No concealment penalty on mere disallowance of a claim if full details were disclosed in return

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IT : Penalty for concealment of income, cannot be levied for claim being rejected by revenue, where full details were disclosed in return
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[2013] 35 taxmann.com 95 (Bombay)
HIGH COURT OF BOMBAY
Director of Income-tax (IT)-I, Mumbai
v.
Administrator of the Estate of Late Mr. E.F. Dinshaw*
J.P. DEVADHAR AND M.S. SANKLECHA, JJ.
IT APPEAL (L) NO. 358 OF 2013
MARCH 19, 2013
Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income [Wrong claim] - Assessment year 2003-04 - Whether penalty for concealment of income is not justified merely because a claim made by assessee had been rejected - Held, yes - Whether, where full details of loss claimed by assessee was stated in return of income, which was rejected by revenue, it would not amount to furnishing of inaccurate particulars or concealment of income on part of assessee, and, therefore, penalty for concealment of income could not be levied - Held, yes [Para 4][In favour of assessee]
CASES REFERRED TO

CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) (para 4).
Tejveer Singh for the Appellant. P.J. Pardiwala and Atul K. Jasani for the Respondent.
ORDER

Office objections waived.
2. In this appeal by the Revenue for assessment year 2003-04, following question of law has been proposed for our consideration.
"Whether, on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that penalty under Section 271(1)(c) of the Act is not leviable when parameters laid in Explanation 1(B) of Section 271(1)(c) stands satisfied ?"
3. The respondent - assessee had purchased units on 21st March 2002, received dividend on 22nd March 2002 and sold the units on 16th April 2002 at a loss of Rs.1.6 crores. The dividend income was exempt under Section 10(33) of the Income Tax Act, 1961 ('Act' for short). The respondent - assessee did not adjust the dividend income against short-term capital gain in view of Section 94(7) of the Act. However, during the assessment proceedings the respondent - assessee raised a claim that Section 94(7) of the Act would not apply as in this case as the units were not sold, but were redeemed. The authorities did not accept the contention of the respondent - assessee and held that redemption of units would also mean transfer within the meaning of Section 2(47) of the Act. The respondent - assessee accepted the aforesaid position. However, the assessing officer levied penalty under Section 271(1)(c) of the Act. In appeal, the Commissioner of Income Tax (A)
upheld the penalty.
4. On further appeal, the Tribunal held that the respondent-assessee having made complete disclosure in the return of income, the fact that during the assessment proceedings a claim was made by the respondent - assessee to the effect that Section 94(7) would not be applicable in their case, cannot be a ground for imposing penalty. The Tribunal relied upon the decision of the Apex Court in the matter of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322, wherein it has been held that levy of penalty is not justified merely because a claim made by the assessee has been rejected. The Tribunal also records a finding of fact that all details of loss claimed has been stated in the return of income and making a bona fide claim to be exempted from the provisions of Section 94(7) would not amount to furnishing of inaccurate particulars or concealing income on the part of the respondent - assessee.
5. Since the order of the Tribunal is based on finding of fact, which is not shown to be perverse, we see no reason to entertain the proposed question of law.
6. Accordingly, the appeal is dismissed with no order as to costs.ESHA