By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
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18. (2011) 132 ITD 296 (Del)
Mrs. Maninder Sidhu vs. ACIT
A.Y.: 2004-05. Dated: 09-04-2010
Section 271(1)(c) – Set off long term capital loss against short term capital gain wrongly claimed by assessee – Withdrew the claim during course of assessment- Revenue did not prove or show falsity of facts as disclosed by assessee in computation of income – In fact revenue accepted computation of capital loss and gain – Assessee under bonafide belief that set off is allowed – in absence of any proof of falsity of facts in computation of income as submitted by assessee, penalty not to be leviedwrong claim is to be distinguished from false claim.
Facts:
The assessee had incurred long-term capital loss and short term capital gain. The loss was adjusted against the gain. However, after issue of notice u/s. 143(2), the claim of the adjustment was withdrawn in the course of hearing. Assessee explained that the adjustment was a mistake made while preparing the return. However, the AO initiated penalty proceedings u/s. 271(1)(c) of the Act as according to the him if there was no mala fide intention in making the claim, the assessee could have withdrawn the claim before the receipt of the notice. However, the claim was withdrawn only when notice was issued to the assessee.
Held:
The claim of assessee was a bona fide mistake. All facts regarding computation of the loss and the gain were furnished along with the return of income. Thus, it is neither a case of concealment of income nor furnishing inaccurate particulars of income.
Falsity of facts made by the assessee in computation of long-term capital loss or short-term capital gain was not proved by the revenue. On the contrary, computation of the loss and the profit had been accepted by the revenue.
Setting off of the loss against the gain was an inadvertent mistake by the assessee which should be taken as bona fide mistake. In absence of proof of falsity in the details regarding computation of income, it was held that the assessee cannot be charged with the penalty. In such matters, one has to distinguish between a wrong claim and a false claim. There was no falsity in the assessee’s case. Penalty ought not to have been levied on assessee in respect of inadvertent but wrong claim.
