TMI Blog2012 (11) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... not necessarily imply concealment or furnishing of inaccurate particulars because the issue regarding allowability of deduction of depreciation on membership fee of stock exchange u/s 32 was debatable issue. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars thereof by the assessee as confirmed in CIT v. Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT]. It can at best be a "wrong claim" not "a false claim" - in favour of assessee. - IT APPEAL NO. 2645 (DELHI) OF 2012 - - - Dated:- 24-8-2012 - I.C. SUDHIR AND A.N. PAHUJA, JJ. Satish Aggarwal for the Appellant. Neeraj Kumar for the Respondent. ORDER A.N. Pahuja Accountant Member - This appeal filed on 31.05.2012 by the Revenue against an order dated 06-03-2012 of the ld. CIT(A)-XV, New Delhi, raises the following grounds:- 1. "On the facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the penalty of Rs. 6,02,514/- imposed u/s 271(1)(c) of the Income-tax Act, 1961. 2. The appellant craves leave to add, alter or amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 5.3 But with the recent decision of the Supreme Court in the case of CIT v. Reliance Petro Products Pvt. Ltd. [2010] (322 ITR 158) (SC), it is clear that the Supreme Court by giving the ruling in Dharmendra Textile Processor's Case (supra) has not overruled their decision given earlier in Dilip N. Shroff's v. CIT (209 ITR 519) except for its mention of Mens rea therein but Supreme Court have again re-iterated their finding given in the case of CIT v. Atul Mohan Bindal [2009] (317 ITR 1) and UOI v. Rajasthan Spinning Weaving Mills [2010] (1 GST R66) (SC) that" that for applicability of Section 271(1)(c) the conditions stated therein must exist." Even in the recent decision in the case of CIT (LTU) v. MTNL, ITA NO. 626/2011 dated 10.10.2011, the jurisdictional Delhi High Court has upheld the same view. 5.4 Thus from above, it is very clear that for imposing penalty under Section 271(1)(c), the AO have to be satisfied that: (a) assessee has concealed the particulars of income or (b) assessee has furnished inaccurate particulars of such income. 5.5 In view of the above discussion and in view of the Hon'ble Supreme Court in Reliance Petroproducts (supra) it is clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd. [2010] 322 ITR 158. 5. We have heard both the parties and gone through the facts of the case as well as the aforesaid decision relied upon on behalf of the assessee. The AO levied penalty u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income on account of amount of Rs. 17,90,000/- disallowed on account of amortization claim written off in relation to membership fee paid to stock exchanges, ignoring the decisions relied upon on behalf of the assessee, holding that the membership card is an intangible asset within the meaning of section 32(1)(ii) of the Act and thus, entitled for depreciation thereof. Some of these decisions relied upon by the assessee are Kaynet Capital Ltd. v. Dy. CIT [IT Appeal nos. 3870, 3871 and 4871/Mum/2005] (BCAJ); Kotak Securities Ltd. v. Addl. CIT [2008] 25 SOT 440 (Mum.)(Trib.); Peninsular Capital Market v. Asstt. CIT [2008] 19 SOT 421 (Cochin); R.M. Valliappan v. Asstt. CIT [2006] 103 ITD 63 (Chennai) (SB) and Techno Shares Stock Ltd. v. ITO [2006] 101 TTJ 349 (Mum.) The ld. CIT(A) while referring to decision in Reliance Petro Products (P.) Ltd. (supra) cancelled the penalty. We find that Hon'ble Apex Court in their decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t than those applied for making or confirming the additions. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition or disallowance made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1)(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. The provisions of section 271(1)(c) of the Act stipulate that if the Assessing Officer or the CIT(Appeals) or the Commissioner, in the course of proceedings under this Act, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars thereof , he may direct that such person shall pay by way of penalty a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by a reason of the concealment of particulars of his income. Explanation 1 to section 271(1)(c) of the Act mentions that where in respect of any facts material to the computation of the total income of any person under the Act, such person fails to offer an explanation or offers an explanation which is found by the AO or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion having regard to the principle of statutory interpretation must be borne in mind before interpreting the aforementioned provisions. Clause (c) of sub-section (1) of section 271 categorically states that the penalty would be leviable if the assessee conceals the particulars of his income or furnishes inaccurate particulars thereof. By reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature but such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. Some of those factors apart from being inherent in the nature of penalty proceedings as has been noticed in some of the decisions of this court, inheres on the face of the statutory provisions. Penalty proceedings are not to be initiated, as has been noticed by the Wanchoo Committee, only to harass the assessee. The approach of the Assessing Officer in this behalf must be fair and objective. The term "inaccurate particulars" is not defined. Furnishing of an assessment of value of the property may not by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. In the case under consideration, there is nothing to suggest that the assessee furnished any inaccurate particulars or concealed the particulars. Admittedly, the claim for deduction of depreciation on membership fee of stock exchange u/s 32 was debatable issue and finally settled by Hon'ble Apex Court in their aforesaid decision dated 9.9.2010 in Techno Shares stock Ltd. (supra). Mere disallowance of a claim will not amount to filing of inaccurate particulars of income. It can at best be a "wrong claim" not "a false claim". In such circumstances, Hon'ble Delhi High Court held in the case of CIT v. Bacardi Martini India Ltd. [2007] 288 ITR 585 that no penalty was leviable. In CIT v. Harshvardhan Chemicals Minerals Ltd. [2003] 259 ITR 212, Hon'ble Rajasthan High Court upheld the finding of the Tribunal that when the assessee has claimed some amount though that is debatable, in such cases, it cannot be said that the assessee has concealed any income or furnished inaccurate particulars for evasion of the tax. In this view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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