TMI Blog1990 (11) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... med on the gross total income before deduction under the claim of investment allowance under s. 32A, allowance under s. 32AB and brought forward investment allowance and deductions under ss. 80HH and 80-I for the asst. yr. 1987-88. However, the total income (book profits as per s.115J of the Act) remained at the original figure of Rs. 13,07,656 and the tax at Rs. 6,86,519. In the assessment order dt. 28th Dec., 1988, however, the Assessing Officer allowed deduction under ss. 80HH and 80-I at Rs. 10,06,834, though he computed the total income (book profits as per s.115J of the Act) at the Rs.13,07,656 with tax at Rs. 6,86,519 and no additional tax demand was created. 3. Being aggrieved against the order of the Assessing Officer regarding deductions under ss. 80HH and 80-I the assessee filed an appeal before the learned CIT(A) on 1st Feb., 1989. However, by means of a written application, that appeal was not pressed because the taxation of the assessee was to be on the basis of book profits under s. 115J. The appeal was accordingly dismissed on 30th June, 1989. 4. The original assessment order under s. 143(3) was, however, rectified by the Assessing Officer on 30th Nov., 1989 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re concealed. It was said that in the revised return, higher deduction was claimed only on account of different legal interpretation by some of the High Courts. It was further stated that there had been no addition to the real income and that on the basis of an addition in relation to which the opinion was debatable, no penalty could be levied. Penalty was also not said to be leviable merely on account of assessee's explanation regarding certain claims which could not be rendered false. The explanation was said to be bona fide. It was stated that no adequate opportunity of hearing was given. Next it was said that in revising the returns, no tax was ought to be evaded. However, the learned CIT(A) observed that there was no merit in the contention that the claim being based on any legal opinion after the filing of the original return in the light of some High Court decision tantamounted to bona fide revision of return of income. He also observed that this was a new argument which could not be entertained because in the written reply dt. 20th Sept., 1989, given before the Assessing Officer, no such care was taken. He held that due opportunity of hearing had been afforded to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns: (a) Agrl. Implements Dealers Syndicate vs. CST (1971) 27 STC 227 (MP) (b) Dadabhoy's New Chirimiri Ponri Hill Colliery Company P. Ltd. vs. CST (1979) 44 STC 100 (c) Cement Marketing Co. of India Ltd. vs. Asstt. CST (1980) 124 ITR 15 (SC). He submitted that the mere rejection of the explanation could not mean that the claim made by the assessee was false. For this proposition, reliance was placed on the following decisions: (a) CTO vs. Kanhayalal Mohanlal (1987) 64 STC 449 (Raj) (b) CTO vs. Sojat Lime Co. (1989) 74 STC 288 (Raj) (c) CIT vs. Devidayal Aluminium India P. Ltd. (1988) 72 CTR (All) 7 : (1988) 171 ITR 683 (All). For the meaning of "concealment", reference was made by him to the following decisions (a) Addl. CIT vs. Delhi Cloth General Mills (1984) 42 CTR (Del) 188 : (1986) 157 ITR 822 (Del) (b) Muralilal Ahuja Sons vs. The Board of Revenue Others (1986) 61 STC 393 (Raj). He referred to the decision of Punjab Haryana High Court in CIT vs. Devraj (1975) 98 ITR 76 (P H) for the proposition that some of the items like income-tax and wealth-tax were of such a nature that the assessee might have been ignorant that they were not deductible and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of this appeal. Sec. 271(1)(c) enables penalty to be levied if the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. Explanation 1 to s. 271(1)(c) envisages a number of situations. Since this was a case in which the assessee had offered an explanation for claiming higher deduction in the revised return, the question to be considered is whether such explanation was false or whether it was a case where the assessee though held to be not able to substantiate the explanation had also failed to prove that such explanation was bona fide and that all the facts relating to the same and material to the computation of his total income had been disclosed by him. In both the situations, the deduction disallowed in computing the total income was to be deemed, for the purpose of s. 271(1)(c) to represent the income in respect of which the particulars had been concealed. If an assessee interprets the law in a particular way disclosing all the relevant facts in the returns so that if the legal position taken by him is not accepted, full tax can be imposed, it cannot be said that the assessee had filed false return. This is what the Madhya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 (Del) (SB) wherein it was held that brought forward loss had to be deducted first before computing deduction from profits @ 20 per cent for the purposes of 80HH. Be that as it may, it does show that the higher deduction claimed by the assessee could not be said to be frivolous or false. The consistency of the assessee's conduct is further established from the fact that it filed an appeal against the assessment order though it was later not pressed due to there being no tax effect involved. From the foregoing discussion it follows that such a deduction could be an arguable, contestible or a debatable question. In such a situation the claim could not be said to be false. If this were not so, it would become impossible for any assessee to raise any claims or claim any deductions which are debatable. It is not certainly the intention of the Legislature to make punishable such claims or deductions under s. 271(1)(c), if they are not accepted. Further, the total income as per the original and revised computation of the assessee as also after the final assessment, remained the same, namely, Rs. 13,07,646. So also the income-tax as computed by the assessee in both the returns and as com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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