TaxTMI 
TaxTMI 
2012 (11) TMI 502
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....of Rs. 17,90,000/- was disallowed in relation to amortization claim written off on account of membership fee paid to stock exchanges. The Assessing Officer [AO in short] also initiated penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income Subsequently, after considering the reply dated 21st April, 2010 in response to a showcause notice before levy of penalty, the AO imposed a penalty of Rs. 6,02,514/- u/s 271(1)(c) of the Act @100% of the tax sought to be evaded on the income of Rs. 17,90,000/-. Inter alia, the AO invoked Explanation 1 to 271(1)(c) of the Act and relied upon the decisions in CIT v. Gates Foam & Rubber Co. [1973] 91 ITR 467 (Ker.); CIT v. Anwar Ali [1970] 76 ITR 696 (SC) and CIT v. Lal Chand Tirath Ram [1997] 225 ITR 675 (Punj. & Har.). 3. On appeal, the ld. CIT(A) cancelled the penalty in the following terms:- "5 I have gone through the submissions of the appellant, the facts on records and have also perused the penalty order and considered the decision relied upon both by the appellant and the AO. 5.1 As per the scheme of Section 271(1)(c), penalty is leviable in case the Assessing Officer, in the course of any proceeding ....
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.... each case has to be seen in the context and then penalty provision should be applied to see whether there was the concealment of particulars of income or the appellant has furnished inaccurate particulars so as to call for the penal action under Section 271(1)(c). 5.7 In the appellant's case is seen that the appellant has been treating the cost of membership card of the stock exchange as an amortised assets and this fact has been disclosed in their return of income also. It is admitted fact that for quite a long, treatment of cost of membership asset, have been a subject matter of litigation and various benches of ITAT have given ruling in favour of the assessee. It was only in the month of September 2010, that Supreme Court gave a ruling in the case of Techno Shares and Stock Ltd. v. ITO (Civil appeal 7780/7781 of 2010, dated 09.09.2010) that this issue is settled. Further it is also a settled preposition that where different views are possible on an issue, in those cases penalty is not leviable. 5.8 Hence in the facts of the appellant's case, their claim of amortization which was disclosed in the return of income but was not accepted by the AO, at assessment stage doesn't mean....
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....nt proceedings. The assessee, in the instant case, merely made a bonafide claim for the deduction of depreciation on the cost of membership card stock exchange u/s 32(1)(ii) of the Act. Not even a whisper has been made in the penalty order as to which specific particulars were furnished inaccurate or were concealed. The expression 'has concealed the particulars of income' and 'has furnished inaccurate particulars of income' have not been defined either in section 271 or elsewhere in the Act. However, notwithstanding the difference in the two circumstances, it is now well established that they lead to the same effect namely, keeping off a certain portion of the income from the return. According to Law Lexicon, the word "conceal" means: "to hide or keep secret. The word 'conceal' is con+celare which implies to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of ; to withhold knowledge of. The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities." In Webster's Dictionary, "inaccurate" has been defined as : "not accurate, not exact or....
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....of shall for the purpose of clause (c) of section 271(1), be deemed to represent the income in respect of which particulars have been concealed. In other words, the necessary ingredients for attracting Explanation 1 to section 271(1)(c) are that: (i) the person fails to offer the explanation, or (ii) he offers the explanation which is found by the AO or the CIT (Appeals) or the Commissioner to be false, or (iii) the person offers 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 have been disclosed by him. 5.2 If the case of any assessee falls in any of these three categories, then the deeming provision provided in Explanation 1 to section 271(1)(c) come into play, and the amount added or disallowed in computing the total income shall be considered as the income in respect of which particulars have been concealed, for the purposes of clause (c) of section 271(1), and the penalty follows. On the other hand, if the assessee is able to offer an explanation, which is not found by the authorities to be false, and assessee has been able to prove that such explanati....
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....t only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income." 5.3 In the light of aforesaid observations of the Hon'ble Apex Court , what is to be seen in the instant case, is whether the claim for deduction of depreciation u/s 32 of the Act, made by the assessee was bona-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(1)(c) of the Act. The assessee, in the light of certain decisions, claimed that it is entitled to depreciation on the membership fee of stock exchange u/s 32 of the Act. The claim was ,subsequently, upheld by the Hon'ble Apex Court in their decision dated 9.9.2010 in Techno Shares & Stock Ltd. (supra). The AO has not been able to establish that the claim of the assessee for deduction of depreciation u/s 32 of the Act was not bona fide or that any specific particulars were concealed or furnished inaccurate. We....