INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)Concealment Disallowance of loss--Assessee an individual filed her return of income and shown loss of Rs. 4,81,839 from business of share trading; long-term capital gains and short-term capital gains from investment in shares and minor's income. The assessment was completed under section 143(3) whereby assessing officer made the certain additions and of business loss and interest expenditure disallowances. Subsequently, penalty proceedings under section 271(1)(c) were initiated by issuing show cause notice and penalty was levied against disallowance of business loss and disallowance on interest. Commissioner (Appeals) confirmed the penalty. Assessee contended that he has disclosed all the relevant details during assessment proceedings and genuineness of expenditure has not been disputed by assessing officer but was disallowed only on the ground that assessee had carried out trading activity only in one scrip and for that, the expenditure of Rs. 4,93,135 was on higher side. As regards disallowance of interest expenditure, assessee contended that he has borrowed money of the purpose of making investment in shares. Assessing officer on the ground that this expenditure has not been incurred in relation to income which was assessable as income from other sources, thus disallowed the same. The learned Authorised Representative, thus submitted that when the assessee has explained all the details as well as the claim of the assessee as genuine, then merely because the addition has been sustained, it does not amount to concealment of income to levy of penalty under section 271(1)(c) of the Act. In support of his contention, he has relied upon the decision of Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. 2010 TaxPub(DT) 1683 (SC) : (2010) 322 ITR 158/189 Taxman 322 (SC). Held: It was not the case of the assessing officer that expenditure claimed by assessee was bogus or absolutely wrong. The fact of expenditure has not been disputed by assessing officer disallowed the expenditure because of excessive in comparing to the trading activity. Further, details of expenditure was also explained and brought on record by assessee during assessment proceedings. Therefore, it was not the case of any misrepresentation for concealment of particulars of income, but claim of assessee was not allowed by assessing officer being excessive in comparing to the business activity. When claim of assessee was not found bogus or absolutely wrong or illegal and assessee had also disclosed all the relevant primary facts, then disallowance of the same under the provisions of the Act could not lead to conclusion that assessee has concealed the particulars of income or furnished inaccurate particulars of income leading to levy of penalty under section 271(1)(c) 'where'. Further, in interest case, assessee came out with an explanation which was proper and bona fide and also supported by the facts that in earlier years, the dividend income was assessable and assessee claimed the interest expenditure under section 57, therefore, claim of assessee could not be said as bogus, hence allowable.