2014 (3) TMI 774

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....n the following substantial questions of law:- (i) Whether in the facts and circumstances of the case, the Tribunal had probably exercised its discretion and was right in deleting the penalty imposed under Section 271(1)(c). (ii) Whether in the facts and circumstances of the case, the Tribunal was right in deleting the penalty on the ground that explanation 4 to Section 43(1) is not applicable to the assessee's case, when the Assessing Officer had invoked explanation 3? 2. The assessee is a company engaged in the business of leasing and finance. The assessment for the year 1996-97, was completed under Section 143(3) of the Income Tax Act, (Act), and the total income was determined by an order of assessment, dated 30.03.1999. In....

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....d to be false. Further, it was pointed out that the total income assessed under Section 143(3) of the Act and the consequent tax thereon happens to be lower than the income returned and the tax computed on the same. Further, the assessee stated that though on merits, the addition is not accepted to it, yet the assessee has not filed an appeal against the addition to avoid time consuming litigation and after considering the cost benefit for the company as the restriction of depreciation would result in tax savings in the subsequent years. The Assessing Officer held that the mere fact that the assessee furnished the invoices supporting the claim towards the cost of acquisition shown is not enough explanation for dropping the penalty proceedin....

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....erred appeal before the Tribunal. The Tribunal by order dated 15.09.2006, while rejecting the appeal filed by the Revenue held that there is no malafide intention on part of the company and the first Appellate Authority found that the assessee had furnished all details of lease transaction and had also explained why market value of the plant and machineries need not be equivalent to WDV of the machineries. Insofar as the contention raised regarding Section 43(1), the Tribunal pointed out that the Explanation 4(1) is not applicable to the assessment year 1996-97, as held in the case of Om Sindhuri Capital Investment Ltd., vs. JCIT reported in 274 ITR 427 and in any case, when the explanation is offered and the same is not false, penal provis....

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....rt and those records were placed before the Assessing Officer apart from the fact that the proof for payment of sales tax and such other details were placed before the Assessing Officer, nevertheless the Assessing Officer fixed the price of the assets on the WDV. Though the assessee has not preferred any appeal as against the said findings, the case would not fall within the scope of Section 271(1)(c) of the Act, so as to bring it within the scope of concealment or furnishing of inaccurate particulars. Therefore, the learned counsel submitted that the Tribunal rightly rejected the appeal filed by the Revenue. 7. Heard the learned counsels appearing on either side and perused the materials available on record. 8. In order to invoke the....

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...." and "erroneous", that the mere making of a claim, which is not sustainable in law, by itself, would not amount to furnishing inaccurate particulars regarding the income of the assessee and that such a claim made in the return cannot amount to furnishing inaccurate particulars. Further, the Hon'ble Supreme Court held as follows:- Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under Section 27....