TMI Blog2023 (11) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... d a difficult call in many a case, and that merely because the assessee made an incorrect claim in law, it would not tantamount to furnishing inaccurate particulars inviting penalty. Since the assessee-respondent had not suppressed the amount in question and had disclosed it in its return, merely because he declared it under a particular head of income , and the AO chose to treat the same under some other head, the assessee-respondent cannot be accused of furnishing incorrect particulars of income or suppressing facts. Decided in favour of assessee. - Hon ble Mr. Justice M.S. Ramachandra Rao, Chief Justice And Hon ble Ms. Justice Jyotsna Rewal Dua, Judge. For the appellant : Mr. Vinay Kuthiala, Sr. Advocate with Ms. Vandana Kuthiala, Advocate For the respondent : Mr. Vishal Mohan, Sr. Advocate with Mr. Sushant Kaprate and Mr. Praveen Sharma, Advocates ORDER M.S. Ramachandra Rao , Chief Justice . This appeal under Section 260-A of the Income Tax Act, 1961 (in short the Act ) arises out of the order dt. 08.08.2014 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, in ITA No.1096/CHD/2009. 2) The said appeal had been filed by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-2000, and the head of investment was changed for the first time by the respondent-assessee thereafter. It was concluded that this was done by the respondent to evade tax, and that the act of the respondent/assessee amounts to furnishing inaccurate particulars inviting penalty under Section 271(1)(c) of the Act. 10) This was challenged by the respondent/assessee before the Commissioner of Income Tax (Appeals), Shimla, by way of an appeal, which was dismissed on 10.09.2009. The Appellate Authority upheld the order of the Assessing Officer for levying penalty of Rs.1,26,98,414/- under Section 271(1)(c) of the Act. 11) This was challenged by the respondent-assessee by filing an appeal before the Income Tax Appellate Tribunal. The impugned order dt.8.4.2014 of the ITAT 12) By the impugned order passed on 08.08.2014, the Tribunal allowed the appeal of the respondent-assessee. 13) It held that merely because the assessee-respondent had treated a particular item of income in a particular way and the Revenue had changed that treatment, it would not attract penal action; and that if the assessee-respondent has a bonafide explanation to treat an item in a particular fash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner 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 thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. 21) In Cement Marketing Co. of India Ltd (1 supra), the assessee effected certain transactions of sale of cement under provisions of the Cement Control Order 1967 during the relevant Assessment Years. Under the terms of contract with the purchasers, the amount of freight, which was included in the free on rail destination railway station price was paid by the purchaser, and hence deducted from the price shown on the invoice sent to the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return as a false return inviting imposition of penalty. It observed that the statute providing for imposition of penalty is penal in character and unless the filing of an inaccurate return is accompanied by guilty mind, the section cannot be invoked for imposing penalty; and if the view canvassed on behalf of the Revenue was accepted, the result would be that even if the assessee raises a bonafide contention that a particular item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held liable for penalty in case his contention is ultimately found by the Court to be not acceptable and that surely could never have been intended by the Legislature. 22) Thus the bonafide of the contention raised by the assessee would protect it from levy of penalty. 23) Counsel for the revenue relied on the decision of the Supreme Court in C.I.T vs. Jeevan Lal Sah 1995 Supp (4) SCC 247 . That decision considered Section 271(1)(c) of the Income Tax, 1961, after amendment thereto in 1964, which introduced an explanation to sub-section (1) of Section 271. The said explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008, it is not open to the Department to infer such a finding. 28) As rightly contended by the counsel for the respondent-assessee, there was no concealment or furnishing of any inaccurate particulars regarding the income in the return filed by the assessee-respondent. Merely making incorrect claim under a particular head of income, will not expose the assessee-respondent to levy of penalty. 29) The decision of the Supreme court in Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Private Limited (2010) 11 SCC 762 supports this view. In that case, the Supreme Court again interpreted Section 271(1)(c) and held as under:- A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... highly debatable and a difficult call in many a case, and that merely because the assessee made an incorrect claim in law, it would not tantamount to furnishing inaccurate particulars inviting penalty. 32) In Amit Jain( 3 Supra) also , the situation was something akin to the instant case. In that case also the assessee declared an income from short term capital gains , but the Assessing Officer, on an interpretation of the relevant provisions, and having regard to the nature of the transactions, assessed it as income from business and levied a penalty under Section 271(1)(c) of the Act, alleging that the assessee had produced inaccurate particulars. The CIT(Appeals), on being approached by the assessee, cancelled the penalty and the revenue unsuccessfully appealed to the Tribunal. The Delhi High Court held that the amount in question which formed the basis for the Assessing Officer to levy penalty was in fact truthfully reported in the returns and merely because the Assessing Officer chose to treat the income under some other head, he cannot characterize the particulars reported in the return as an inaccurate particulars or a suppression of facts . 33) We respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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