TMI Blog2024 (2) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... n as long-term capital gain was to avoid payment of any tax - entire short term capital gain was paid even before the assessment order was passed. A mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing incorrect particulars regarding the income of assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars as held in Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee. - K.R. SHRIRAM DR. NEELA GOKHALE, JJ. For the Appellant : Mr. K. Gopal a/w Ms. Neha Paranjape and Mr. Akhilesh Deshmukh. For the Respondents : Mr. Akhileshwar Sharma. P.C. : 1. Appellant an architect by profession filed, on 28th September 2010, his return of income for the Assessment Year 2010-11 declaring his income as Rs. 15,00,23,830/-. The return was accompanied with Computation of Income, Balance Sheet and Profit and Loss Account also. The return of appellant was selected for scrutiny assessment. Appellant realised that while filing his return of income he had declared long term capital gain on sale of property at Bangalore for Rs. 8,41,94,374/- after indexat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 19th February 2014 allowed the appeal. Appellant reiterated before the CIT(A) that the error in declaring the gain arising on transfer of guest house at Bangalore was due to a bonafide impression that since appellant had held the asset for more than three years it is a long term capital asset and therefore any gain arising on transfer of long term capital asset will result in long term capital gains with all the benefits attached to it such as indexation and lower tax rate of 20%. It was explained that under this bonafide belief appellant filed the return of income and declared a gain as long-term capital gain. It was also submitted that before any show cause notice was served the error was noticed and revised computation of income was filed and the gain was declared as short term capital gain. Appellant also relied on the judgment of the Hon ble Apex Court in Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) wherein it has been held that mere making of a claim, which is not sustainable in law, will not amount to furnishing of inaccurate particulars of income. The CIT(A) accepted these submissions and allowed the appeal. 5. Against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long-term capital gain would not tantamount to furnishing inaccurate particulars. We should also note that the assessment order itself was passed after assessee furnished its revised computation of income. A mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of assessee. Such claim made in the returns cannot amount to inaccurate particulars. We find support for this view in Reliance Petroproducts Pvt. Ltd. (supra) where Paragraph Nos. 8 to 12 read as under : xxxxxxxxxx 8. 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. The present is not a 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 the word particular is a detail or details (in plural sense); the details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1)(c) 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. It was further held that the Assessing Officer must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff v. Joint CIT wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und 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 inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. 12. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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