Commissioner of Income Tax vs Nalin P. Shah

In these appeals by the revenue for the assessment year 2004-05, identical common questions of law have been raised for our consideration:-

(i) Whether in the facts and in the circumstances of the case and in law, the ITAT was right in holding that the wrong claim made by the assessee is not filing of inaccurate particulars, ignoring the fact that the assessee has knowingly claimed the setting off of loss against other source of income under the same head arising out of sell of units US 64 to be exempted u/s. 10(33) as income includes loss which has been accepted by the assessee before the ITAT during the course of quantum appeal ?

(ii) Whether the ITAT was justified in allowing the appeal by deleting the penalty imposed on the assessee u/s 271(1)(c) of the I.T. Act ?

(iii) Whether the ITAT was justified in holding that deliberately wrong claim made by the assessee is not filing of inaccurate particulars / concealing of income ?

Counsel for revenue prayed for time to take instructions. However, after perusing the question and the impugned order, we see no reason to adjourn the matter.

Though we are hearing three matters together as the issue involved are identical, for the sake of convenience we refer to the facts as set out in Income Tax Appeal (Lod) No. 51 of 2013.

In this case, the respondent-assessee had declared long term capital loss of Rs. 4.39 crores which were inclusive of loss incurred on the sale of US 64 units. The assessing officer disallowed the loss on sale US 64 units on the ground that where income from particular source was exempt from tax then the loss from such source could not be set off from another source under the same head of income. In view of the above, the assessing officer also initiated penalty proceedings and imposed penalty u/s 271(1)(c) of the income Tax Act 1961.

In appeal, CIT (A) upheld the order of assessing officer levying penalty.

On further appeal, the Tribunal in the impugned order held that the respondent-assessee had in its return of income filed a note with its computation of income disclosing all details about the sale of US 64 units, the loss and resultant carry forward. Further, all details were disclosed in its return of income as is evident from the fact that the assessing officer gathered information about the carry forward loss and sale of units from return filed by the respondent-assessee. The Tribunal held that the from the aforesaid facts at the highest it can be said that the claim of the assessee was not sustainable in law but there was no furnishing of inaccurate particulars or concealment of income on the part of the respondent-assessee. Thus, the penalty was set aside. We find that the same view is taken by the Apex Court in the matter of Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts Pvt. Ltd., . As the decision of the Tribunal is essentially based on finding of fact, we see no reason to entertain the proposed question of law. Accordingly, all the three appeals are dismissed with no order as to costs.