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2016 (1) TMI 1086 - ITAT AHMEDABAD

2016 (1) TMI 1086 - ITAT AHMEDABAD - TMI - Penalty order u/s 271(1)(c) - Income from house property - Held that:- Section 271(1)(c) refers to imposition of penalty if the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. Examining the facts of the case of assessee in this aspect we find that income from house property was certainly disclosed by the assessee in its return of income on estimate basis because the house property was not rented d .....

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the clutches of section 271(1)(c) of the Act. We, therefore, delete the penalty u/s 271(1)(c) of the Act calculated on the sustained concealed income of ₹ 1,900/-. - Decided in favour of assessee

Short term capital loss on sale of car - Held that:- From going through the facts and judicial pronouncement we find that assessee was possessing only one car and the same was sold during the financial year 2000-01. There was no other asset in the block of asset relating to motor car an .....

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on account of merely wrong claim made by the assessee. Penalty u/s 271(1)(c) of the Act is imposable where the assessee has concealed particulars of his income or furnished inaccurate particulars of such income. Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. (2010 (3) TMI 80 - SUPREME COURT ) has held that mere making a claim which is not sustainable in law in itself will not amount to furnishing of inaccurate particulars regarding income of the assessee. - Decided .....

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(2), Surat. Following grounds have been raised in this appeal :- 1. The Assessing Officer and ld. CIT(A) has grossly erred in levying penalty on fidderence on notional income of ₹ 1900 on municipal ratable value as per municipal corporation bill and assessee shown in his return of income. 2. The AO and ld. CIT(A) not considered the fact that income of ₹ 1900 added as per municipal ratable value which is notional income and not the earned income by the assessee. The AO impose penalty .....

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nsidered the fact properly. The penalty imposed on both income were not earned by the assessee. One is the notional income while another is the difference of opinion for set off of different types of losses. 6. The relief as claimed by the appellant may kindly be allowed in toto. 7. The appellant reserves to the right to add, amend, alter or substitute any other grounds upto and at the time of hearing of this appeal. 2. Since all the grounds are inter related, they are taken together for disposa .....

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led in response to the notice u/s 153A(a) of the Act. Assessment u/s 143(3) r.w.s. 153A of the Act was framed on 29.12.2006 after making certain additions and returned income of the assessee shown as per his return of income. Income of the assessee was assessed at ₹ 4,09,430/-. In the quantum appeal before CIT(A) appeal of the assessee was partly allowed. No further appeal of quantum addition confirmed by CIT(A) was preferred before the Tribunal. Thereafter on 26.3.2012 the ITO, Wd-8(2), S .....

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me on account of income from house property, claim of loss on sale of car, long term capital gain and income from other sources. However, assessee is in appeal against the imposition of penalty u/s 271(1)(c) of the Act on following concealed income:- 1) Income from house property ₹ 1,900/- 2) Short term capital loss on sale of car ₹ 1,35,297/- 4. To arrive at the conclusion that whether ld. CIT(A) was justified in confirming penalty on the above said two additions, we will take up ea .....

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y at ₹ 1,900/-,from perusal of the record, we find that during the year the assessee was having two house properties out of which one was shown as self-occupied and on the other house property income of ₹ 500/- was shown in the return of income by the assessee. However, during assessment proceedings income from house property of this rented house was estimated by Assessing Officer at ₹ 27,500/- thereby making an addition at ₹ 27,000/-. However, in appeal before ld. CIT(A) .....

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refers to imposition of penalty if the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. Examining the facts of the case of assessee in this aspect we find that income from house property was certainly disclosed by the assessee in its return of income on estimate basis because the house property was not rented during the year and assessee has disclosed his income at ₹ 500/-. The AO further estimated this income at ₹ 27,500/- and .....

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ed concealed income of ₹ 1,900/-. 9. Regarding second concealment on account of claim of short term capital loss on sale of car ₹ 1,35,297/-, ld. AR submitted that there was only one car in the block no.III and the same has been sold during the FY 2000-01. After deduction of sale value from the book the short term capital loss has been arose. There was no dispute regarding sale value of the car and short term capital loss from sale of car was set off against the regular income in the .....

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of only difference of opinion it cannot be said that the assessee provided wrong details or inaccurate particulars and penalty u/s 271(1)(c) is applicable. 10. The ld. CIT(A) confirmed the penalty by observing as under :- 6. I have considered the penalty order as well as the submissions of the appellant The Grounds of appeal- Ground No. 1,2 & 3 effectively pertains to imposition of penalty of ₹ 1,01,483/- u/s 271(1)(c) of the Act. On the perusal of the details it is observed that the a .....

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e CIT(A) as mentioned in the penalty order itself. The appellant's contention that there is a difference of opinion that the short term capital loss on the sale of car can be adjusted against other income in the same year or not, is devoid of facts and merits. Itis settled law that the loss on account of capital gains cannot be adjusted against any other source of income as per the provisions of section 74 of the IT Act. Hence the law is very clearand there is no question of having two opini .....

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a presumption that as and when an amount is added or disallowed in computing the total income the same shall be deemed or represent the income in respect of which particulars have been concealed. Further w.e.f. 10.09.1986 amendment has been made in Explanation 1-B to section 271(1)(c). After, this amendment further onus has been placed on the assessee to prove that the explanation furnished by him was bonafide. The position now is that unless and until the assessee substantiates the explanation .....

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cases, the amount added or disallowed in computing the total income of such person shall be deemed to represent the income in respect of which particulars have been concealed. As per the Proviso to this Explanation, the onus to establish that the explanation offered was bonafide and facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged for concealment. 6.1.3 As per the provisions of Explanation (1)(B),now the entire onu .....

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explanation by assessee. The explanation should be based on cogent and relevant material and should be acceptable to the authorities. In this connection reference may be made to the Delhi High Court's decision in the case of CIT Vs. GurbachanLal reported in 250 ITR 157(Delhi) 6.1.4 The apex court had approved the interpretation placed upon the Explanation by a Full Bench of the Punjab and Haryana High Court in Viswakarma Industries Vs. GIT (1982) 135 ITR 652. 6.1.5 Similar view has been expr .....

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onus is of primary and added importance in legal acrimony. In CIT Vs. Amvar AH (1970) 76 ITR 696, the apex court laid down that, before a person could be visited with a penalty for concealment, etc., the Revenue must prove that the amount in question was the income of the assessee and that he had concealed it with a motive. It was further held that penalty could not be imposed merely because any explanation given by the assessee in regard to the items in question was not believed to be true. Th .....

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the purpose of penalty by operation of a deeming provision. A proviso was added to the new Explanation. It concerns cases where the assessee offers an explanation which he is not able to substantiate. Consequentially, the provisions are intended to save such amount from imposition of penalty although the same had been added to the assessee's income in the assessment. If the assessee'sexplanation is found to be bonafide and all the facts relating to the same and material to the computati .....

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course of assessment proceedings, through not conclusive, are not totally irrelevant. They could be taken note of. According to the High Court what was required was that the assesses must offer an explanation which, if found to be untenable or unacceptable, then the penalty can be levied under section 271(1)(c)oftheITAct. 6.1.8 In view of the above facts, it is evident that the appellant had claimed incorrect deductions and therefore the provisions of section 271(1)(c) of the Act are applicable .....

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er dated March 31, 2010 by observing as under: 5. We have considered the rival contentions, carefully gone through the orders of the authorities below and also deliberated upon the various case laws cited by the learned AR and discussed by lower authorities in their respective orders. From the record, we found that assessee has claimed set off of unabsorbed business loss against the capital gains earned during the year. As a result of AO's action for decline of such set off, penalty was impo .....

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rector's report etc. filed along with return of income. In the quantum order, the AO declined assessee's claim of set off. Nowhere AO has alleged that assessee's claim is mala-fide. Thus, it was a simple case of denial of assessee's claim of set off of business loss against the capital gain. In this regard, Hon'ble Supreme Court in the case of Reliance Petro Products (P) Ltd. (supra) while confirming the order of Hon'ble High Court deleting the penalty imposed u/s 271(1)( .....

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of the Act. Hon'ble Supreme Court in this case after considering the proposition of law laid down in the case of Dilip N.Shroff - 291 ITR 519 (SC) and Union of India v. Dharmender Textile Processors - 306 ITR 277 (SC), held as under:- "A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. Merely because t .....

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t in the case of CIT v. Aretic Investment Pvt. Ltd., (2010) 190 Taxman 157 observed that where the loss claimed by the assessee on account of trading in shares was not accepted by the AO and was treated as a speculation loss in terms of explanation to Section 73 of the Act, did not automatically result in the inference of concealment of income justifying imposition of penalty u/s 271(1)(c) of the Act. Similarly, in the case of CIT v. Auric Investment & Securities Ltd. (2009) 310 ITR 121/ 163 .....

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1(1)(c) of the Act. The Hon'ble High Court held that mere treatment of business loss as a speculation loss by the AO did not automatically warrant inference of concealment of income, accordingly penalty was not leviable. 7. Recently, Hon'ble Jurisdictional High Court in the case of Shahabad Coop. Sugar Mills Limited (supra) observed that where the assessee is found to have made wrong claim u/s 80P and wrong claim of depreciation on guest house, making a wrong claim is not at par with con .....

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applicable and thus, loss on account of trading in shares was disallowed, it was held that for such disallowance penalty u/s 271(1)(c) is not leviable as the assessee has filed preliminary details along with the return. 9. Hon'ble Jurisdictional High Court in the case of CIT v. Siddhartha Enterprises - 322 ITR 80 observed that where the assessee's claim for set off on account of capital gains against profit of business was disallowed by the AO and AO imposed penalty for furnishing inacc .....

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profit of business was by the negligence or by mistake, the fact remains that the particulars of income furnished were not correct and willful concealment not being an essential requirement for levy of penalty u/s 271(1)(c) of the IT Act, as held by the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (supra), the penalty could not be deleted, the Hon'ble High Court observed as under:- "We are unable to accept the submission. The judgment of the Hon'ble Suprem .....

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e by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. This being the position, the finding having been recorded on facts that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, the view taken by the Tribunal cannot be held to be perverse." 10. In view of the above judicial pronouncements, we can reasonably conclude that assessee has disclosed all the particulars .....

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