Case Law Details
During the assessment proceedings,, it was noted by the Assessing Officer that the assessee sold land at Pune for a consideration of Rs. 18 lakhs and accordingly worked out long term capital loss on sale of such property. However, the valuation of the land was adopted by stamp valuation authority at Rs. 20 lakhs. The assessee was, therefore, asked to show cause as to why the capital loss on sale of the said property should not be worked out as per the provisions of section 50C of the Act. In response, the assessee filed a revised computation of capital gains in accordance with section 50C of the Act. The Assessing Officer was also satisfied that penalty proceedings u/s. 271(1)( c) of the Act is required to be initiated as the assessee has furnished inaccurate particulars of income with reference to the above.
In the instant case, the assessee had not furnished the inaccurate particulars of his income when it furnished the return. There is only difference of opinion on the relevant issues. Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Ajaib Singh & Co. [2002] 253 ITR 630 have observed that merely because of certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that particulars furnished by the assessee were wrong. It was held that mere dis allowance of expenses per se cannot mean that assessee has furnished inaccurate particulars of its income. It is repeatedly held by the Courts that the penalty on the ground of concealment of particulars or non-disclosure of full particulars can be levied only when in the accounts/return an item has been suppressed dishonestly or the item has been claimed fraudulently or a bogus claim has been made. When the facts are clearly disclosed in the return of income, penalty cannot be levied and merely because an amount is not allowed or taxed to income, as it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. Further, conscious concealment is necessary. Even if some deduction or benefit is claimed by the assessee wrongly but bona fide and no mala fide can be attributed, the penalty would not be levied. Reliance is also placed on the judgment of the Supreme court in the case of CIT Reliance Petroproducts P. Ltd.(2010) 322 ITR 158.
From the discussion made above, it can be concluded that mere dis allowance or addition will not be sufficient for levy of penalty u/s 271 (l)( c). In view of the above and taking into consideration the facts (a) that the appellant had disclosed all material facts and (b) raising a legal claim, even if it is ultimately found to be legally unacceptable, cannot amount to furnishing of inaccurate particulars of income, I hold that there is no case of concealment or furnishing of inaccurate particulars of its income in respect of the dis allowances made on account of (a) capital gains amounting to Rs.2,00,000/- Therefore, it is held that A.0. was not justified in imposing penalty u/s 271(1)(c).
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