Vanaik Investors Ltd. Vs. Ito - Court Judgment

Excerpt:
this is an appeal by the assessee against the order dated 20-1-2005 of the commissioner (appeals)-xx, new delhi. in this appeal, the assessee has challenged the order of the commissioner (appeals) confirming the order of the assessing officer imposing penalty under section 271(1)(c) of the act. the facts and circumstances under which penalty was levied by the assessing officer and confirmed by the commissioner (appeals) are as follows : the assessee is a company. it owned 8,150 equity shares of vardhaman spinning & general mills ltd., which had been acquired prior to 1-4-1981. it held the said shares by way of investment and not as stock-in-trade. these shares were sold during the financial year relevant to assessment year under appeal and the capital gain thereon had been computed and shown in the return by calculating indexed cost after taking into account the fair market value as on 1-4-1981 at rs. 52.25 per share. during the year 1982, the assessee received 8, 150 bonus shares of vardhman spinning & general mills ltd. on 1:1 bonus issue made by the said company. during the previous year, the appellant-company also sold 8,150 bonus equity shares of vardhman spinning & general mills ltd. according to the assessee there was no cost of acquisition or cost of improvement for the said bonus shares, therefore, no capital gain was computed in view of the various decisions of the courts including that of the apex court in the case of cit v. b. c. srinivasa setty (1981) 128 itr 294 (sc). the assessee had given all the relevant material facts in respect of sale of 8,150 bonus shares in para 4 of the notes on accounts in schedule x of the balance sheet attached with the return of income as reproduced hereunder : "8,150 equity shares of vardhman spinning & general mills ltd. sold during the year for rs. 39,12,000 which were acquired as bonus shares in 1982 having no cost of acquisition. the sale price represents capital value of asset and hence not included in capital gains." the learned assessing officer computed the long-term capital gain on the sale of bonus shares, rejecting the claim of the assessee that since there was no cost of acquisition of the bonus shares, no capital gain could be brought to tax in view of the decision of the hon'ble supreme court in the case of b.c. srinivasa setty (supra) laying down the law that where cost of acquisition of a capital asset transferred, cannot be ascertained, then the capital gain on transfer of such capital cannot be brought to tax. the assessing officer thus brought to tax the sum of rs. 39,12,000 being the sale consideration received on transfer of bonus shares under the head 'capital gain'.in the assessment order the assessing officer also made a further addition of rs. 10,59,500 to the capital gain assessed in respect of the original shares of vardhman spinning and general mills ltd., in respect of which the assessee himself had offered the capital gain to tax in the return of income. the assessing officer held that the market value of the shares as per quotation on the stock exchange were more than the price at which the sale was made by private negotiation, therefore, he held that the assessee had suppressed the sale price of shares and made the said addition of rs. 10,59,500. the assessing officer initiated penalty proceedings under section 271(1)(c) for furnishing of inaccurate particulars of income not for the addition of rs. 10,59,500 mentioned above but for the addition of rs. 39,12,000 in respect of sale of bonus shares as per the sale price disclosed by the appellant in respect of bonus shares only alleging that the assessee had furnished inaccurate particulars of income. aggrieved by the order of the assessing officer, the assessee referred appeal before the commissioner (appeals) against the two additions of rs. 39,12,000 and rs. 10,59,500 made in the computation of capital gain. the commissioner (appeals) deleted both the additions made by the assessing officer and the income returned stood accepted without any addition. however, in the 2nd appeal, the hon'ble itat reversed the decision of the commissioner (appeals) only in respect of bonus shares amounting to rs. 39,12,000 and restored the finding of the assessing officer and held that the reliance of the assessee on the decision of supreme court in b.c. srinivasa setty's case (supra) upheld by the commissioner (appeals), was not justified.in the light of the aforesaid findings in the quantum proceedings, penalty proceedings were initiated. in response to show-cause notice, the assessee submitted that there was no mens rea on its part as it was under bona fide belief that the decision of the hon'ble supreme court in the case of b.c srinivasa setty (supra) was squarely applicable in their case and that it had no guilty intention to evade tax particularly when all the material facts regarding the sale or bonus shares were duly pointed out in the p&l a/c. and schedule 10 to the balance sheet. the assessing officer however held as follows : "i have gone through the assessee's reply and find it to be totally misplaced. in the assessment order the assessing officer had clearly brought out why the decision of the hon'ble supreme court in the case of b.c. srinivasa shetty was not applicable in the assessee's case as the issue before the apex court was regarding the taxability of capital gains arising out of the sale of "goodwill" and not on the sale of bonus shares. the assessing officer had categorically stated that assessee's reliance upon the order of the hon'ble supreme court was absolutely incorrect instead the decision of the jurisdictional high court i.e., hon'ble delhi high court in the case of m/s. dalmia investment company v. cit was more applicable as the issue before the court was akin to the assessee's case and dealt with the capital gains on bonus shares. it may be pointed out that the hon'ble supreme court declined to interfere in the orders of the hon'ble delhi high court and as such it had become the law of the land. these decisions had been pronounced before the assessee had filed its return, but by claiming its capital gains on the sale of bonus shares to be exempt, despite of the decision of the apex court to the contrary, the assessee-company thus blatantly and wilfully sought to evade tax in terms of the explanation 4 below section 271(1)(c) of the income tax act, 1961. i therefore, hold the assessee to be in default in terms of section 271 (1)(c) of the act and impose a penalty of rs. 13,49,640." on appeal by the assessee, the commissioner (appeals) confirmed the order of the assessing officer imposing penalty. hence, the present appeal before the tribunal.we have heard the submissions of the learned counsel for the assessee as well as the learned departmental representative. the learned counsel for the assessee submitted that the assessee cannot be said to have furnished inaccurate particulars of income. the claim made by the assessee that on sale of bonus shares there was no cost of acquisition and therefore, for want of provision for determination the cost of acquisition there cannot be any charge to capital gain tax in terms of the decision of the hon'ble supreme court in the case of b.c. srinivasa setty (supra) was a bona fide claim. it was further submitted by him that the decision of the hon'ble supreme court in the case of cit v.dalmia investment co. ltd. (1964) 52 itr 567 dealt with a question as to how a dealer in share holding original and bonus shares should value the bonus shares. in that context, the supreme court had held that the bonus shares had to be valued by spreading cost of the old shares over old shares and new bonus shares. according to him, the question as to what was the cost of acquisition of bonus shares in the context of capital gain was not the question before the hon'ble supreme court in the case of dalmia investment co. ltd. (supra). as far as the decision of the hon'ble delhi high court in the case of escorts farms (ramgarh) ltd. v. cit (1983) 143 itr 749 (del), the issue was with regard to cost of acquisition of original shares when subsequently bonus shares are issued in respect of a person holding original shares. in that context, the hon'ble delhi high court held that the cost of the original shares has to be determined by spreading over the cost over both the original and bonus shares. the question of cost of acquisition of bonus shares was again not the subject-matter of dispute before the hon'ble high court. though one could say that by implication, the ratio in the case of escorts farms (ramgarh) ltd. (supra), can only lead to a conclusion that the bonus shares did have a cost of acquisition, yet the legal position was not clear and a claim based on a not so well settled legal position cannot be said to be not a bona fide claim. it was therefore, contended by the learned counsel for the assessee that the plea of the assessee that cost of acquisition of bonus shares has to be taken as nil could still be raised as an issue by an assessee. in other words, it was submitted by him that this question had not directly been considered in any of the decisions rendered. in any event, it was submitted by him that the hon'ble calcutta high court in the case of sutlej cotton mills ltd. v. cit (1979) 119 itr 666 (cal), had taken a view that subsequent issue of bonus shares does not affect the cost of acquisition of original shares. if this ratio is applied then the cost of bonus shares has to be taken as not capable of being determined.similar view was taken by the hon'ble calcutta high court in the case of cit v. steel group ltd. (1981) 131 itr 234 (cal.). it was further submitted by him, that the hon'ble supreme court in the case of escorts farms (ramgarh) ltd. v, cit (1996) 222 itr 509 (sc) settled the issue and ultimately agreed the view taken by the hon'ble delhi high court.in short, it was submitted by the learned counsel for the assessee that the legal position with regard to the cost of acquisition of the bonus shares was in doubt or dispute and was ultimately resolved by the hon'ble supreme court only on 26-9-1996 when the decision of the supreme court was pronounced. it cannot therefore be said that the claim by the assessee was without any basis. it was also pointed out that the assessee filed return of its income in the present case on 30-11-1995 much prior to the judgment of the supreme court in the case of escorts farms (ramgarh) ltd. (supra). it was, therefore, submitted that the assessee cannot be said to have furnished inaccurate particulars of income. it was also submitted by him that the commissioner (appeals) had agreed with the view of the assessee and the tribunal ultimately reversed the view of the commissioner (appeals).the fact that one of the' authorities, in the hierarchy of judicial remedy, provided under the act, has accepted the claim of the assessee can only lead to the conclusion that the claim made by the assessee was a bona fide claim. in such circumstances, it was contended by him, it cannot be said that the assessee furnished inaccurate particulars. it was submitted by him that the claim made by the assessee based on judicial decisions even though the claim was misplaced cannot lead to an inference that an assessee furnished inaccurate particulars of income unless the view taken by the assessee was an absurd view or a totally untenable view in law. with regard to applicability of explanation 1, it was submitted by him that facts material to computation of total income had been furnished by the assessee and the explanation offered by the assessee though was not accepted but was a bona fide explanation and all facts had material to computation of income had been disclosed by the assessee. he therefore, submitted that even under explanation 1 to section 271 (1), the assessee had discharged his onus. consequently it was submitted by him that the penalty imposed is liable to be cancelled.the learned departmental representative, on the other hand, placed strong reliance on the order of the revenue authorities and in particular it was argued by the learned departmental representative that after the decision of the hon'ble supreme court in the case of k.p. madhusudhanan v. cit (2001) 251 itr 99 (sc), the burden of proof was on the assessee, to show that he has not furnished inaccurate particulars. it was submitted by him that the plea taken by the assessee was not sustainable even according to the decision of the hon'ble delhi high court. therefore, the explanation offered by the assessee has construed as false and penalty has to be imposed.we have considered the rival submissions. as rightly contended by the learned counsel for the assessee, the facts material to computation of income of the assessee had been duly disclosed. the question is as to whether the particulars furnished were incorrect. we have already noticed that the assessee in a note to the accounts in schedule x had duly disclosed the fact that the bonus shares were sold for a consideration of rs. 39,12,000 and since the bonus shares did not have any cost of acquisition, they were to be considered as capital receipts not chargeable to tax under the head 'capital gain'. the plea of the assessee was based on the absence of any judicial pronouncement on the question of valuation of cost of acquisition, when the capital asset transferred is bonus shares owned by an assessee. as rightly pointed out by the learned counsel for the assessee, in none of the decisions this question had directly come up for consideration. no doubt, the delhi high court in the case of escorts farms (ramgarh) ltd. (supra) had taken a view that the cost of original shares will have to be determined by spreading its cost over the bonus shares as well as the original shares. this was in the context of capital gain on transfer of the original shares. by implication it could be said that the bonus shares will therefore have a cost of acquisition. but contrary view had been expressed by the hon'ble calcutta high court in case of sutlej cotton mills ltd. (supra) and steel group ltd. (supra). these conflicting judicial pronouncements were rendered much earlier to the filing of the return by the assessee. the hon'ble supreme court, however, settled the issue in the case of escorts farms (ramgarh) ltd. (supra), approving the view taken by the delhi high court. this decision was rendered on 26-9-1996. the assessee however, filed its return on 30-11-1996 much prior to the decision of the supreme court.the ratio of supreme court, by implication can lead to the conclusion that the cost of acquisition of bonus shares has to be taken by spreading over the cost of original shares over the original shares and the bonus shares. the claim made by the assessee based on judicial decisions, even though the claim was misplaced, cannot lead to an inference that an assessee furnished inaccurate particulars of income unless the view taken by the assessee was an absurd view or a totally untenable view in law. under these circumstances it cannot be said that the assessee furnished inaccurate particulars of income. even the burden that lay on the assessee under explanation 1 to section 271(1), in our view stands discharged. the assessee had offered explanation with regard to facts material to computation of his total income. the assessee has also substantiated that the explanation offered was bona fide and all facts relating to the sale of bonus shares had been disclosed in the accounts annexed to the return of income. thus, all facts material to computation of assessee's income had been duly disclosed. in these circumstances, the onus that lay on the assessee under explanation 1 also stands duly discharged. the fact that the additions were confirmed in the quantum proceedings is not conclusive in the assessment proceedings and the same cannot be the sole basis on which the penalty that can be imposed. we are, therefore, of the view that on the facts and circumstances of the present case, no penalty ought to have been imposed. we therefore, direct that the penalties imposed be deleted/cancelled.

Judgment:
This is an appeal by the assessee against the order dated 20-1-2005 of the Commissioner (Appeals)-XX, New Delhi. In this appeal, the assessee has challenged the order of the Commissioner (Appeals) confirming the order of the assessing officer imposing penalty under section 271(1)(c) of the Act. The facts and circumstances under which penalty was levied by the assessing officer and confirmed by the Commissioner (Appeals) are as follows : The assessee is a company. It owned 8,150 equity shares of Vardhaman Spinning & General Mills Ltd., which had been acquired prior to 1-4-1981. It held the said shares by way of investment and not as stock-in-trade. These shares were sold during the financial year relevant to assessment year under appeal and the Capital Gain thereon had been computed and shown in the return by calculating indexed cost after taking into account the fair market value as on 1-4-1981 at Rs. 52.25 per share. During the year 1982, the assessee received 8, 150 bonus shares of Vardhman Spinning & General Mills Ltd. on 1:1 bonus issue made by the said company. During the previous year, the appellant-company also sold 8,150 bonus equity shares of Vardhman Spinning & General Mills Ltd. According to the assessee there was no cost of acquisition or cost of improvement for the said bonus shares, therefore, no capital gain was computed in view of the various decisions of the Courts including that of the Apex Court in the case of CIT v. B. C. Srinivasa Setty (1981) 128 ITR 294 (SC). The assessee had given all the relevant material facts in respect of sale of 8,150 Bonus Shares in Para 4 of the Notes on Accounts in Schedule X of the Balance Sheet attached with the return of income as reproduced hereunder : "8,150 Equity Shares of Vardhman Spinning & General Mills Ltd. sold during the year for Rs. 39,12,000 which were acquired as bonus shares in 1982 having no cost of acquisition. The sale price represents capital value of asset and hence not included in capital gains." The learned assessing officer computed the long-term capital gain on the sale of bonus shares, rejecting the claim of the assessee that since there was no cost of acquisition of the bonus shares, no capital gain could be brought to tax in view of the decision of the Hon'ble Supreme Court in the case of B.C. Srinivasa Setty (supra) laying down the law that where cost of acquisition of a capital asset transferred, cannot be ascertained, then the capital gain on transfer of such capital cannot be brought to tax. The assessing officer thus brought to tax the sum of Rs. 39,12,000 being the sale consideration received on transfer of bonus shares under the head 'Capital gain'.

In the assessment order the assessing officer also made a further addition of Rs. 10,59,500 to the capital gain assessed in respect of the original shares of Vardhman Spinning and General Mills Ltd., in respect of which the assessee himself had offered the capital gain to tax in the return of income. The assessing officer held that the market value of the shares as per quotation on the Stock Exchange were more than the price at which the sale was made by private negotiation, therefore, he held that the assessee had suppressed the sale price of shares and made the said addition of Rs. 10,59,500. The assessing officer initiated penalty proceedings under section 271(1)(c) for furnishing of inaccurate particulars of income not for the addition of Rs. 10,59,500 mentioned above but for the addition of Rs. 39,12,000 in respect of sale of bonus shares as per the sale price disclosed by the appellant in respect of bonus shares only alleging that the assessee had furnished inaccurate particulars of income. Aggrieved by the order of the assessing officer, the assessee referred appeal before the Commissioner (Appeals) against the two additions of Rs. 39,12,000 and Rs. 10,59,500 made in the computation of capital gain. The Commissioner (Appeals) deleted both the additions made by the assessing officer and the income returned stood accepted without any addition. However, in the 2nd appeal, the Hon'ble ITAT reversed the decision of the Commissioner (Appeals) only in respect of bonus shares amounting to Rs. 39,12,000 and restored the finding of the assessing officer and held that the reliance of the assessee on the decision of Supreme Court in B.C. Srinivasa Setty's case (supra) upheld by the Commissioner (Appeals), was not justified.

In the light of the aforesaid findings in the quantum proceedings, penalty proceedings were initiated. In response to show-cause notice, the assessee submitted that there was no mens rea on its part as it was under bona fide belief that the decision of the Hon'ble Supreme Court in the case of B.C Srinivasa Setty (supra) was squarely applicable in their case and that it had no guilty intention to evade tax particularly when all the material facts regarding the sale or bonus shares were duly pointed out in the P&L A/c. and Schedule 10 to the Balance Sheet. The assessing officer however held as follows : "I have gone through the assessee's reply and find it to be totally misplaced. In the assessment order the assessing officer had clearly brought out why the decision of the Hon'ble Supreme Court in the case of B.C. Srinivasa Shetty was not applicable in the assessee's case as the issue before the Apex Court was regarding the taxability of capital gains arising out of the sale of "goodwill" and not on the sale of bonus shares. The assessing officer had categorically stated that assessee's reliance upon the order of the Hon'ble Supreme Court was absolutely incorrect instead the decision of the jurisdictional High Court i.e., Hon'ble Delhi High Court in the case of M/s. Dalmia Investment Company v. CIT was more applicable as the issue before the court was akin to the assessee's case and dealt with the capital gains on bonus shares. It may be pointed out that the Hon'ble Supreme Court declined to interfere in the orders of the Hon'ble Delhi High Court and as such it had become the law of the land. These decisions had been pronounced before the assessee had filed its return, but by claiming its capital gains on the sale of bonus shares to be exempt, despite of the decision of the Apex Court to the contrary, the assessee-company thus blatantly and wilfully sought to evade tax in terms of the Explanation 4 below section 271(1)(c) of the Income Tax Act, 1961. I therefore, hold the assessee to be in default in terms of section 271 (1)(c) of the Act and impose a penalty of Rs. 13,49,640." On appeal by the assessee, the Commissioner (Appeals) confirmed the order of the assessing officer imposing penalty. Hence, the present appeal before the Tribunal.

We have heard the submissions of the learned counsel for the assessee as well as the learned departmental Representative. The learned Counsel for the assessee submitted that the assessee cannot be said to have furnished inaccurate particulars of income. The claim made by the assessee that on sale of bonus shares there was no cost of acquisition and therefore, for want of provision for determination the cost of acquisition there cannot be any charge to capital gain tax in terms of the decision of the Hon'ble Supreme Court in the case of B.C. Srinivasa Setty (supra) was a bona fide claim. It was further submitted by him that the decision of the Hon'ble Supreme Court in the case of CIT v.Dalmia Investment Co. Ltd. (1964) 52 ITR 567 dealt with a question as to how a dealer in share holding original and bonus shares should value the bonus shares. In that context, the Supreme Court had held that the bonus shares had to be valued by spreading cost of the old shares over old shares and new bonus shares. According to him, the question as to what was the cost of acquisition of bonus shares in the context of capital gain was not the question before the Hon'ble Supreme Court in the case of Dalmia Investment Co. Ltd. (supra). As far as the decision of the Hon'ble Delhi High Court in the case of Escorts Farms (Ramgarh) Ltd. v. CIT (1983) 143 ITR 749 (Del), the issue was with regard to cost of acquisition of original shares when subsequently bonus shares are issued in respect of a person holding original shares. In that context, the Hon'ble Delhi High Court held that the cost of the original shares has to be determined by spreading over the cost over both the original and bonus shares. The question of cost of acquisition of bonus shares was again not the subject-matter of dispute before the Hon'ble High Court. Though one could say that by implication, the ratio in the case of Escorts Farms (Ramgarh) Ltd. (supra), can only lead to a conclusion that the Bonus shares did have a cost of acquisition, yet the legal position was not clear and a claim based on a not so well settled legal position cannot be said to be not a bona fide claim. It was therefore, contended by the learned counsel for the assessee that the plea of the assessee that cost of acquisition of bonus shares has to be taken as nil could still be raised as an issue by an assessee. In other words, it was submitted by him that this question had not directly been considered in any of the decisions rendered. In any event, it was submitted by him that the Hon'ble Calcutta High Court in the case of Sutlej Cotton Mills Ltd. v. CIT (1979) 119 ITR 666 (Cal), had taken a view that subsequent issue of bonus shares does not affect the cost of acquisition of original shares. If this ratio is applied then the cost of bonus shares has to be taken as not capable of being determined.

Similar view was taken by the Hon'ble Calcutta High Court in the case of CIT v. Steel Group Ltd. (1981) 131 ITR 234 (Cal.). It was further submitted by him, that the Hon'ble Supreme court in the case of Escorts Farms (Ramgarh) Ltd. v, CIT (1996) 222 ITR 509 (SC) settled the issue and ultimately agreed the view taken by the Hon'ble Delhi High Court.

In short, it was submitted by the learned counsel for the assessee that the legal position with regard to the cost of acquisition of the bonus shares was in doubt or dispute and was ultimately resolved by the Hon'ble Supreme Court only on 26-9-1996 when the decision of the Supreme Court was pronounced. It cannot therefore be said that the claim by the assessee was without any basis. It was also pointed out that the assessee filed return of its income in the present case on 30-11-1995 much prior to the judgment of the Supreme Court in the case of Escorts Farms (Ramgarh) Ltd. (supra). It was, therefore, submitted that the assessee cannot be said to have furnished inaccurate particulars of income. It was also submitted by him that the Commissioner (Appeals) had agreed with the view of the assessee and the Tribunal ultimately reversed the view of the Commissioner (Appeals).

The fact that one of the' authorities, in the Hierarchy of Judicial Remedy, provided under the Act, has accepted the claim of the assessee can only lead to the conclusion that the claim made by the assessee was a bona fide claim. In such circumstances, it was contended by him, it cannot be said that the assessee furnished inaccurate particulars. It was submitted by him that the claim made by the assessee based on judicial decisions even though the claim was misplaced cannot lead to an inference that an assessee furnished inaccurate particulars of income unless the view taken by the assessee was an absurd view or a totally untenable view in law. With regard to applicability of Explanation 1, it was submitted by him that facts material to computation of total income had been furnished by the assessee and the explanation offered by the assessee though was not accepted but was a bona fide explanation and all facts had material to computation of income had been disclosed by the assessee. He therefore, submitted that even under Explanation 1 to section 271 (1), the assessee had discharged his onus. Consequently it was submitted by him that the penalty imposed is liable to be cancelled.

The learned Departmental Representative, on the other hand, placed strong reliance on the order of the revenue authorities and in particular it was argued by the learned departmental Representative that after the decision of the Hon'ble Supreme Court in the case of K.P. Madhusudhanan v. CIT (2001) 251 ITR 99 (SC), the burden of proof was on the assessee, to show that he has not furnished inaccurate particulars. It was submitted by him that the plea taken by the assessee was not sustainable even according to the decision of the Hon'ble Delhi High Court. Therefore, the explanation offered by the assessee has construed as false and penalty has to be imposed.

We have considered the rival submissions. As rightly contended by the learned counsel for the assessee, the facts material to computation of income of the assessee had been duly disclosed. The question is as to whether the particulars furnished were incorrect. We have already noticed that the assessee in a note to the accounts in Schedule X had duly disclosed the fact that the bonus shares were sold for a consideration of Rs. 39,12,000 and since the bonus shares did not have any cost of acquisition, they were to be considered as capital receipts not chargeable to tax under the head 'Capital gain'. The plea of the assessee was based on the absence of any judicial pronouncement on the question of valuation of cost of acquisition, when the capital asset transferred is bonus shares owned by an assessee. As rightly pointed out by the learned counsel for the assessee, in none of the decisions this question had directly come up for consideration. No doubt, the Delhi High Court in the case of Escorts Farms (Ramgarh) Ltd. (supra) had taken a view that the cost of original shares will have to be determined by spreading its cost over the bonus shares as well as the original shares. This was in the context of capital gain on transfer of the original shares. By implication it could be said that the bonus shares will therefore have a cost of acquisition. But contrary view had been expressed by the Hon'ble Calcutta High Court in case of Sutlej Cotton Mills Ltd. (supra) and Steel Group Ltd. (supra). These conflicting judicial pronouncements were rendered much earlier to the filing of the return by the assessee. The Hon'ble Supreme Court, however, settled the issue in the case of Escorts Farms (Ramgarh) Ltd. (supra), approving the view taken by the Delhi High Court. This decision was rendered on 26-9-1996. The assessee however, filed its return on 30-11-1996 much prior to the decision of the Supreme Court.

The ratio of Supreme Court, by implication can lead to the conclusion that the cost of acquisition of bonus shares has to be taken by spreading over the cost of original shares over the original shares and the bonus shares. The claim made by the assessee based on judicial decisions, even though the claim was misplaced, cannot lead to an inference that an assessee furnished inaccurate particulars of income unless the view taken by the assessee was an absurd view or a totally untenable view in law. Under these circumstances it cannot be said that the assessee furnished inaccurate particulars of income. Even the burden that lay on the assessee under Explanation 1 to section 271(1), in our view stands discharged. The assessee had offered explanation with regard to facts material to computation of his total income. The assessee has also substantiated that the explanation offered was bona fide and all facts relating to the sale of bonus shares had been disclosed in the accounts annexed to the return of income. Thus, all facts material to computation of assessee's income had been duly disclosed. In these circumstances, the onus that lay on the assessee under Explanation 1 also stands duly discharged. The fact that the additions were confirmed in the quantum proceedings is not conclusive in the assessment proceedings and the same cannot be the sole basis on which the penalty that can be imposed. We are, therefore, of the view that on the facts and circumstances of the present case, no penalty ought to have been imposed. We therefore, direct that the penalties imposed be deleted/cancelled.