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2019 (1) TMI 200 - AT - Income TaxPenalty u/s 271(1)(c) - reopening of expenditure - Disallowance of capital loss treated as revenue expenditure - Held that:- No new tangible incriminating material was received by the AO as the reopening was done based on the material already on record while framing original assessment u/s 143(3) and in first round the claim of the assessee was allowed when the original assessment u/s 143(3) was framed on 30-03-2013. No doubt the Revenue can rightfully open concluded assessment u/s 147 under the prevailing circumstances of the case as the reopening was done within four years from the end of the assessment year and first proviso to Section 147 is not applicable . There is no estoppels against law. So far as penalty u/s 271(1)(c) levied by Revenue is concerned in the instant case, the decision in the case of Reliance Petroproducts Private Limited [2010 (3) TMI 80 - SUPREME COURT] is relevant as the assessee lodged its legal claim for allowability of loss on fixed assets written off as the said assets became unusable / damaged on a bonafide belief but the said claim was not accepted in reopening proceedings u/s 147 in the midst of concept of Block of assets u/s 32(1)(ii) read with Section 50 of the 1961 which was applicable to the instant case as the assessee is engaged in the business of shipping. As already seen above that there is lack of clarity in the placement of section 32 and its subsections. Merely because the legal claim filed by the assessee is not accepted by Revenue will not automatically make tax-payer liable for penalty u/s 271(1)(c). The assessee had a bonefide belief that its claim is allowable keeping in view provisions of Section 32(1)(iii) albeit assessee was governed by Block of assets as per provision of Section 32(1)(ii) and 50 of the 1961 Act but no doubt explanation offered by the assessee was bonafide and Explanation 1 to Section 271(1)(c) will be applicable which takes assessee out of penalty provisions as are contained in Section 271(1)(c). - Decided in favour of assessee.
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