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TMI Blog2010 (9) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... ing been accepted. It is also an accepted position that the claim made by the assessee was in accordance with the various decisions of the Division Benches of this Tribunal, and it was only as a result of later judicial developments that the claim of the assessee was rejected. Even on these undisputed facts, the Assessing Officer held that the assessee furnished inaccurate particulars of income by making the claim of deduction. It was further observed that 'had the assessee's case not been selected for scrutiny, the assessee would have benefited from filing inaccurate particulars of income'. The incorrectness of legal claim has thus been viewed as furnishing of inaccurate particulars of income. When matter travelled in appeal, the CIT(A) relied upon Hon'ble Supreme Court's judgment in the case of Union of India Vs Dharmendra Textile Processors (306 ITR 277) and held that penalty, being a civil liability to provide remedy for loss of revenue, has been rightly imposed on the facts of the present case.... 4. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 5. We have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant in the context of 'furnishing of inaccurate particulars'. The expression 'particulars' refers to 'facts, details, specifics, or information about someone or something'. Therefore, the plain meaning of the expression 'furnishing of inaccurate particulars of income' implies furnishing of details or information about income which are not in conformity with the facts or truth. The details or information about income deal with the factual details of income and this cannot be extended to areas which are subjective such as the status of taxability of an income, admissibility of a deduction and interpretation of law. The furnishing of inaccurate information thus relates to furnishing of factually correct details and information about income. ................................... The admission or rejection of a claim is a subjective exercise and whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particulars of income. The authorities below have apparently proceeded to treat assessee's making an incorrect claim of income as furnishing of inaccurate particulars. What is a correct claim and what is an incorrect claim is a matter of perception. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessee which has been put against the assessee in these penalty proceedings. 7. We must however add that merely because there is no concealment of particulars, it cannot be said that it is not a fit case for imposition of penalty. It is quite possible that an assessee may not furnish any inaccurate particulars of income and yet he can be said to have concealed income. That can possibly be in a situation in which the assessee is hit by the deeming fiction and the assessee does not have a reasonable explanation for the legal claim made by the assessee. However, even assuming that deeming fiction under Explanation 1 to Section 271 (1)(c) can be triggered by a wrong legal claim, it cannot be the case that merely because there is a wrong claim, even if that be so, penalty under section 271(1)(c) can be imposed. This deeming fiction under section 271(1)(c) only shifts the onus of proof on the assessee, as this Explanation itself provides that a penalty can only be imposed (a) when there is no explanation by the assessee, (b) when the explanation given by the assessee is found to be false, and (c) when the assessee provides an Explanation which he fails to substantiate and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a that what he has made is a purely legal claim in a transparent manner, and merely because claim is rejected, concealment penalty cannot be imposed. The legal claim must also be a reasonable claim. The true test, therefore, must lie in the nature of explanation of the assessee for having made the claim, and whether the explanation can be said to be a bonafide explanation. In the present case, the assessee has made a claim which is not only in accordance with several decisions of the coordinate benches but also entirely based on an interpretation which was admittedly a possible, even though incorrect, view of the matter. It is not a frivolous, absurd or patently inadmissible claim that has been made by the assessee. In our considered view, therefore, the explanation for the legal claim of depreciation made by the assessee cannot be said to be, what Hon'ble Supreme Court termed as, a wholly fantastic or unacceptable explanation. 10. For all these reasons, and in the light of the settled legal position discussed above, it was indeed not a fit case for confirmation of impugned penalty. We, therefore, uphold the grievance of the assessee, and direct the Assessing Officer to delete the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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