Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1993-94 - Whether where assessee does not include a particular item in taxable turnover under bona fide belief that he is not liable to include same, it would not be right to treat return of income as a false return inviting imposition of penalty - Held, yes - While completing assessment, Assessing Officer made additions on account of certain purchases which were not shown in closing stock and on account of amount of fee paid to Registrar of Companies for increase in share capital which was claimed by assessee as revenue expenditure whereas as per decision of Supreme Court, it was a capital expenditure - Assessing Officer held that assessee furnished inaccurate particulars of income and, therefore, levied penalty on it - On appeal, Tribunal found that amount not included in closing stock was to be included in closing stock and was to be taken in opening stock in subsequent year, thereby making zero effect to income of assessee - Similarly, Tribunal found that assessee filed its return on 4-1-1994 whereas Apex Court rendered decision on 27-2-1997 holding payment of fee to Registrar of Companies as capital expenditure - Therefore, Tribunal held that there was no concealment of income and, thus, no penalty was leviable under section 271(1)(c) - Whether any substantial question of law did arise from Tribunal's order - Held, no FACTS While making assessment, the Assessing Officer observed that the assessee-company had not shown certain purchases in the closing stock and thereby concealed the income to that extent; that the assessee had made false statement with regard to the certain payments made to 'P' and 'K'; and that the fees paid to the Registrar was claimed as revenue expendi- ture, while as per decision of the Supreme Court in the case of Brooke Bond India Ltd. v. CIT [1997] 225 ITR 798/ 91 Taxman 26, it was a capital expenditure. The Assessing Officer made addition accordingly. On appeal, the additions were upheld. Thereafter, the Assessing Officer levied penalty under section 271(1)(c). On appeal, the Commissioner (Appeals) upheld penalty, but the Tribunal…

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