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2019 (5) TMI 849

conclusion that the income has escaped the assessment on receipt of the report of the DIT (Inv.) Hyderabad - in the re-assessment proceedings, assessee has offered the LTCG to tax - penalty levied for furnishing of inaccurate particulars of income or concealment of income? - HELD THAT:- We do not find that it is a case of furnishing of inaccurate particulars of income or concealment of income, because, the assessee had declared LTCG and had claimed it as exempt u/s 10(38) on the ground that shares have suffered STT, but subsequently withdrew the claim of exemption. This may, at most be considered as an unsubstantiated or wrong claim but it cannot be held to be furnishing of inaccurate particulars of income or concealment of income. See COMMISSIONER OF INCOME-TAX VERSUS RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee. - 1513/Hyd/2018, 1514/Hyd/2018, 1515/Hyd/2018, 1516/Hyd/2018, 1517/Hyd/2018, 1518/Hyd/2018 - 10-5-2019 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For the Assessee : Shri K.C. Devdas For the Revenue : Shri Nilanjan Dey, DR ORDER PER BENCH: All these appeals by the respective asse .....

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the same as exempt from tax and that the modus operandi adopted by the operators was to make the beneficiary purchase the shares at a very nominal price, mostly off-line through preferential allotment of offline sale and that the beneficiary (individual) would hold the shares for one year and thereafter, sell the shares at the pre-determined price and claim LTCG so gained as exempt u/s 10(38) of the Act with the sole aim of bringing back the unaccounted money. The AO, took into account, the investigation report of the DIT (Inv.)Kolkata and also considered the statement of Sri Alok Harlalka, Director of M/s. Unno Industries and also Sri Pawan Dalmia, Director of the company, wherein they have stated that the companies in which they are directors are not real companies but are only paper companies and have only issued accommodation entries of bogus LTCG. The AO therefore, issued a show cause notice to the assessee as to why the LTCG claimed as exempt u/s 10(38) should not treated as a bogus LTCG and added to the income of the assessee u/s 68 of the Act. Vide letter dated 29.11.2016, the assessee submitted that the LTCG which was arisen out of sale of shares of M/s. Unno Industries to .....

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d therefore, the penalty is justified and is sustainable. 7. Having regard to the rival contentions and the material on record, we find that the assessee, at the time of filing of return itself, has declared the long term capital gain on sale of shares and had claimed the same as exempt from taxation u/s 10(38) of the Act. The AO initially allowed the exemption but subsequently came to the conclusion that the income has escaped the assessment on receipt of the report of the DIT (Inv.) Hyderabad. Therefore, he had reopened the assessment u/s 147 by issuance of a notice u/s 148 and the assessee, in the re-assessment proceedings, has offered the LTCG to tax. The penalty u/s 271(1)(c), is levied for furnishing of inaccurate particulars of income or concealment of income. In the case before us, we do not find that it is a case of furnishing of inaccurate particulars of income or concealment of income, because, the assessee had declared LTCG and had claimed it as exempt u/s 10(38) of the Act on the ground that shares have suffered STT, but subsequently withdrew the claim of exemption. This may, at most be considered as an unsubstantiated or wrong claim but it cannot be held to be furnish .....

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Wvg. Mills [2009] 13 SCC 448 and reiterated in para 13 that :- "13. It goes without saying that for applicability of section 271(1)( c), conditions stated therein must exist." 8. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must 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 would arise. In Dilip N. Shroff v. Jt. CIT[2007] 6 SCC 329, this Court explained the terms "concealment of income" and "furnishing inaccurate particulars". The Court went on to hold therein that in order to attract the penalty under section 271(1)(c), mens rea was necessary, as according to the Court, the word "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 .....

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ssential ingredient for the penalty under section 271(1)(c) that the decision in Dilip N. Shroff's case (supra) was overruled. 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary,the word "inaccurate" has been defined as :- "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccu .....

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