TaxTMI 
TaxTMI 
2012 (9) TMI 126
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....aw, the Tribunal was right in deletion of penalty to the extent of Rs.9,49,399/- as imposed by the A.O. on account of diminution in value of shares investment ?" 3. The matter is clearly covered by the judgment of the Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd., (2010) 11 SCC 762 = (2010) 322 ITR 158. 4. The respondent is a non-banking financial company. It claimed a deduction of Rs.11,47,989/- under section 35D of the Act which was disallowed on the ground that it is not an industrial undertaking. A similar claim had been disallowed during the previous years as well. The respondent also claimed a deduction of Rs.9,94,399/- on account diminution in the value of shares held by it. The same was disallowed on the ground that the shares were held as investments and profits and losses on the sale thereof were to be considered under the head "capital gains". 5. The quantum proceedings inter-alia on these two issues were concluded against the respondent. The Assessing Officer also initiated penalty proceedings under section 267(1)(c), which fall for consideration in this appeal. 6. The CIT (A) confirmed the penalty inter-alia in respect of the claim for deduction....
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....nishing of inaccurate particulars of such income [or fringe benefits]. Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act, - (A) .......................................................................... (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section be deemed to represent the income in respect of which particulars have been concealed." 10. In support of his submission, Mr.Malhotra relied upon the following observations of the Supreme Court in Union of India & Ors. vs. Dharmendra Textile Processors & Ors. (2008) 13 SCC 369 = (2008) 306 ITR 277 :- "17. It is of significance to note that the conceptual and contextual difference between Section 271(1)(c) and Section 276-C of the IT Act was lost sight of in Dilip Shroff case. 18. T....
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....of income. Explanation 1(B) would apply only where an assessee has concealed the particulars of his income or has furnished inaccurate particulars of income. Explanation 1(B) provides that in such cases if the reasons given for the concealment or furnishing of inaccurate particulars of income are found to be unsubstantiated or not bona-fide, the amount added or disallowed in computing the total income would represent income in respect of which particulars have been concealed. 12. As we noted earlier, the matter in any event stands concluded in favour of the respondent by the judgment of the Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (supra) where the Supreme Court considered a similar situation. The respondent therein had disclosed all the facts and there was no concealment of income. The Supreme Court negated an identical submission. The judgment considers and interprets the judgment of the Supreme Court in Union of India & Ors. vs. Dharamendra Textile Processors & Ors. (supra). The Supreme Court after setting out Section 271 (1)(c) in paragraph 10 held as under :- "10. .................................................................... A glance at this pr....
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....ect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form part of the total income. It was, therefore, reiterated before us that the assessing officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. 20. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. M....