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2022 (5) TMI 515 - AT - Income TaxPenalty u/s 271(1)(c) - assessee in the year under consideration has declared loss on account of sale of unit of mutual funds under the head short-term capital gain which was carried forward to the subsequent assessment years impugned loss was inclusive of the loss which was to be ignored under the provisions of section 94(7) - HELD THAT:- Under the explanation 1 to section 271(1)(c) of the Act, there are 2 situations. In situation (A), if the assessee failed to offer an explanation or offers an explanation which is found to be false with respect to any fact material to the computation of income, then the amount added or disallowed shall be deemed as concealment of income. In situation (B), the assessee offer an explanation but fails to substantiate the explanation offered by him and fails to prove that such explanation is bona fides and that all the facts relating such explanation and material to the computation of income have been disclosed by him, then the amount added or disallowed to the total income of the assessee shall be deemed as concealment of income. Coming to the present case, we have to test whether the case of the assessee falls under the main provisions of section 271(1)(c) of the Act or explanation 1 attached with it. As regards the main provisions of section 271(1)(c) of the Act, we find that there was no allegation that the assessee has claimed bogus loss by furnishing inaccurate particulars of income. Thus, the claim of the assessee at the most can be regarded as inaccurate claim which cannot be equated with the inaccurate particulars of income. It is for the reason that nothing has been brought on record by the authorities below suggesting that the assessee has furnished the particulars of income with dishonest intent. As regards the explanation 1 to section 271(1)(c) of the Act, there was no iota of evidence suggesting that the explanation offered by the assessee was false. STCG loss claimed by the assessee cannot be said amounting to concealment of particulars of income. Likewise, there was no finding of the authorities below qua the fact that the assessee fails to substantiate the explanation offered by him and fails to prove that such explanation is bona fides with respect to material facts relating to the computation of total income. Thus, in our considered view the provisions of expression 1 to section 271(1)(c) cannot be attracted in the given facts and circumstances. In view of the above and after considering the facts in totality, we set aside the finding of the CIT (A) and direct the AO to delete the penalty levied by him under section 271(1)(c) of the Act. Hence the ground of appeal of the assessee is allowed.
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