TaxTMI 
TaxTMI 
2011 (2) TMI 911
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....ff and carry forward of business loss of 25 per cent. share in M/s. Gee Marketing Network in which the assessee was a partner." 3. The Assessing Officer issued a show-cause notice to the assessee as to why such amount should not be disallowed and in the show-cause notice dated December 15, 2006, the Assessing Officer required the assessee to submit explanation in this regard as follows : "You have claimed business loss for Rs. 7,36,723 which was transferred from M/s. GMN. You have to justify that a return was audited by a qualified chartered accountant and such type manner to conceal the income from taxable income is a deliberately uncorrectable mistake. Therefore, you are deserved to penalise under section 271(1)(c) of the Income-tax Act, 1961 for furnishing inaccurate particulars with income-tax return." 4. In response to the said query of the Assessing Officer no details whatsoever were submitted by the assessee. Hence, the addition was made by the Assessing Officer by making the following observations in the assessment order : "During the course of assessment proceedings it has been revealed that the assessee has claimed business loss of Rs. 7,36,723 which was trans....
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....and therefore the same was disallowed and penalty proceedings under section 271(1)(c) of the Income-tax Act was initiated. The case of the assessee falls within the ambit of section 271(1)(c) of the Income-tax Act, 1961 as the assessee has furnished inaccurate particulars of income. The act of the assessee cannot be regarded as an innocent act as the same is a conscious act. This act is an act of gross and willful neglect on his part and he has furnished inaccurate particulars deliberately which is not capable of being regarded as innocent act. The assessee cannot afford to be routinely careless and casual while submitting the returns. The assessee certainly does have a duty to verify the particulars furnished by him and ensure that the particulars furnished are indeed accurate. Falsehood in accounts can take either of two forms, either an item of receipt may be suppressed fraudulently, or an item of expenditure may be falsely (or in an aggregated amount) claimed. Both types are attempt to reduce the taxable income. Both types of amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. Penalty must be imposed for either or b....
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....see has made a claim which could not be supported by him either by the provisions of the Income-tax Act or by showing any decision. She submitted that in response to a query raised by the Assessing Officer regarding justification of such claim, the assessee did not submit any reply. She submitted that in response to show-cause notice, no explanation whatsoever was filed by the assessee. Thus, she submitted that the case of the assessee clearly falls within the ambit of section 271(1)(c) and Explanation 1 thereto as the assessee has submitted inaccurate particulars of his income. He submitted that the assessee cannot place reliance upon the aforementioned decision of the hon'ble Supreme Court as, in that case, the claim of the assessee was not wholly unsubstantiable whereas in the present case the claim of the assessee is wholly unsubstantiable. She referred to the recent decision of the hon'ble Delhi High Court in the case of CIT v. Zoom Communication (P.) Ltd. [2010] 327 ITR 510 in which the aforementioned decision of the hon'ble Supreme Court was considered and it was held that penalty in cases of claims which are wholly unsubstantial in law is to be upheld and, thus, she p....
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....o be carried over by partners. The firm had discontinued its business. This is the last financial year of business activities of the firm. for Gee Marketing Network, Sd/- (Parikshit Goel), Partner." 12. As it can be seen that it is not even the loss of the current financial year, but it is a loss pertaining to the assessment years 2002-03 and 2003-04. For the current financial year the assessee has earned profit from the said firm. Therefore, the loss consists of earlier years which has been carried forward in the hands of the firm and again are claimed by the assessee in the hands of the partner which claim is wholly unsubstantiable in law. During the course of assessment proceedings, the assessee did not submit any explanation as this fact has been ascertained from the assessment record. During the course of penalty proceedings also the assessee did not give any reply. Therefore, no explanation whatsoever has been submitted by the assessee before the Assessing Officer in response to show-cause notice against levy of penalty. Therefore, it is found that the assessee has not submitted any explanation regarding this claim either in the assessment proceedings or in the pe....
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....e jurisdictional High Court in the following words: "In the case of Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC), the addition made by the Assessing Officer in respect of the interest claimed as a deduction under section 36(1)(iii) of the Act was deleted by the Commissioner of Income-tax (Appeals) though it was later restored, by the Tribunal, to the Assessing Officer. The appeal filed by the assessee against the order of the Tribunal was admitted by the High Court. It was, in these circumstances, that the Tribunal came to the conclusion that the assessee had neither concealed the income nor filed inaccurate particulars thereof. In recording this finding, the Tribunal felt that if two views of the claim of the assessee were possible, the explanation offered by it could not be said to be false. This, however, is not the factual position in the case before us. The facts of the present case thus are clearly distinguishable." (p. 518) 15. The hon'ble Delhi High Court has further observed that it is true that mere making a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but, it cannot be disputed that a c....