TaxTMI 
TaxTMI 
2014 (5) TMI 1037
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.... and the details were furnished by the assessee, in the course of proceedings. Thereafter, the assessee withdrew its adjustment to the extent of Rs. 1,93,13,616 towards loss on account of currency fluctuation and sought to revise the loss from Rs. 6,76,37,054 to Rs. 5,12,20,481. This position was accepted by the Assessing Officer and the assessment was completed on a loss of Rs. 5,12,20,481. The quantum assessment rested there without any further appeal. 4. Thereafter, the Assessing Officer levied penalty under section 271(1)(c) on the ground that the assessee has furnished inaccurate particulars to the extent of Rs. 1,93,13,616 pertaining to loss on account of currency fluctuation. The Assessing Officer held that this excess claim was found out only because of the scrutiny assessment carried out in the case of the assessee and if no such scrutiny assessment was made, the excess claim would not have come to light and to that extent, the assessee would have overstated the loss, resulting in concealment of income. The Assessing Officer supported his finding on the ground that the assessee has not preferred any appeal against the quantum assessment. The assessee has filed detailed ex....
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.... decisions relied on by the assessee and finally held that the facts of those decisions are different and not applicable to the facts of the present case. 7. The Commissioner of Income-tax (Appeals) finally confirmed the penalty under the provisions of section 271(1)(c) particularly, relying on Explanation 1 to section 271(1)(c). 8. The assessee is aggrieved and therefore, the second appeal before the Tribunal. 9. The grounds raised by the assessee in the present appeal read as below : "2. The learned Commissioner of Income-tax (Appeals) erred in confirming the imposition of penalty in a routine manner without application of mind under section 271(1)(c) of the Act, to wit : (a) Fundamentally the provision is purely discretionary and there is no necessity to adopt 'blood curdly' approach to the issue since the claim is bona fide and special provision in terms of section 43A has no application to the facts. (b) There exists neither conce....
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....e return filed by it as a deduction. It is on the basis of the above computation that the assessee has returned a loss of Rs. 6,76,37,054. 11. But in the course of the assessment proceedings, it was found that the foreign currency fluctuation loss to the extent of Rs. 1,93,13,616 related to acquisition of fixed assets and, therefore, cannot be claimed as a loss as such but has to be dealt under section 43A, thereby adjusting the value of fixed assets acquired by utilising the foreign exchange loan availed of by the assessee. The assessee readily argued to this legal position emerged out in the course of the assessment proceedings and withdrew the loss of Rs. 1,93,13,616. Instead, the assessee made a claim for additional depreciation on the enhanced cost of fixed assets as provided under section 43A. The assessment was thus completed. 12. Thereafter, the Assessing Officer imposed penalty on the assessee on the ground that the assessee has furnished inaccurate particulars of income. We do not agree with the proposition made by the assessing authority in the present case. As sufficiently explained by the assessee before the assessing authority and the Commissioner of Income-tax (App....
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....43(3). It is not a case of detecting concealment of income. The consequential disallowance made by the assessing authority cannot be treated as a case of furnishing of inaccurate particulars or concealment of income. 14. Coming to the order of the Commissioner of Income-tax (Appeals), he has considered the issue in a very detailed manner. The only thing is that he went on an entirely different tangent. He examined the issue, as if he was adjudicating a quantum appeal. He has merely discussed that the liability arising out of acquisition of fixed assets must be adjusted under section 43A and not under section 37. He has deliberated upon the Accounting Standards issued by the Institute of Chartered Accountant of India. But it is to be seen that all these discussions are relevant in a quantum assessment appeal. 15. In the present case, the Commissioner of Income- tax (Appeals) was not concerned about any quantum adjustment made by the assessing authority. The Commissioner of Income-tax (Appeals) was concerned about the levy of penalty under section 271(1)(c). Finally, the Commissioner of Income- tax (Appeals) confirmed the penalty relying on Explanation 1 to section 271(1)(c). Even ....