TaxTMI 
TaxTMI 
2026 (3) TMI 886
X X X X Extracts X X X X
X X X X Extracts X X X X
....2. The assessee has taken the following grounds of appeal: "1. Ld. CIT(A) erred in confirming penalty of Rs. 82,91,261/- by invoking provision/s 271(1)(c) of the Act ignoring submission of the appellant that there is neither concealment of income nor furnishing inaccurate particulars of income which leads to invocation of penalty. 2. Ld. CIT(A) failed to appreciate that ld. AO failed to record proper satisfaction as to penalty for concealment of income or furnishing inaccurate particulars of income and without proper satisfaction penalty order required to be quashed. It be so held now. 3. Ld. CIT(A) ought to have considered that amount received on dissolution of trust is capital receipt whereas it is treated as re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the amount received from the foreign trust. 4. Aggrieved by the penalty order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) and challenged the imposition of penalty. The assessee contended that there was full disclosure of the amount received from Mimosa Trust in the return of income and in the notes accompanying the return. It was submitted that the receipt was treated by the assessee as a capital receipt and the complete particulars of the transaction had been furnished before the Assessing Officer during the assessment proceedings. The assessee further submitted that that the addition made by the Assessing Officer was only on account of a difference of opinion regarding the taxability of the receip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he transaction in the relevant columns of the return of income, particularly in the column relating to foreign assets and financial interests. According to the CIT(Appeals), the assessee had not come forward with the full facts relating to the receipt of the amount from the foreign trust at the stage of filing the return of income and the details came to light only during the assessment proceedings when the Assessing Officer examined the matter in detail. The CIT(Appeals) further observed that the assessee had attempted to claim refund while not disclosing the full particulars of the receipt and therefore the conduct of the assessee indicated an intention to conceal income. The CIT(Appeals) also rejected the argument that the issue was mere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er, there were no direct case laws on the subject which had been decided against the assessee on this issue, which would have necessitated the assessee taking a different view. Further, the ld. counsel for the assessee drew our attention to pages 99 and 103 of Paper-Book, wherein the Ahmedabad ITAT referred the taxability of the said amount to a Special Bench of the ITAT in view of decision of Mumbai ITAT in the case of Dwarka Prasad v ITO in ITA Number 4591 and 4592/Mum/2016 vide order dated 05.10.2017 wherein Mumbai ITAT held that distribution out of corpus funds is a capital receipt not liable to tax in the hands of the assessee. The reference to Special Bench of the ITAT in the assessee's own case clearly demonstrates that the taxabilit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficer cannot be said to have arisen on account of any suppression of facts or non-disclosure of material particulars by the assessee. 12. It is well settled that penalty proceedings under section 271(1)(c) of the Act are distinct from assessment proceedings and the mere fact that an addition has been made in the assessment order does not automatically lead to the conclusion that the assessee has concealed income or furnished inaccurate particulars. The Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd. (2010) 322 ITR 158 (SC) has categorically held that making an incorrect claim in law cannot amount to furnishing inaccurate particulars of income. The Court held that where all the facts relating to the claim are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of law, it cannot be said that the assessee had either concealed income or furnished inaccurate particulars so as to warrant the levy of penalty. 14. In this regard, reference may also be made to the decision of the Ahmedabad Special Bench of the Tribunal in Gujarat Credit Corporation Ltd. vs. ACIT (2008) 113 ITD 133 (Ahmedabad SB) wherein it was held that mere rejection of a claim made by the assessee does not lead to the inference that the assessee has concealed income or furnished inaccurate particulars. The Special Bench further observed that penalty provisions are penal in nature and the burden lies upon the Department to establish that the assessee has deliberately concealed income or furnished inaccurate particulars. In the pres....