TMI Blog2013 (8) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... n identical fact situation, wherein it has been held that the impugned claim is not liable to be visited with penalty u/s. 271(1)(c) as there is under the circumstances no furnishing of inaccurate particulars of income. The fact situation in the instant case being identical, therefore, constrained on the ground of consistency to adopt the same view as has found approval by the hon'ble jurisdictional high court – Decided in favor of Assessee. - I.T.A. No.4782/Mum/2010 - - - Dated:- 5-7-2013 - Shri Sanjay Arora, A. M. And Shri Vijay Pal Rao, J. M.,JJ. For the Appellant : Shri Gopal Bohra For the Respondent : Shri Rajarshi Dwivedy ORDER Per Sanjay Arora, A. M. This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-25, Mumbai ('CIT(A)' for short) dated 20.04.2010, confirming the levy of the penalty u/s.271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2004-05 vide order dated 30.10.2006 at Rs.102 lacs, i.e., as levied, being only marginally over the minimum penalty of 100% of the tax sought to be evaded, which works to Rs.101.47 lacs. 2. Explaining the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the statement/s made by the ld. AR at bar before us has been found by us as untrue on facts. This is as section 10(33) of the Act, which reads as under, does not exempt dividend income on units of US-64, as stated, but only the income arising on their transfer, i.e., the very income, albeit in the negative, that inures to the assessee during the year, and in respect of which the impugned loss stands claimed by it: "Incomes not included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included (1) agricultural income; (2) ............................ (3) ............................ (33) any income arising from the transfer of a capital asset, being a unit of the Unit Scheme, 1964 referred to in Schedule I to the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) and where the transfer of such asset takes place on or after the 1st day of April, 2002;" [emphasis, supplied] The language of the provision is precise and unambiguous. There is, as such, no scope for an argument that a view in favor of the assessee's claim could possibly be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the background and context of the fact situation of the case. The said decision cannot be understood to imply a complete exposition of the law in the matter or read de hors the same, i.e., as explained by the apex court itself per a host of decisions cited supra. In fact, the decision in the case of Reliance Petroproducts (P.) Ltd. (supra) has received interpretation and explanation by the higher courts of law in different fact situations, where the same was sought to be applied, so that this issue can no longer be considered as res integra. In CIT vs. Escorts Finance Ltd. [2010] 328 ITR 44 (Del), the hon'ble court found the assessee's claim u/s.35D, said to be based on the opinion of its Chartered Accountant, a tax expert, as without basis in view of the clear language of the provision, extending the benefit of the said deduction to an industrial company, while the assessee-respondent was admittedly a finance company. Where the claim was ex facie bogus, it could attract penalty, clarifying that it was not a case of a wrong claim but of a false claim. In CIT vs. Zoom Communication (P.) Ltd. [2010] 327 ITR 510 (Del.), the claim was qua income-tax, barred by section 40(a)(ii), so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income exempt u/c. III of the Act, not forming part of the total income, would not enter the computation process to determine the quantum of income under the relevant head of income, each of which has its own computation provisions. Needless to add, the assessee did not prefer any appeal against the non-acceptance of its so called legal claim. The explanation, if it could be considered as one, is false. We need not dwell any further in the matter; the same being basic and integral to the scheme of the Act, and part of the well settled law. Reference in this context be made to the decisions, inter alia, in the case of CIT v. Harprasad Co. (P.) Ltd. [1975] 99 ITR 118 (SC) and CIT v. Gold Coin Health Foods (P.) Ltd. [2008] 304 ITR 308 (SC), to the effect that loss is only negative income, bearing the same character, and that the definition of income in s. 2(24) includes 'loss'. In fact, per the former decision, the apex court has clarified that the assessee is not obliged to disclose loss from a source of income in its return where the income from that source is tax exempt, nor the ITO under an obligation to compute or assess the same. Continuing further, the assessee has in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty, the details supplied in the return 'must not be accurate, not exact or correct, not according to the truth or erroneous'. In the matter under consideration facts reveal that details supplied by the assessee did not fall in any of these categories. In these circumstances we delete the penalty levied u/s. 271(1) (c) of the Act." The merits of the legal plea, i.e., that s. 10(33) speaks only of 'income' while what it claims is 'loss', which is the assessee's explanation on facts; the provision of law as well as well-settled law being only proven facts, has not been, as apparent, discussed by the tribunal. The basis of the decision by the tribunal was the factum of the assessee making a legal claim coupled with the disclosure of the primary facts, in view of the decision in the case of Reliance Petroproducts Pvt. Ltd. (supra). There was however no reference to precedents, as in the form of decisions by the hon'ble high courts referred to supra. 3.5 The issue was raised by the Revenue before the hon'ble jurisdictional high court. The assessee's claim being without doubt a legal claim, though not sustainable in law, the hon'ble court found nothing amiss in the decision by the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptable, would not make it susceptible to penalty, and which is without doubt the ratio of the decision in the case of Reliance Petroproducts Pvt. Ltd. (supra). Furthermore, the decision by the hon'ble jurisdictional high court can by no score be considered as holding in favour of non-levy of penalty u/s. 271(1)(c) even in the face of admittedly wrong or false claim/s, i.e., which has no basis in fact or in law or both; the facts in the instant case disproving the assessee's 'legal' claim. The issue thus essentially boils down to the finding of fact as to whether the claim is indeed debatable, or is it frivolous. 3.6 At the same time, it cannot be denied that the decision by the hon'ble high court in the case of Nalin P. Shah Othrs. (supra) is rendered in an identical fact situation, wherein it has been held that the impugned claim is not liable to be visited with penalty u/s. 271(1)(c) as there is under the circumstances no furnishing of inaccurate particulars of income. The fact situation in the instant case being identical, we are constrained on the ground of consistency to adopt the same view as has found approval by the hon'ble jurisdictional high court. Accordingly, follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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