S. 271(1)(c) — Penalty for concealment of income — Whether non bifurcation of short term capital loss from the overall business loss amounted to concealment of income and furnishing of inaccurate particulars of income — Held, No.

5. 
   Nera (India) Limited v. DCIT

ITAT ‘F’ Bench, New
Delhi

D. R. Singh (JM)
and K. G. Bansal (AM)

ITA No.
107/Del./2009

A.Y. : 2004-05.
Decided on : 4-8-2009

Counsel for assessee/revenue :
A. K. Mittal/

Sunita Singh

S. 271(1)(c) —
Penalty for concealment of income — Whether non bifurcation of short term
capital loss from the overall business loss amounted to concealment of income
and furnishing of inaccurate particulars of income — Held, No.

Per D. R.
Singh :

Facts :

The assessee had
filed return of income declaring business loss of Rs.1.37 crore. During the
course of assessment proceedings, it was noticed by the AO that the Auditors
in Form No. 3CD had reported that debit to the Profit & Loss account included
capital expenditure by way of fixed assets written off amounting to Rs.l0.17
lacs, which was not added back by the assessee. The same was added to the
income (reduced from the loss) of the assessee and the business loss was
assessed accordingly. According to the AO since the assessee accepted the
mistake only after the show cause was issued, he was of the view that the
assessee had concealed his income and furnished inaccurate particulars of
income. He therefore levied penalty of Rs.3.65 lacs u/s.271(1)(c) of the Act.
On appeal, the CIT(A) confirmed the same.

Before the Tribunal
the assessee explained that instead of classifying the sum of Rs.10.17 lacs as
short term capital loss, which was allowable to be carried forward u/s.70 of
the Act, the assessee in its return made a technical error of not bifurcating
short term capital loss from the overall business loss of the company. The
assessee claimed that the same cannot by any assumption be deemed to be
concealment of income or furnishing of inaccurate particulars of the income.

Held :

According to the
Tribunal, a mere omission or negligence would not constitute a deliberate act
of suppression. It agreed with the assessee that its explanation cannot be
treated as false and inaccurate simply because of its mistake in wrongly
classifying heads of loss. Accordingly, the penalty imposed was deleted.