ORDER
1. The Revenue is aggrieved by an order dt. 2nd Sept., 2005, passed by the Tribunal, Delhi Bench “B”, in ITA No. 1555/Del/2005 relevant for the asst. yr. 1996-97.
2. The only question that has arisen in this case is whether the assessed is liable for penalty under Section 271(1)(c) r/w Expln. 1(B) of the IT Act, 1961. Learned Counsel for the Revenue has taken us through the relevant provision and it appears on a reading thereof that before penalty can be imposed on the assessed, there are three requirements that have to be fulfillled, namely, that in respect of facts material to the computation of his total income, the assessed offers an explanation which he is not able to substantiate, that the assessed fails to prove that his explanation is bona fide and that the assessed has not disclosed all the facts relating to his income and material to the computation of his total income.
3. In this case, the Tribunal has proceeded on a consideration of the third ingredient, which was not satisfied and, therefore, the penalty imposed on the assessed has been deleted.
4. The assessed had claimed dividend income as his business income and according to the assessed it was entitled to a deduction under Clause (baa) of the Explanation to Section 80HHC(4C). In his return, in the computation of income a note was given by the assessed which read as follows:
Dividend Rs. 14,11,930 (UTI)-Rs. 14,10,474 and shares Rs. 1,456) and interest Rs. 15,15,808 (FDRs Rs. 9,89,062, inter-corporate deposit Rs. 57,269, certificate of deposit with banks Rs. 4,46,977, Bank of Baroda Bonds Rs. 1,619, IT Department Rs. 20,890) are claimed as business income chargeable under the head ‘Profits and gains of business or profession’ and profit derived from industrial undertaking at C-51, Sector-57, Noida.
The Tribunal came to the conclusion that the assessed had disclosed all the facts, and therefore, even though it had made an erroneous claim which could not be justified in law, that’ by itself did not attract the penal provisions of the Act.
5. What is required to be considered is whether there was any enquiry that was required to be made by the AO before concluding that the assessed had furnished inaccurate or false particulars. In this case, we are of the view that no such enquiry was required to be made but there was only the need for application of the law. On the legal position, the AO was not satisfied and did not agree with the assessed but that by itself is not a ground to invoke the penalty provision of the statute.
6. Learned Counsel for the Revenue relied upon CIT v. Vidyagauri Natverlal and Ors. . In that case the question that arose was of unexplained cash credit. The Gujarat High Court made a distinction between a wrong claim as opposed to a false claim. In that case, the AO needed to make an enquiry as to whether the claim of the assessed was right or not. Insofar as the present case is concerned, the decision cited by learned Counsel for the Revenue is clearly distinguishable.
7. We find that there was full disclosure of all relevant material. It cannot be said that the conduct of the (assessed) attracted the provisions of Section 271(1)(c) of the Act.
8. In our opinion, no substantial question of law arises for our consideration.