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If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bonafide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them
Whether the disclosure/admission of Assessee of taxing the income @ 8% when faced with detailed enquiry is a voluntary surrender and not liable for penalty under section 271(1)(c) of the Act?”
The question of concealment of income and whether the revised return was filed voluntarily or not is a question of fact to be examined and decided upon the facts and circumstances of the each case and, therefore, it was not permissible to the Tribunal to merely rely on earlier orders where this issue was considered and penalties were cancelled.
The first question is whether the assessee-company had produced reasonable evidence to support its claim of incurring expenditure to the extent of Rs. 32,99,650. The answer is a categorical “no”. This position has been upheld even by the Tribunal. The assessee has not produced details or any evidence to support its claim of expenditure to the extent of Rs. 32,99,650.
Section 271(1)(c) empowers the Assessing Officer to impose penalties wherever the assessee does not furnish accurate particulars, in the form of returns, such as concealing the sources of income, or withholding true and full information. This duty was spelt out by the Supreme Court as one cast on the assessee to disclose all facts, including every potential income.
What is to be seen in the instant case, is whether the claim for deduction of depreciation u/s 32 of the Act, made by the assessee was bona-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(1)(c) of the Act.
As explained by assessee, the income could not be offered as assessee sought approval under section 10(23G) as early as of 24-8-2005 which was followed with reminder letter addressed to the CCIT on 17-1-2006. Since the application was made in form No. 56E, it is natural that the Board will either accept or reject the application in a reasonable period of time. As on 1-11-2006 assessee has not been communicated by the result of the application, even though it was following it up.
Assessing Officer should record in the assessment order his satisfaction that the assessee had either concealed the income or furnished inaccurate particulars of income in his return before imposing penalty, we noticed that in the assessment orders passed by the Assessing Officer for the assessment year 1982-83 (which is the subject-matter of I.T.T.A. No. 29 of 2000) and for the assessment year 1983-84 (which is the subject matter of I.T.T.A. No. 33 of 2000), no such satisfaction is recorded.
The mistake on the part of the assessee is that the assessee invested a part amount of sale consideration/ capital gain in residential house instead of gross sale consideration and claimed deduction under section 54F. It is relevant to note that for claiming deduction under section 54 of the Act investment of capital gain is the requirement whereas for claiming dedication under section 54F investment of sale consideration is the condition. From the facts of the case it is a clear cut case of bona fide calculation mistake.
Merely because the Assessing Officer invoked section 50C(2) and adopted guideline value to be the actual sale consideration and made addition in the assessee’s income automatically become a case attracting penalty under section 271(1 )(c) of the Act.
