High Court Of Madras
CIT vs. Ganesan Builders Ltd.
Section 271(1)(c)
Asst. Year 1997-98, 1998-99
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) Nos. 637 & 638 of 2007
14th June, 2007
Counsel Appeared :
J. Narayanasamy, for the Appellant
JUDGMENT
P.D. Dinakaran, J. :
The above tax case appeals are directed against the orders of the Tribunal made in ITA Nos. 1035 and 1036/Mad/2003, dt. 14th July, 2006. 2.1 The Revenue is the appellant. The assessment years involved are 1997-98 and 1998-99. The assessee acquired shares from M/s Amaravathy Chemicals and claimed the diminution in the value of shares as revenue loss. The AO found that the assessee acquired the shares for the purpose of investment and not for the purpose of stock-in-trade and hence, the diminution in the value of shares will only be capital in nature. Accordingly, the AO holding that the assessee had wrongly claimed a notional capital loss as revenue loss and thereby reduced its tax liability, imposed penalty under s. 271(1)(c) of the IT Act, 1961, for both the assessment years. 2.2 Aggrieved, the assessee preferred appeals before the CIT(A), who, by orders dt. 3rd Feb., 2003, deleted the penalty holding that the assessee had duly disclosed the material facts and particulars of income in the audit statements filed before the AO and has not concealed any income nor furnished inaccurate particulars of income. Against the said order of the CIT(A), the Revenue filed appeals before the Tribunal, which, by its common order dt. 14th July, 2006, upheld the order of the CIT(A). 2.3 Aggrieved by the same, the Revenue has preferred the above appeals raising the following substantial questions of law :
“(i) Whether, on the facts and circumstances of the case, the Tribunal had properly exercised its discretion and was right in deleting the penalty imposed under s. 271(1)(c) ?
(ii) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the AO has to prove with evidence that there was a deliberate attempt to conceal income before he could invoke the provisions of s. 271(1)(c), ignoring the Expln. 1 to s. 271 ?”
Heard Mr. J. Narayanasamy, the learned standing counsel appearing on behalf of the Revenue. It is not in dispute that the assessee acquired shares and that there was a diminution in the value of shares acquired by the assessee. It is also not disputed that the assessee has debited the equal amount of diminution in the value of shares in the P&L a/c. The assessee claimed the diminution in the value of shares as revenue loss. It is seen from the order of the CIT(A) that the issue whether it is a business loss or not has already been decided against the assessee in a separate appeal. But, it is the concurrent finding of both the authorities below that since the issue whether it is a business loss or not has been decided against the assessee, it cannot be concluded that the assessee had filed inaccurate particulars of income, because the assessee had duly disclosed the same in the audit statements filed before the AO. Accordingly, both the authorities below held that the case does not fall under furnishing of inaccurate particulars of income, as the assessee had disclosed the writing off of the investments in the audit statements for both the assessment years and hence, levy of penalty under s. 271(1)(c) is not warranted. This Court, in CIT vs. P. Natarajan (2004) 266 ITR 219 (Mad), while observing that the power to levy penalty under s.271(1)(c) of the Act is discretionary and that discretion vested in the AO is subject to appeal and the appellate authorities are entitled to look into all the facts of a given case and decide as to whether the penalty was to be sustained or set aside, found that both the authorities below had examined all the facts and accepted the claim of the assessee therein that his failure to file the return earlier was bona fide and hence, penalty was not on the facts of that case leviable and thus, upheld the orders of the authorities below holding that there was no error in the application of law to the facts of the case. Similarly, in the instant case, it is the concurrent finding of the lower authorities that the assessee has not concealed any particulars of income nor furnished inaccurate particulars of income, as the assessee had disclosed the facts in the audit statements furnished before the AO. Hence, following the earlier decision of this Court in CIT vs. P. Natarajan (supra) as well as in view of the recent decision of the apex Court in CIT vs. P. Mohanakala (2007) 210 CTR (SC) 20 : (2007) 291 ITR 278 (SC), whereunder it is held that whenever there is a concurrent factual finding by the authorities below, the same should be accepted and no interference should be called for by the High Court, we do not find any error or legal infirmity in the order of the Tribunal so as to warrant interference. In view of the above finding no substantial questions of law arise for our consideration, the tax cases are dismissed. Consequently, Misc. Petn. No. 1 of 2007 is also dismissed.
[Citation : 299 ITR 403]
