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TMI Blog2024 (12) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... peal filed by the assessee for adjudication. 3. The assessee has raised the following grounds of appeal: "1. The order of the NAFC/Commissioner of Income tax (Appeals) is contrary to law, facts and circumstances of the case. 2. The NAFC/Commissioner of Income tax (Appeals) erred in confirming the levy of penalty u/s.271(1)(c) of Rs. 24,65,583/. 2.1 Wrong claim only: The NAFC/Commissioner of Income tax (Appeals) ought to have appreciated that the appellant at the time of filling the return of income have inadvertently claimed the capital gain on sale of debt fund in respect of 10 transactions as exempt u/s 10(38) instead of claiming it as loss. The 10 mutual funds resulted in a loss only and the loss has not been claimed in the return filed u/s 148 by the assessee. Reliance placed on bonafide/inadvertent error, penalty not leviable as per PwC vs CIT (348 itr 306 SC) 2.2 All transactions disclosed in ITR: The NAFC/CIT(A) ought to have appreciated that all the transactions were disclosed while filing the return of income. There is no concealment of particulars of income/inaccurate particulars for S.271 (1 )(c) to be invoked but only a wrong claim. Reliance placed on CIT vs. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result in a Capital Loss of Rs. 38,57,504/- which it ought to have claimed. Hence there is no income escaping assessment. Further, the 11th transaction pertains to Reliance Liquidity Fund - Treasury Plan-Retail option on which Appellant earned short term capital gains and offered it to tax of Rs. 13,24,121/- so this cannot be subject matter of dispute. The AO on merits u/s.147 passed Order dated 27.09.2021 considering the assessee's submissions and accepted the assessee's Return of Income. Hence, on merits there was no addition to income as assessed in the Assessment u/s.143(3) r.w.s.147 of the Act. However, the AO vide his order dated 05.01.2022 Levied penalty u/s.271(1)(c) amounting to Rs. 24,65,583/- claiming that the assessee had furnished inaccurate particulars. 5. The assessee aggrieved by the penalty order of the AO, filed an appeal to the ld.CIT(A) and the ld.CIT(A) has also upheld the AO's penalty order. Hence, the assessee filed an appeal before us. 6. The Ld.AR stated that there is no dispute in facts of the case by the AO or the CIT(A) in the penalty proceedings. Further, it is pointed out that the Order on merits u/s.147 r.w.s 144 of the Act dated 27.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch reads as follows: "Section 271(1)(c) Explanation 4(b) where in any case the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, the amount of tax sought to be evaded shall be determined in accordance with the formula specified in clause (a) with the modification that the amount to be determined for item (A- B) in that formula shall be the amount of tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income;" This above Explanation 4 is prima facie not applicable to the instant case where the returned loss is NOT reduced by the reassessment. In fact, the returned income of assessee was accepted by the AO (after the assessee pointed out it could have actually claimed Capital Loss instead on indexation). Further, the CIT(A) also quotes Brij Mohan vs CIT (120 /TR 1) where it holds that law operating on date on which wrongful act is committed determines penalty, but this ruling has no relevance to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10. It was tried to be suggested that s.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 AO 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, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r book these specific 10 transactions are also highlighted). Thus, all the details of capital gain transactions in dispute are very much part of the Return of Income along with the Schedules. 8.2 The Ld.AR further argued that only the claim u/s.10(38) of exemption from capital gains for some transactions was rejected but the facts and particulars about investments have not been found inaccurate. Thus, in short, all the particulars have been submitted though some legal claims may have been incorrect and hence Reliance Petro products supra is squarely applicable to the instant case and the penalty ought to be deleted. 9. Per contra, the ld.DR relied on the orders of the AO and that of the Ld.CIT(A) and prayed for dismissing the appeal of the assessee. 10. We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities. The assessee is an individual filed his return of income and the case was selected for scrutiny and passed an order on 22.11.2016 u/s.143(3) of the Act by accepting the return of income of Rs. 1,48,38,670/-. Subsequently, the case was reopened u/s.147 for the reason that the some of the equity-oriented fun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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