TMI Blog2019 (6) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer allowed the carry forward of long term capital loss of ₹ 350.31 crores. The Revenue authorities have not doubted the correctness of the assessee s claim that it suffered the loss of ₹ 5 crores. Meaning thereby, the genuineness of loss is not in dispute. The only dispute was whether it is an allowable deduction either as a business loss or a capital loss. The assessee s claim is not accepted by the Revenue. However, on these facts, we do not find any justification to arrive at the conclusion that the loss claimed by the assessee was mala fide. See RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee. - ITA No.112/Del/2019 - - - Dated:- 29-5-2019 - Shri G.D. Agrawal, Vice President And Ms. Suchitra Kamble, Judicial Member For the Appellant : Shri Ajay Wadhwa, Advocate And Ms. Aayushi Gupta, CA. For the Respondent : Shri R.L. Meena, CIT-D ORDER PER G.D.AGRAWAL, VP : This appeal by the assessee for the assessment year 2015-16 is directed against the order of learned CIT(A)-4, New Delhi dated 1st November, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Assessing Officer in paragraph 4 has considered the submission of the assessee and, after rejecting the assessee s contention, held that Therefore, an amount of ₹ 5 Cr. Claimed as business expenditure is hereby disallowed and added back to the income of the assessee company . That there is no finding by the Assessing Officer of furnishing of any inaccurate particulars or concealment of income by the assessee. He has not recorded any satisfaction for initiation of penalty proceedings either. However, at the end of the assessment order, after computing the income, he recorded the following finding :- Assessee is eligible to carry forward its long term capital losses of ₹ 350,31,73,044/- as per provision of law. Keeping in view the facts of the case, I am satisfied that it warrants the initiation of penalty proceedings u/s 271(1)(c) of the I.T. Act, and the same are hereby initiated by issuing notice u/s 274 of the I.T. Act. 5. Thus, despite the disallowance of claim of ₹ 5 crores as a business loss/capital loss, the carry forward of long term capital loss permitted by the Assessing Officer was more than S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as considered and explained the phrase furnishing of inaccurate particulars in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. [2010] 322 ITR 158 (SC). That the above decision would be squarely applicable to the facts of the assessee s case as the Assessing Officer has not specified which particulars furnished by the assessee were inaccurate, false or untrue. The assessee had only made a claim of loss actually suffered by it and the said claim was denied by the Assessing Officer. That does not amount of concealment of income. 6. Learned CIT-DR, on the other hand, relied upon the order of the Assessing Officer as well as CIT(A) and he stated that the claim made by the assessee was not bona fide because the assessee could not establish for which purpose the huge advance of ₹ 5 crores was given. When during the course of assessment proceedings the assessee was asked to substantiate its claim, the assessee could not furnish any satisfactory explanation. That when the Assessing Officer disallowed the loss of ₹ 5 crores claimed by the assessee, the assessee accepted the order of the Assessing Officer and did not file any ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced ₹ 5 cr to M/s TAIDIA Conconation Ltd and written off the same in the year under consideration and claimed it in P L account. The company has failed to file any agreement or supporting evidence in respect of advance given to M/s TAIDIA Conconation Ltd. In view of all these, this alleged advance written off cannot be allowed as expense in P L account. Therefore, an amount of ₹ 5 cr claimed as business expenditure is hereby disallowed and added back to the income of the assessee company. 9. In the above paragraph, the Assessing Officer has not pointed out any furnishing of inaccurate particulars by the assessee. He simply arrived at the conclusion that the advance written off cannot be allowed as expense in the profit loss account. Thus, in the whole body of the order, no satisfaction has been recorded for initiating penalty proceedings. Only at the end of the computation of income, the Assessing Officer has recorded Keeping in view the facts of the case, I am satisfied that it warrants the initiation of penalty proceedings u/s 271(1)(c) of the I.T. Act . Thus, no specific charge is specified either in the assessment order or in the penalty not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed as a deduction under section 36(1)(iii) of the Act was deleted by the Commissioner of Income-tax (Appeals) though it was later restored, by the Tribunal, to the Assessing Officer. The appeal filed by the assessee against the order of the Tribunal was admitted by the High Court. It was, in these circumstances, that the Tribunal came to the conclusion that the assessee had neither concealed the income nor filed inaccurate particulars thereof. In recording this finding, the Tribunal felt that if two views of the claim of the assessee were possible, the explanation offered by it could not be said to be false. This, however, is not the factual position in the case before us. The facts of the present case thus are clearly distinguishable. It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to the disadvantage of the assessee. The court cannot overl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee but if the claim, besides being incorrect in law is mala fide, Explanation 1 to Section 271(1)(c) would come into play. If the assessee s claim is bona fide, then he will not be liable for penalty. Therefore, the precise question to be adjudicated by us is whether the assessee s claim was bona fide or mala fide. 15. On the facts of the assessee s case, we find that the assessee filed the return declaring loss of ₹ 354.34 crores. Even the Assessing Officer allowed the carry forward of long term capital loss of ₹ 350.31 crores. The Revenue authorities have not doubted the correctness of the assessee s claim that it suffered the loss of ₹ 5 crores. Meaning thereby, the genuineness of loss is not in dispute. The only dispute was whether it is an allowable deduction either as a business loss or a capital loss. The assessee s claim is not accepted by the Revenue. However, on these facts, we do not find any justification to arrive at the conclusion that the loss claimed by the assessee was mala fide. Therefore, the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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