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2023 (8) TMI 1256 - AT - Income TaxPenalty u/s 271(1)(c) - AO treated amount shown under the head ‘decrease in value of investment’ as ‘capital loss’, declined to allow the same and added it back to the income of the assessee - HELD THAT:- Hon'ble Delhi High Court in the case of CIT vs. DCM Limited [2013 (9) TMI 760 - DELHI HIGH COURT] wherein held that law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible; that when such a claim is made during the course of regular or scrutiny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law; that full probe and appraisal is natural and normal; that threat of penalty cannot become a gag and/or haunt an assessee for making a claim which may be erroneous or wrong, when it is made during the course of the assessment proceedings; that normally, penalty proceedings in such cases should not be initiated unless there are valid or good grounds to show that factual concealment has been made or inaccurate particulars on facts were provided in the computation. Law does not bar or prohibit a person from making a claim, when he knows the matter is going to be examined by the AO. In the case of CIT vs Reliance Petroproducts Pvt Ltd [2010 (3) TMI 80 - SUPREME COURT] held that when the assessee preferred a claim, it was up to the authorities to accept its claim in the Return or not, but 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 attract the penalty u/s 271(1)(c) - As further held that if the contention of the Revenue is accepted, then in case of every return where the claim made is not accepted by the AO for any reason, the assessee will invite penalty u/s 271(1)(c) of the Act and that is clearly not the intendment of the Legislature. On a consideration of the material before us, we are of the considered opinion that the above decisions are applicable to the facts of the case on hand. Merely because the assessee preferred a claim which was not acceptable to the Revenue, the assessee cannot be visited with the proceedings u/s 271(1)(c) unless and until the twin requirements u/s 271(1)(c) are satisfied. Decided in favour of assessee.
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