The assessee\u2019s argument supra of the same being only a differential treatment of the very same, i.e., rental, income, so that there has been thus neither any concealment nor furnishing of inaccurate particulars of income, though appealing, is misconceived. The reason is simple. Yes, the assessee has apparently stated the quantum and nature of the income correctly. However, penalty u\/s 271(1)(c) is not only qua the misstatement of fact\/s but also of law. When the law is clear and well settled, as in the facts of the present case, the so called \u2018differential treatment\u2019, which the law does not admit of, i.e., qua the admitted nature of the income, is only admittedly a wrong claim in law. This is more so where the said claim has tax implication. Income has to be necessarily computed under separate, mutually exclusive heads of income, allowing deductions as per the computational provisions of the respective head of income, and toward which the Assessing Officer (A.O.) has relied on United Commercial Bank Ltd. vs. CIT [1957] 32 ITR 688 (SC) and CIT vs. Chugandas and Co. [1965] 55 ITR 17 (SC). In fact, the \u2018differential treatment\u2019 would be rendered as of no consequence, so that no penalty could be levied, where it carries the same or a similar tax burden; the whole premise thereof being only a lesser tax liability, so that whole issue therefore boils down to whether it is the case of tax avoidance, which is legally permissible, or of tax evasion, which the law seeks to penalize, and which therefore has to be adjudged on the basis or edifice of the assessee\u2019s explanation for its adopted treatment. The term \u2018differential treatment\u2019, which is thus to be examined on the touchstone of the validity or plausibility, or otherwise, of the legal claim, carries no legal meaning in itself. How could, one may ask, the assessee justify its\u2019 claim of the declared nature of the income as \u2018rent\u2019, when it declares as it as \u2018business income\u2019, claiming all expenses there-against? That is, could it be said that the assessee has furnished accurate particulars of income when it, de hors settled law, claims all regular, business expenditure, including depreciation on building, there-against, so that the assessee\u2019s claim of having stated \u2018fact\/s\u2019 correctly is also highly suspect. <\/p>\n","protected":false},"excerpt":{"rendered":"
The assessee\u2019s argument supra of the same being only a differential treatment of the very same, i.e., rental, income, so that there has been thus neither any concealment nor furnishing of inaccurate particulars of income, though appealing, is misconceived. The reason is simple. Yes, the assessee has apparently stated the quantum and nature of the income correctly. However, penalty u\/s 271(1)(c) is not only qua the misstatement of fact\/s but also of law<\/p>\n