2010 (3) TMI 899

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....arte qua the assessee. The only ground raised by the revenue in the appeal reads as under : "1. The learned Commissioner of Income-tax (Appeals) has erred in law and on facts of the case in deleting the penalty levied under section 271(1)(c) of the Act holding that the levy of penalty is not justified." 3. The facts of the case are that the assessee is a company which is-running 'a cinema theatre. For the year under consideration, the assessee furnished return of income declaring business loss of Rs. 1,00,92,940. However, the Assessing Officer determined the loss at Rs. 63,31,606. The loss was reduced on account of the following two additions : (i) Excess claim of depreciation disallowed Rs, 37,11,454 (ii) Deduction und....

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.... crores. The company was also not having any taxable income as per section 115. As such the error was inadvertent and the company was not going to derive any material benefit on account of the error. Counsel for the appellant further submitted that the deduction under section 35D was relating to preoperative expenses incurred in 1999-2000 and similar claims were made and allowed in earlier assessments. The disallowance of the claim was made as the appellant could not produce the evidence of such expenses incurred in the preoperative period. In any case, there is no justification for holding that the appellant was guilty of concealment in respect of the claim. 2.2 The issue has been considered. The facts pointed out that the appellant had....

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....e assessee. The Explanation has no bearing on factor No. 1 but it has a bearing only on factor No. 2. The Explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income with the hypothesis that it does. If the assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the Department because there will be no material to show that the amount in question was the ....