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Paharpur Cooling Towers Ltd. Versus Commissioner of Income Tax, Kolkata-IV

2015 (12) TMI 775 - CALCUTTA HIGH COURT

Penalty u/s 271(1)(c) - addition treating profits on cancellation of forward foreign exchange contract as trading receipt instead of capital receipt - Held that:- The question is whether non-acceptance of a claim can be said to be a concealment. In a case where claim is made it is for the authorities to decide. It may or may not accept the claim. In the instant case, as the sum claimed as deduction is undisputed, it cannot be said that the assessee had furnished inaccurate particulars of income. .....

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s regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Thus the income tax authorities erred in imposing the penalty and the Tribunal was not justified in upholding the imposition of penalty. - Decided in favour of assessee - ITA No. 42 of 2006 - Dated:- 19-11-2015 - Soumitra Pal And Mir Dara Sheko, JJ. For the Appellants : Mr J P Khaitan, Senior Adv. Agnibesh Sengupta, Adv For the Respondent : Mr P K Bhowmick, Adv JUDGMENT Sou .....

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new factory was a capital receipt and purported findings of the Tribunal upholding the imposition of penalty and reversing the order of the Commissioner of Income Tax (Appeals) are arbitrary, unreasonable perverse?" The fact of the case is that the assessee filed its return showing total income of ₹ 9,81,75,426/-. The case was assessed under Section 143(3) on a total income of ₹ 11,32,19,669/-. In the assessment order, an addition of ₹ 52,90,499/- was made by treating prof .....

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haitan, learned senior advocate for the appellant, went unattended so far as the assessee is concerned and there was no decision on merits. Incidentally in the meantime, the Assessing Officer had passed an order under Section 271(1)(c) imposing a penalty of ₹ 30,43,036 by holding as under: "The words inaccurate particulars would cover both falsity in final figure as also constituent element, which are inaccurate in some specific or definite respect, whether in constituent or subordina .....

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assessee was having any doubt regarding nature of this receipt as revenue receipt. This is proved by intention of the assessee to adjust the income with revenue expenses and to debit net revenue expenses. Had it been the case of capital receipt in the mind of assessee, it could have not been adjusted with revenue item. Had this case not been scrutinized u/s. 143(3), the assessee could have taken the benefit and such deduction could have been allowed. This to conclude, the assessee furnished inac .....

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y in his assessment order the claim of the appellant that the said receipt was a capital receipt and not a revenue income. These facts indicate that the receipt of ₹ 52,90,499/- had not been hidden from the Department. It is therefore cannot be said that such amount was concealed or hidden from the Department. The claim made by the appellant that such receipt is a capital receipt and not a revenue receipt is always a claim and such claim may be correct or incorrect. To conclude that having .....

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appeal before the Tribunal. The Tribunal while allowing the said appeal held as under: "We have examined the rival submissions. We find that the facts stated by the A.O. in his penalty order are correct. The assessee has shown the aforesaid receipts as revenue receipts and adjusted this amount with bank charges, and only net bank charges had been debited. The quantum appeal has been decided against the assessee. We are of the view that after the insertion of Explanation I to Section 271 (1 .....

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s which are inaccurate in some specific or definite respect. In this case the assessee claimed Deduction of the amount from its taxable income in the computation by treating the same as a revenue receipt. This is proved by the intention of the assessee to adjust the income with revenue expenses and to debit net revenue expenses. Had it been the case of capital receipt in the mind of the assessee it should not have been adjusted with the revenue item. Had this case not been scrutinized u/s 143(3) .....

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itan, relying on the computation of income, annexed to the paper book, submits that the amount of ₹ 52,90,499/- is a part of the claim. There was no falsity in the figures mentioned. Referring to Section 271(1)(c) of the Act, it has been submitted that since there was no concealment of particulars of income and when materials to the computation of income were disclosed, the Tribunal erred in setting aside the order passed by the CIT(A). Submission is, had there been a failure to explain th .....

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respondent, relying on the judgment in CIT vs. Bijay Iron Stores : 252 ITR 408 [Cal.] submits that as the assessee had shown the receipts attributable as revenue receipt and as there was no proper explanation, the Tribunal was justified in passing the order under challenge. It is evident that in the computation of income a sum of ₹ 52,90,499/- has been shown as a deduction being "Receipts attributable to foreign exchange fluctuation in forward contract in respect of foreign currency .....

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e. It may or may not accept the claim. In the instant case, as the sum claimed as deduction is undisputed, it cannot be said that the assessee had furnished inaccurate particulars of income. Since there is no finding that the factual details furnished by the assessee in its return were inaccurate or erroneous or false and as the assessee had claimed the deduction of an expenditure treating it be capital in nature, it is appropriate to refer to the law laid down by the Supreme Court in CIT vs. Re .....

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