this is sufficient satisfaction and the penalty cannot be annulled on the ground of lack of satisfaction by the assessing officer. Penalty may not be levied on bonafide and inadvertent error of the assessee - In our considered opinion showing a huge amount of foreign currency translation loss on capital account by a multinational company as revenue loss can by no stretch of imagination be considered to be a bonafide - assessee was very well aware that it was deliberately showing capital account transaction loss as loss on revenue account. Hence by no stretch of imagination it can be said that there was any inadvertent error. It was fully considered decision of the assessee to show the capital loss as revenue loss. Hence this limb of the argument is dismissed and inadvertent error. Assessee voluntarily disclosed during the course of assessment proceedings - by no stretch of imagination it can be said that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of income. 4) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the learned AO has enquired about the details of foreign exchange fluctuation loss during the course of assessment proceedings. 5) On the facts and in the circumstances of the case, the learned CIT(A) erred in not appreciating the fact that the disallowed expense (ie foreign exchange fluctuation loss) was suo-moto offered for tax by the Appellant during the course of assessment proceedings. 3. Brief facts of the case relating to levy of penalty are as under :- The assessee-company is engaged in the business of manufacture of industrial belts, building material and has state of art manufacturing facilities across the globe. In the assessment order the Assessing Officer has held as under :- On perusal of the profit and loss account, it is seen that out of the total foreign currency loss of ₹ 1,84,85,987/- debited, ₹ 1,68,68,672/- pertains to capital assets and should have been capitalized. Since the same was not added to the total income, it now disallowed u/s. 37 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the loss account of foreign exchange loss in respect of revenue account can only be allowed under section 37. The same decisions has been relied in number of decisions by the CIT(A) and above. Further if the assessee was aware of the fact that the same was not allowed revised return could have been filled by the assessee as the Act gives adequate time for the same. 5. The Assessing Officer further referred to the decision of Hon'ble Apex Court in the case of Union of India Vs. Dharmendra Textiles Processors (166 Taxmann 65) and decision in the case of K.P. Madhusudanan Vs. CIT (251 ITR 99). The Assessing Officer further distinguished the decision relied upon by the assessee and finally concluded that he was satisfied that the assessee had furnished inaccurate particulars of its income and concealed its income in various issues discussed above. 6. Against the above order, the assessee has filed the appeal before learned CIT(A). However learned CIT(A) upheld the decision of the Assessing Officer. 7. Against the above order the assessee is in appeal before us. 8. At the outset, learned Counsel of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court) Price Waterhouse Coopers Pvt. Ltd. 348 ITR 306 (Supreme Court) Penalty cannot be levied when assessee voluntarily discloses wrong claim during assessment proceedings. CIT vs Blue Star Ltd (357 ITR 669) (Bom HC) approving the decision of the ITAT dated 20 July 2012 (ITA No. 4481/Mum/2011 10. Per contra, learned Departmental Representative relied upon the orders of the authorities below. 11. The first ground raised by the assessee is that the penalty levied under section 271(1)(c) of the Act is invalid inasmuch as the inappropriate limb in the notice in the penalty was not struck off. We find that this issue was raised before the learned CIT-A. Learned CIT-A has duly noted the assessee s submission in his order. However while adjudicating the issue he has omitted to adjudicate this ground raised before him. Hence in our considered opinion the interest of justice requires that this issue should be remitted to the file of learned CIT-A. Learned CIT-A is directed to consider the issue afresh after giving the assessee proper' opportunity of being heard. The learned CIT-A should also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before the learned CIT-A. AO has to adopt principle of consistency: It is pertinent to note that MBIPL has adopted a consistent approach while filing return of income for AY 2013-14 viz. treating the foreign exchange fluctuation loss on account of capital assets as revenue 'in nature and hence deductible against the business income basis the position adopted in AY 2012-13 viz. treating the foreign exchange fluctuation gain on capital assets as revenue in nature and offering the same to tax. The AO accepted the position of MBIPL for AY 2012-13 ie treating the same as revenue in nature, accordingly, it is submitted that principle of consistency should be applicable in the instant case . 17. Hence the assessee was very well aware that it was deliberately showing capital account transaction loss as loss on revenue account. Hence by no stretch of imagination it can be said that there was any inadvertent error. It was fully considered decision of the assessee to show the capital loss as revenue loss. Hence this limb of the argument is dismissed 18. Another ground raised is that penalty cannot be levied as assessee voluntarily di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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