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TMI Blog2010 (3) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts in brief are that in the return of income, the assessee claimed set-off of brought forward business loss against the income under the head "Capital gains". The Assessing Officer declined the claim of set off as not permissible under section 71/72 of the Income-tax Act. The Assessing Officer also levied penalty under section 271(1)(c) with respect to the claim of set off declined by him. Against the order of the Assessing Officer levying penalty, the assessee approached the Commissioner of Income-tax (Appeals) who deleted the same by observing that no satisfaction has been recorded for levy of penalty. The order of the Commissioner of Income-tax (Appeals) for cancelling the penalty was upheld by the Income-tax Appellate Tribunal. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 158, wherein it was observed that making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars, no penalty is leviable under section 271(1)(c) of the Income-tax Act. The learned authorised representative also placed on record order of the Income-tax Appellate Tribunal, Visakhapatnam Bench reported at 29 DTR 1, wherein it was held that short-term capital gain under section 50 is eligible for set off against unabsorbed depreciation and eligible business loss. Accordingly, it was pleaded that the assessee's claim was allowable even on the merits and that no penalty should have been imposed under section 271(1)(c) merely by declining such claim. The decision of the Hon'ble jurisdictional High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer was justified in levying penalty for such wrong claim. 5. We have considered the rival contentions, carefully gone through the orders of the authorities below and also deliberated upon the various case law cited by the learned authorised representative and discussed by the lower authorities in their respective orders. From the record, we found that the assessee has claimed set-off of unabsorbed business loss against the capital gains earned during the year. As a result of the Assessing Officer's action for decline of such set off, penalty was imposed under section 271(1)(c). The contention of the assessee was that the claim was made in a bona fide way for setting of carry forward business loss against the income arising on sale of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT [2007] 291 ITR 519 and Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277, held as under (page 166 of 322 ITR) : "A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. 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, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sugar Mills Ltd. (supra) observed that where the assessee is found to have made wrong claim under section 80P and wrong claim of depreciation on guest house, making a wrong claim is not at par with concealment or giving of inaccurate information, it will not call for levy of penalty under section 271(1)(c). Accordingly, the order of the Income-tax Appellate Tribunal, Chandigarh Bench deleting penalty imposed under section 271(1)(c) was upheld by the Hon'ble court. 8. The Hon'ble Madhya Pradesh High Court in the case of CIT v. S.P.K. Steels (P.) Ltd. [2004] 270 ITR 156 upheld the order of the Tribunal deleting the penalty under section 271(1)(c) by observing that the assessee being engaged in the business of commission agency, the Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty could not be deleted, the Hon'ble High Court observed as under (page 82) : "We are unable to accept the submission. The judgment of the Hon'ble Supreme Court in Dharamendra Textile Processors [2008] 306 ITR 277 cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. What has been laid down is that qualitative difference between criminal liability under section 276C and penalty under section 271(1)(c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, the concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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