TaxTMI 
TaxTMI 
2011 (2) TMI 858
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....5/Del/2009, relating to the assessment year 1994-95. 2. The following substantial questions of law have been claimed for determination by this Court: Income Tax Appeal No. 779 of 2010 2 (1) Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in deleting the penalty of Rs. 6,30,930/- levied by the Assessing Officer, under Section 271(1)(c) of the Income Tax Act, 1961, even though the assessee had failed to discharge the onus to explain satisfactorily inaccurate furnishing of income through wilful attempt of setting off of brought forward business losses against the capital gains of the current year by deliberate violation of the specific provisions of Section 72 and 71(2) of the Income Tax A....
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....) {in short "the CIT(A)"} also did not agree to the submission made on behalf of the assessee in regard to not allowing the setting off of the assessed business loss for the assessment years 1991-92 to 1993-94 against the capital gains during the current year, in the appeal carried by it. The appeal was consequently dismissed on 16.7.1997. In further appeal at the instance of the assessee, the order of the CIT(A) was upheld by the Tribunal. 4. In view of the aforesaid, the assessing officer levied a penalty of Rs. 6,30,930/- under Section 271(1)(c) of the Act on the assessee, vide order dated 23.3.2004. The CIT(A) in appeal against that order drew support from a decision of this Court in M/s. Manish Iron Stores vs. CIT (2003) 263 ....
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.... by the learned AR and discussed by lower authorities in their respective orders. From the record, we found that assessee has claimed set off of unabsorbed business loss against the capital gains earned during the year. As a result of AO's action for declining of such set off, penalty was imposed under Section 271(1)(c). Contention of the assessee was that claim was made in bona fide way for setting off carry forward business loss against the income arising on sale of business assets. Along with the return of income, the assessee has also submitted director's report duly disclosing the fact of sale of building and utilisation of the amount for the purpose of business. Thus, we found that assessee has furnished all the particulars of income ....
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....essee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature." 8. The Tribunal held that making incorrect claim would not tantamount to furnishing of inaccurate particulars unless it was established that the assessee had acted with mala fide intention or had claimed deductions being aware of the well settled legal position. Further, a perusal of the fi....