TMI Blog2016 (5) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty u/s. 271(1)(c), as the assessment proceedings and penalty proceedings are different so decision taken during the assessment stage would not and should not lead to automatic levy of concealment penalty. It has to be seen that what explanation was offered by the assessee while filing reply to the penalty notice. After going through the explanation filed by the assessee, we are of the opinion that it was one of the plausible explanation. The issue of taxing a particular income under the head business income or income arising of capital gains is a debatable issue. In our opinion no penalty should be levied in such circumstances. Therefore, upholding the order of the FAA, we decide the effective ground of appeal against the AO. - Decided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by the assessee was for non-compete and was covered by section 28(va) of the Act. He further held that income was taxable under the head profit and gains of business/profession. An addition of ₹ 5473 crores was made as compensation for non-compete fee and closure of the business under the head business income. He also initiated penalty proceedings u/s. 271(1)(c)of the Act for furnishing inaccurate particulars of income. In the meanwhile the quantum proceedings were contested before the First Appellate Authority(FAA), who restricted the non compete fee to ₹ 4. 5cr. The matter travelled up to the Tribunal. Vide its order dt9. 10. 15(ITAs No. 3245 2430/Mum/2008), the Tribunal dismissed appeals filed by the aa as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate, that the issue was a debatable issue, that penalty could not be levied in respect of a legal claim irrespective of the fact that the same was decided against the assessee. 6. In our opinion, whether a receipt/expense is capital or revenue is a legal issue. Non acceptance of such a legal claim cannot be considered as concealment of income for furnishing of inaccurate particulars of income that would warrant imposition of penalty u/s. 271(1)(c) of the Act. After considering the submission of the assessee and the penalty order, the FAA held that AO had relied on the findings given in the assessment order while passing the penalty order, that he had not brought any amount to justify that there was concealment of income or filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 73 to the income of the assessee treating the same as non-compete fee, that in the appellate proceedings the FAA reduced it to ₹ 4. 5 crores, that his order was challenged before the Tribunal, that the Tribunal dismissed both the appeals, that the AO initiated penalty proceedings of ₹ 4. 5 crores and levied a penalty of ₹ 1. 61 crores. Considering these facts we are of the opinion that there was neither furnishing of inaccurate particulars of income nor concealing the particulars of income. The assessee had filed all the details of transaction in the return of income itself. There was difference of opinion between the AO and the assessee as to under which head the sale proceeds of transaction should be taxed. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. 11. The learned counsel argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income . We do not think that such can be the interpretation of the words concerned. 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 imaginatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate signified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of Section 271(1) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term inaccurate particulars was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. 14. It was further held in Dilip N. Shroff [(2007) 6 SCC 329] that the assessee must be found to have fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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