TaxTMI 
TaxTMI 
2012 (10) TMI 801
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....e a part amount, Rs. 70,00,000/-. The A.O. was of the view that the assessee is entitled for only proportionate amount of deduction under section 54F of the Act. The A.O. accordingly found that the assessee has made excess claim of deduction under section 54F for Rs. 9,10,634/-. During the assessment proceedings the A.O. pointed out to the assessee about the said excess deduction of Rs.9,10,634/-. The assessee filed a revised return and submitted that the assessee has wrongly claimed exemption on the basis of section 54 of the Act which exemption was to be claimed under section 54F of the Act. The aforesaid mistake was on account of misunderstanding on the part of the clerical staff of the Counsel and was not at all intentional. It was submitted that when the mistake came to the notice, the assessee has voluntarily filed revised return of income. The A.O. levied penalty of Rs. 2,78,660/- by invoking provisions of section 271(1)(c) read with explanation-1 of the Act on the ground that the assessee is aware of the exemption under section 54F and claiming the same in his return of income as the primary onus lies with the assessee to fulfill all the requisite conditions for availing th....
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....ection 54F or under section 54 of the Act. This is a case of bona fide misconception and belief, therefore, penalty under section 271(1)(c) is not livable. Ld. Authorised Representative in support of his contention relied upon the following decisions:- (i) CIT v. Reliance Petroproducts (P.) Ltd. 2010 (SC) (ii) Chandra Pal Bagga v. ITAT [2003] 261 ITR 67 (Raj) (iii) CIT v. Sumerpur Truck Operators Union [IT Appeal No. 27 of 2006, dated 13-4-2006] (iv) Veejay Service Station v. Asstt. CIT [2009] 122 TTJ 824 (Delhi) (v) Zycus Infotech (P.) Ltd. v. ITO/Asstt. CIT [2007] 17 SOT 310 (Mum.) (vi) Udayan Mukherjee (supra) (vii) Devi Dass Sukhani v. ITO [2006] 101 TTJ 551 (Jodh.) (viii) Kamal Kishore Swami v. ITO [2004] 85 TTJ 206 (Jodh.). 6. Ld. Authorised Representative submitted that the explanation given by the assessee was a bonafide explanation and under that circumstances the question of failing to discharge the burden under explanation-1 to section 271(1)(c) would not arise. Ld. Authorised Representative in support of his contention relied upon the judgement of the Apex Court in the case of T (or P kindly see) T. Ashok Pai v. CIT [2007] 292 ITR 11. 7. It i....
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....n Union of India v. Rajasthan Spg. & Wvg. Mills [2009] 180 Taxman 609, wherein the Supreme Court understood Dharamendra Textile Processors' case (supra) to be not applicable, where section 11AC of the Central Excise Act is not applicable, especially since that was not even the stand of the Revenue in this case. The Supreme Court had further explained the decision in CIT v. Atul Mohan Bindal [2009] 317 ITR 1 pointing out that Dharamendra Textile Processors' case (supra) has been explained in Rajasthan Spg. & Wvg. Mills' case (supra) and concluded in line with this decision that penalty under section 11AC of the Central Excise Act could not be levied in every case of non-payment or short payment of duty and that penalty in respect of section 271(1)(c) of the Income-tax Act would be leviable, subject only to the conditions thereunder. It required the matter to be considered not solely with reference to Dharamendra Textile Processors' case (supra) but along with the decision of Rajasthan Spg. & Wvg. Mills' case (supra). In the case of Reliance Petroproducts (P.) Ltd. (supra) the Supreme Court further explained the matter and finally settled the controversy created in Dharamendra Textil....
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....llation of penalty for a wrong claim of deduction in computation of non-agricultural income bona fide made and for a wrong claim of relief under section 80P were found to be decisions on the facts on which no question of law would arise as held in CIT v. Shahabad Co-op. Sugar Mills Ltd. [2010] 322 ITR 73 (Punj. & Har.). In the case of CIT v. Sidhartha Enterprises [2010] 322 ITR 80 (Punj. & Har.) it was held that "a wrong claim as business income of what should be treated as short term capital gains on the advice of the assessee's Counsel, could not be treated as an instance of deliberate default. In the case of Chandra Pal Bagga (supra) the Hon'ble Rajasthan High Court has held that when the assessee has disclosed the transaction which is the basis for capital gains tax and though wrongly claimed exemption from the capital gains tax, but that cannot be a case of penalty under section 271(1)(c) of the Act. It if has claimed any exemption after disclosing the relevant basic facts and under ignorance of the provisions of the Act, and not offered that amount for tax, in such cases, penalty should not be imposed. In such cases rather it is the duty of the A.O. to ask for further d....
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.... evidence for refusing the assessee's claim or evidence or explanation. 14. The essence of part-B of the explanation is that the person must provide an explanation which is bonafide and he should substantiate that explanation by some evidence with him. If he fails to do so, his explanation may be treated as untenable. But when the assessee is able to offer a reasonable explanation based on some evidence, the A.O. cannot invoke Part-B of the explanation unless he has given finding based on some contrary evidence to disapprove that explanation offered by the assessee which the assessee is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. 15. In the light of above discussion, if we consider the facts of the case under consideration, we find that the assessee has furnished complete facts regarding computation of capital gain, total sale consideration, calculation of long term capital gain, investment in residential house and others. The mistake on the part of the assessee is that the assessee invested a part amount of sale considerati....