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TMI Blog2013 (8) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... at a per unit price of Rs.12/- as against the face value (cost) of Rs.10/- per unit. The basis of the assessee's claim for the loss, which stood brought out clearly in its computation of income accompanying the return, was that it is only the income arising by way of dividend on the said units that is exempt u/s.10(33) of the Act, and not the income (or loss) arising on their transfer. The same was found not acceptable in view of the provision of section 10(33) of the Act. The assessee had, he would urge further, claimed only a carry forward of the said loss as a part of the total loss under the head 'long term capital gains' (LTCG) at Rs.643.14 lacs, and not its set off against any other income. The assessee's explanation was found not acceptable, so that the impugned penalty stood levied invoking Explanation 1 to section 271(1)(iii) by the Assessing Officer (A.O.), relying on the decisions in the case of Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277 (SC) and K.P. Madhusudhanan vs. CIT [2001] 251 ITR 99 (SC). The same stood confirmed in appeal on the same basis. Placing a copy of the order by the Tribunal in the case of Nalin P. Shah & Othrs. v. Dy. CIT (in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all the facts material to the computation of the income and relevant to the legal claim being made stand furnished per the return, establishing the assessee's bona fides qua its claim. The same would have no application in or cover cases where no legal claim as being pressed arises on the basis of the facts furnished; in fact, stands negated by a particular provision of law, as in the instant case. That is, the facts furnished, on which there is no dispute, contradict or disprove the assessee's claim inasmuch as the same stand squarely governed by the relevant provision. There is therefore no basis for the assessee's legal claim, even as Explanation 1 to the provision would also stand clearly attracted. Furnishing of a plausible explanation in making the claim, establishing its bona fides, would thus continue to govern the levy or otherwise of penalty under section 271(1)(c) in this case as in any other. The interpretation of the provision, including Explanation 1 thereto, which deems, in the absence of an explanation for the default, concealment or furnishing inaccurate particulars of income, attracting penalty thereunder, has been the subject matter of elucidation by the hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation in support of its claim for loss on sale of shares, which was not allowable in view of s. 94(7), was confirmed for levy of penalty u/s.271(1)(c). Penalty there-under was accordingly confirmed, or its deletion reversed, as the case may be, in all these cases by the hon'ble courts, confirming thus that furnishing of a plausible explanation for the default continues to be the building block or an essential ingredient for saving levy penalty u/s. 271(1)(c) of the Act, and would apply even in respect of legal claims and, further, even after the decision in the case of Reliance Petroproducts Pvt. Ltd. (supra), which decision was considered in all these cases. 3.3 Coming to the facts of the case, the assessee's explanation was, in view of the provision of s. 10(33), not what the ld. AR would state before us (refer para 2), which is itself depreciable, but that sec. 10(33) is inapplicable in its case as the same refers only to 'income' while the assessee has admittedly incurred a 'loss'. It is this explanation, given in response to the show cause notice u/s. 274, which is relevant, and forms the basis of the respective cases of the parties. The said 'explanation', if it may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of all legal basis, and equally without merit. The brought forward of any loss is only for its subsequent set off, and which right inures to the assessee on its assessment and being allowed carry forward in its respect, i.e., the same right which the assessee claims per its return. The actual set off, be it in the year of claim or a subsequent year, is of little moment. In either case, the same falls squarely within the purview of Explanation 4 to section 271(1)(iii). In sum, the assessee's claim is ex facie inadmissible, being contrary to the clear provision of law and, further, without any basis whatsoever. Far from being debatable, it qualifies for being termed as baseless and false. The assessee, therefore, can clearly be considered as having not furnished any explanation within the meaning of the term, or as one which it could not substantiate, so as to be covered by Explanation 1 to s. 271(1)(iii). 3.4 Continuing further, the tribunal, per a co-ordinate bench decision, has, however, under an identical situation, stated as being in respect of the assessee's family members, held such claim to, in view of disclosure of primary facts, not warrant levy of penalty in light of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question/s of law raised by the Revenue before it; the relevant part of its decision reading as under: "6. On further appeal, the Tribunal in the impugned order held that the respondent-assessee had in its return of income filed a note with its computation of income disclosing all details about the sale of US 64 units, the loss and resultant carry forward. Further, all details were disclosed in its return of income as is evident from the fact that the assessing officer gathered information about the carry forward loss and sale of units from return filed by the respondent-assessee. The Tribunal held that the from the aforesaid facts at the highest it can be said that the claim of the assessee was not sustainable in law but there was no furnishing of inaccurate particulars or concealment of income on the part of the respondent- assessee. Thus, the penalty was set aside. We find that the same view is taken by the Apex Court in the matter of CIT v/s. Reliance Petroproducts Pvt. Ltd. reported in [2010] 322 ITR 158 (SC). As the decision of the Tribunal is essentially based on finding of fact, we see no reason to entertain the proposed question of law." Under the circumstances, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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