TMI Blog2014 (5) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... esent year has resulted into gain to assessee in succeeding year as assessee was able to adjust cost of such bonus units against sale of such units – here inaccurate particulars of income were not furnished. The provisions of section 94(8) were inserted in the statute to curb tax avoidance in such type of circumstances only which were applicable from assessment year 2005-06, the fact CIT(A) has noted in his order also - The present cases relate to assessment year 2004-05 and therefore in these years the assessee had not violated the provisions of section 94(8) and therefore had valued the bonus units as per provisions of section 55(2)(iiia) which is an accepted method though for different purposes - The AO had charged the assessee with the violation of provisions of section 94(7) which is not the fact as section 94(7) relates to the cases where an assessee earns dividend or income on such securities - the other charge of AO is that assessee had shown income from other sources as agricultural income is also not correct as CIT(A) in quantum proceedings had accepted the claim of assessee – thus, the assessee had valued the bonus units at nil value by taking one of the possible vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am of the opinion that the assessee has concealed the particulars of income in the form of not following the provisions of section 94(7) of the Income Tax Act, 1961 claiming wrong exemption u/s 10 of the Act on income from other sources which has been wrongly shown as agricultural income and claiming un-allowable set up off of losses against other income in certain transactions i.e. SMF, IVMF etc. and hence doing tax avoidance by using colourable devices, so it is a fit case to initiate penalty proceedings u/s 271(1)(c ) of the IT Act, 1961. Thereafter, the Assessing Officer passed penalty order in both cases vide order dated 29.3.2010 and imposed penalties to Rs.13,77,450/- and Rs.28,05,210/- respectively. 3. Aggrieved with the order, the assessee filed appeal before Ld CIT(A) and submitted as under:- i) That assessee wholly depended on his counsel for preparing the return and assessee being a lay man does not know the technicality of IT Law. ii) That the only charge of Assessing Officer is that assessee had not followed the provisions of section 94(7) and had claimed wrong exemption u/s 10 on income from other sources but further discussion that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed exempt. The plea of the appellant to shift the onus on the counsel is therefore not tenable and hence it is held that the appellant furnished inaccurate particulars of his income and hence is liable for penalty u/s 271(1)( c) of the Act. The case laws relied upon by the appellant are of no help being distinguishable on facts. For example, the issue in the case of CIT v. Preeti N. Aggarwala 309 ITR 140 (Del.) relied upon by the appellant, is regarding the legality of satisfaction recorded by the Assessing Officer. The ITAT cancelled the penalty proceedings on the ground that no satisfaction was recorded by the Assessing Officer which was confirmed by the Hon'ble High Court. Similarly the facts of the case of the applicant are entirely different with the facts of the case of Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC). The appellant further referred to the decision of the Hon'ble Supreme Court in the case of Ashok Pai v., CIT 292 ITR 11 (SC) in which the Hon'ble Court held that the word inaccurate in the context of levying penalty u/s 271(1)( c) signifies a deliberate omission on the part of the assessee. From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transaction was not doubted by him or even by the Assessing Officer and assessee was entitled to value the bonus units at NIL value and there was nothing wrong if the assessee claimed long term exempt capital gain in succeeding year. Continuing his arguments he submitted that however in succeeding year the Assessing Officer had not accepted the income on such units as long term capital gain and instead treated the same as business income. He invited our attention to paper book pages 48 to 52 where a copy of assessment order for assessment year 2006-07 was placed. Arguing further the Ld AR submitted that assessee was dependent on his counsel due to complicated provisions of income tax and he was not expected to know all the applicable provisions. Reliance in this respect was placed on the judgment of CWT v. Ramnik Lal D Mehta reported in 136 ITR 729. He further argued that it was a case where two opinions were possible and assessee had taken one of the possible views and if the assessee s plea was not acceptable to revenue the assessee cannot be subjected to penalty u/s 271(1)( c) as no wrong particulars of income were furnished and rather the assessee had valued bonus units at N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner(Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of Clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed . A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the present cases we find that assessees were issued bonus units which they valued at NIL value as they were issued free of cost and assessee had not paid any amount for receipt of the same. The assessee had valued these units at NIL value and had sold the original units on which they had incurred losses and had claimed set off of the same. The Assessing Officer was of the view that loss incurred was notional in nature as alongwith sale of bonus units in succeeding year the assessee had in fact earned profits and therefore he disallowed the set off of loss and imposed penalty for concealment of income u/s 271(1) (c ) of the IT Act. To dispose off these appeals we have to see as to whether the assessee has furnished inaccurate particulars or not. In the present cases there is no dispute about the sale price of original units and loss incurred by the assessee on original units and also it is an undisputed fact that this loss cannot be said to be notional as assessee had actually made the sale of original units. Therefore, to this extent, there does not seem to be a case of furnishing of inaccurate particulars. 12. Now coming to the second point of value of bonus units we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from assessment year 2005-06, the fact Ld CIT(A) has noted in his order also. The present cases relate to assessment year 2004-05 and therefore in these years the assessee had not violated the provisions of section 94(8) and therefore had valued the bonus units as per provisions of section 55(2)(iiia) which is an accepted method though for different purposes. The Assessing Officer had charged the assessee with the violation of provisions of section 94(7) which is not the fact as section 94(7) relates to the cases where an assessee earns dividend or income on such securities. The other charge of Assessing Officer is that assessee had shown income from other sources as agricultural income is also not correct as Ld CIT(A) in quantum proceedings had accepted the claim of assessee. Therefore, keeping in view all the facts and circumstances of the cases, we are of the considered opinion that assessee had valued the bonus units at nil value by taking one of the possible views and various courts has held that penalty under these circumstances is not leviable. Moreover Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts Ltd. has held that mere making a claim which is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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