The Tax Publishers2020 TaxPub(DT) 4304 (Mad-HC)

INCOME TAX ACT, 1961

Section 271(1)(c)

Merely because assessee claimed a set-off of losses while filing return of income, which was subsequently disallowed by AO, however, such disallowance could not be construed as the assessee furnishing inaccurate particulars or concealed any part of his income and therefore, the penalty levied under section 271(1)(c) would not be sustainable.

Penalty under section 271(1)(c) - Leviability - Disallowance of claim of set-off of losses -

Assessee was a doctor and also MD of a Diagnostic Centre, which was solely owned by the assessee's wife. Assessee also derived income from house property, professional income and share trading, apart from income from other sources. AO disallowed assessee's claim for set-off of losses incurred in the share trading business from that of the professional income on the ground that the transactions in purchase and sale of shares were speculative transactions. Subsequently, penalty under section 271(1)(c) was levied on account of disallowance of claim for set-off of losses. Held: Assessee admittedly suffered losses in share trading business and set off those losses against other income, however, the same was disallowed by AO. Further, the assessee made a claim after furnishing entire details and it was his personal opinion with regard to the computation of income-tax and there might be difference of opinion with regard to nature of transaction by the assessee on the one end and the opinion of the Department on the other end and such difference of opinion, could not be construed as furnishing of inaccurate particulars of income or concealment of particulars of income. Merely because the assessee claimed a set-off of losses while filing return of income, which was subsequently disallowed by AO, however, such disallowance could not be construed as the assessee had furnished inaccurate particulars or concealed any part of his income. Hence, the penalty levied under section 271(1)(c) would not be sustainable.

REFERRED : CIT, Ahmedabad v. Reliance Petro-Products Pvt. Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC).

FAVOUR : In assessee's favour

A.Y. : 2007-08



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