TMI Blog2015 (5) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance of expenditure in respect of car hire charges, it is an undisputed position that the assessee did produce Memorandum of Understanding in support of the claim of expenditure but then the Assessing Officer was swayed by other considerations such as non deduction of tax at source which was wholly irrelevant so far as assessment year 2004-05 was concerned since the provisions of section 40(a)(ia) has been brought to statute w.e.f. 1st April, 2005. Therefore, whether the tax was deducted at source while making payments of car hire charges or not, prima facie, could not have any legally sustainable implications in the disallowance with respect to the expenditure in question. Even on this issue as we refrain from making any observation on merits, we are clearly of the view that the facts on record did not justify or warrant imposition of penalty in respect of this quantum disallowance. Finally as regards the partial disallowance of depreciation on software, it is an undisputed position that all the relevant facts were before the Assessing Officer and incorrectness of the claim, even if that be so, cannot by itself lead to or result in imposition of penalty u/s. 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow the market price. The Assessing Officer was not satisfied with this explanation. He deputed his Inspector for ascertaining further details and based on inspector s reports who suggested that the market price of the plot was in the range of ₹ 600 to ₹ 620 per sq. yard as against purchase price of said plot, which was ₹ 470 per sq. yard, the Assessing Officer proceeded to reject the capital loss of ₹ 19,80,000/-. It was taken at nil. The Assessing Officer also noticed that the assessee has paid car hire charges of ₹ 1,80,000/- and ₹ 36,000/- but the relevant agreement with car owner, the details of tax deduction at source and other vouchers for payment etc. were not available. Accordingly he disallowed the same. The Assessing Officer also disallowed ₹ 1,20,000/- being depreciation on purchase of software from Amsoft Gloval Pvt. Ltd. on the ground that the software were used for less than 180 days. The matter did not rest there. The Assessing Officer also imposed concealment penalty u/s. 271(1)(c) in respect of the aforesaid disallowances as the Assessing Officer was of the view that the assessee has concealed its income by filing inaccur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty proceedings, the assessee is entitled to show and establish by the material and relevant facts, which may go to affect and having direct bearing on the liability for penalty. Whether there is a concealment to make the penalty exercisable is normally a question of fact. Where the burden of proof in a given case has been discharged on a set of facts, is also a question of fact. The burden is cast on the assessee to offer a bona fide explanation. There are also plethora of judgments to the effect that finding recorded or conclusion drawn in deciding the quantum appeal, are neither conclusive nor binding. For this proposition reliance may be placed on the judgment of Hon'ble Kerala High Court in the case of CIT Vs. Pawan Kumar Dalmia [1987] 168 ITR 1 and the judgment of the Hon'ble Allahabad High Court in the case of Banaras Texturium Vs. CIT [1988] 169 ITR 782 and also the judgments of the Hon'ble Delhi High Court in the case of CIT Vs. Chetandan Lachhmandas [1995] 214 IIR 726 and CIT v. J.K. Synthetics Ltd. [1996] 219 ITR 267 (Delhi). 4.2 The considerations in penalty proceedings are different from those in quantum proceedings. It is trite law that merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's case in the light of the Explanation. Explanation 1 to section 271 (1)( c) reads as under: Where in respect of any facts material to the computation of the total income of 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 Commissioner 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. From the above Explanation it is evident that the Explanation is a deeming provision and if the assessee's case falls within the ambit of circumstances provided in Part A or Part B of the Explanation, it will be deemed that the amount added or disallowed in computing the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been claimed fraudulently or a bogus claim has been made. When the facts are clearly disclosed in the return of income, penalty cannot be levied and merely because an amount is not allowed or taxed to income, it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. Even if some deduction or benefit is claimed by the assessee wrongly but bona fide and no mala fide can be attributed, the penalty would not be levied. Reliance is also placed on the judgment of the Supreme court in the case of CIT vs. Reliance Petro products Pvt. Ltd.(2010) 322 ITR 158. 4.6 From the decisions cited above and the case laws relied upon by the appellant, it can be concluded that mere disallowance or addition will not be sufficient for levy of penalty u/s 271 (1)(c). In view of the above and after taking into consideration the fact that the appellant had disclosed all material facts cannot amount to furnishing of inaccurate particulars of income, I hold that there is no case of concealment or furnishing of inaccurate particulars of its income in respect of the addition of ₹ 23,16,000/- on account of long term capital loss, car hire charges and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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