TMI Blog2014 (7) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of assessee. - IT Appeal No. 1619 (PN.) of 2012 - - - Dated:- 30-7-2014 - SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND R.K. PANDA, ACCOUNTANT MEMBER Rajesh Damor for the Appellant. Suhas P. Bora for the Respondent. ORDER Shailendra Kumar Yadav, Judicial Member - This appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeal)-II, Pune, dated 30.03.2012 for A.Y. 2004-05 on the following grounds. '1. The order of the Learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The Learned Commissioner of Income-tax (Appeals) grossly erred in allowing the assessee's appeal by deleting the penalty levied u/s.271(1)(c) of the Income-tax Act, 1961. 3. The Learned CIT(A) grossly erred in cancelling the penalty u/s 271(1)(c) without in any manner examining the facts evidences available on records and brought out by the Assessing Officer in the penalty order in support of levy of penalty u/s 271(1)(c). 4. The Learned Commissioner of Income-tax (Appeals) grossly erred in not appreciating that the words used in section 80IA is derived and not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r initiated penalty proceedings u/s.271(1)(c) of the Act on the said disallowance of the claim of the deduction u/s.80IA of the Act. He held that the assessee has filed inadequate particulars of income deliberately and thereby concealed its income. 3. The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and having considered the same, the CIT(A) deleted the penalty in question. The same has been opposed before us on behalf of Revenue, inter alia, submitted that the CIT(A) was not justified in allowing the assessee's appeal by deleting the penalty levied u/s.271(1)(c) of the Act. The CIT(A) erred in cancelling the penalty u/s 271(1)(c) of the Act without in any manner examining the facts evidences available on records and brought out by the Assessing Officer in the penalty order in support of levy of penalty u/s 271(1)(c) of the Act. He erred in not appreciating that the words used in section 80IA is derived and not from which is a much wider term and though the benefit is provided to the assessee by State Govt. because of installation of windmill but the sales tax benefit subsidy and its sale to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) .......... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, (i) and (ii) ........... (iii) in the cases referred to in cl. (c) or cl. (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits the furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1: 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 AO or the CIT(A) 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to represent the income in respect of which inaccurate particulars have been furnished. Thus, it is by virtue of Explanation 1 to sec. 271(1)(c) only that the Assessing Officer has been given a right to raise a presumption to deem certain sum added to income or disallowed in computing the income of a person, to represent the income in respect of which particulars have been concealed, if the assessee did not furnish an explanation or when explanation furnished was found to be false; and also when such person offers an explanation which he is not able to substantiate and fails to prove that such explanation was 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. The penalty u/s. 271(1)(c) is a penalty for concealment of income or for furnishing of inaccurate particulars, or, under the extended definition by virtue of Explanation 1 to section 271(1)(c), for concealment of income. As a corollary to this legal position, unless it is established that there is concealment of income or furnishing of inaccurate particulars or it is established that, on the facts of the case, concealment of income could be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, such an interpretation is not rendered incorrect. In such circumstances, a bona fide legal claim made by the assessee could not be visited with penal consequences merely because it has not been accepted by the lower authorities. In the present case, no information or statement given in the return or during the assessment proceedings was found to be factually incorrect or inaccurate. The expression 'inaccurate particulars of income' do not extend to the issues, which are capable of different interpretations under law and therefore the case of the assessee could not be said to be a case of 'furnishing of inaccurate particulars of income either. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. 4.4 Let us examine the assessee's case under the deeming provisions of Explanation 1 to section 271(1)(c) of the Act. This deeming fiction, as mentioned earlier in this order, comes into play where in respect of any facts material to the computation of the total income of any person under this Act, (i) when the assessee fails to provide an explanation, (ii) when the assessee provides an explanation which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was an admitted position in the instant case that no information given in the return was found to be incorrect or inaccurate. It was not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. The revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such cannot be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. [Para 7] Therefore, it must be shown that the conditions under section 271(1)(c) exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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