TMI Blog2011 (6) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal raised above at the time of hearing. 2. The assessee furnished return of income declaring total loss of ₹ 7,67,68,423/- on 31.10.2007. The same was processed u/s 143(1) on 25.2.2009 and subsequently taken under scrutiny. During the assessment proceedings,, it was noted by the Assessing Officer that the assessee sold land at Pune for a consideration of ₹ 18 lakhs and accordingly worked out long term capital loss on sale of such property. However, the valuation of the land was adopted by stamp valuation authority at ₹ 20 lakhs. The assessee was, therefore, asked to show cause as to why the capital loss on sale of the said property should not be worked out as per the provisions of section 50C of the Act. In response, the assessee filed a revised computation of capital gains in accordance with section 50C of the Act. The Assessing Officer was also satisfied that penalty proceedings u/.s 271(1)(c) of the Act is required to be initiated as the assessee has furnished inaccurate particulars of income with reference to the above. 3. Similarly, it was noted by the Assessing Officer that the expenses relating to increase in authorized share capital were amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utation of' income read with assessment Order, it is evident that the intention of the assessee was not malafide and mere omission to claim capital loss at ₹ 607926/- instead of ₹ 407926/L(as assessed by AO) was an inadvertent/unintentional. Learned DCIT assessed the losses for the year at ₹ 76242869/- based on the rectified computation of income filed. Keeping in view the quantum of losses for the year and existing brought forward losses, it cannot be concluded that the assessee has concealed income or filed in accurate particulars of income for a nominal amount of ₹ 2.00 Lacs. It is pertinent to mention that the assessee has also failed to claim brokerage paid on the said deal amount to ₹ 60000/-. Mere omission to compute capital gains on circle rate does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid imposition of tax thereon. Your kind attention is invited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) vide para 08 of assessment order date 21.12.2009 no mention of initiation of penalty has been made on para 5 and 6 of the order. The disallowance u/s 35D of the Income Tax Act has been made by invoking Delhi High Court judgment in the case of CIT vs. Hindustan Insecticides Ltd. 250 ITR 338 (2001). In order to attract penalty provisions of 271 (1)(c), there has to be concealment of income or furnishing of inaccurate particulars of income by the assessee. In the instant case assessee claimed deduction on account of expenditure incurred on increase in authorized share capital of the company for the purpose of infusion of more capital for business expansion. No information pertaining to this expenditure was found to be incorrect or inaccurate. The assessee cannot be held guilty of furnishing inaccurate particulars. Ld. DCIT has disallowed the said expenditure in view of the Delhi high court judgment in the case of CIT vs. Hindustan insecticides Ltd. The disallowance has been made merely on the interpretation of above judgment. Even if the assessee has made an incorrect claim in law, it cannot tantamount to furnishing of inaccurate particulars. Merely because the assessee claimed ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that the penalty on the ground of concealment of particulars or non-disclosure of full particulars can be levied only when in the accounts/return an item has been suppressed dishonestly or the item has 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, as it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. Further, conscious concealment is necessary. 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 Petroproducts P. Ltd.(2010) 322 ITR 158. 5.2. From the discussion made above, it can be concluded that mere disallowance or addition will not be sufficient for levy of spenalty u/s 271 (1)(c). In view of the above and taking into consideration the facts (a) that the appellant had disclosed all material facts and (b) raising a legal claim, even if it is ultimately found to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord any evidence to show that relevant particulars required for computation of capital gain/loss or for computation of deduction u/s 35D were wrongly furnished by the assessee. It is not the case of the revenue that the copy of sale deed of the impugned property was not accompanied along with the return of income or that in the claim made u/s 35D of the Act, it was not mentioned by the assessee that expenses incurred for increasing in the share capital of the company was included therein. The Hon'ble jurisdictional High Court's judgment in the case of CIT v. Escorts Finance Ltd. (supra) thus support the case of the revenue wherein the jurisdictional High Court has opined that even if there was no concealment of income or furnishing of inaccurate particulars but on the basis thereof the claim which was made was ex facie bogus, it could attract penalty provision. The Hon'ble Court was also deciding leviability of penalty u/s 271(1)(c) of the Act in case of a claim u/s 35D of the Act. According to the Hon'ble High Court in the case of false claim made by the assessee penalty u/s 271(1)(c) of the Act could be attracted and not when merely a wrong claim is made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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