(-1-) MGN IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1197 OF 2008 Commissioner of Income Tax......Appellant Versus M/s.Sukh Hotels Pvt. Ltd.........Respondent Mr. P.S.Sahadevan, for the Appellant. Mr.B.V. Jhaveri, for the Respondent. CORAM: F.I. CORAM: F.I. CORAM: F.I. REBELLO REBELLO REBELLO & R.S.MOHITE, JJ. R.S.MOHITE, JJ. R.S.MOHITE, JJ. DATED: 20TH MARCH, 2009 DATED: 20TH MARCH, 2009 DATED: 20TH MARCH, 2009 P.C.: P.C.: P.C.: . The Revenue is in Appeal on the following question:- "Whether on the facts and in the circumstances of the case and in law, the Hon’ble Tribunal was right in deleting the penalty u/s.271(1)(c) even though the assessee disclosed the income which was not included in the original return and there by concealed the particulars of income? 2. The proceedings by way of penalty were initiated against the respondent. The issue pertains to whether certain amounts were to be treated as revenue expenditure or capital expenditure. The assessee had treated the same in (-2-) his books as revenue expenditure. The A.O. disallowed the same holding the same to be capital expenditure. That order was not challenged by the assessee. Based on that proceedings in penalty were initiated against the assessee. A penalty was imposed. The C.I.T. (A) after considering the material on record held that there was no concealment and consequently allowed the appeal filed by the assessee. The Revenue aggrieved preferred an appeal before the Tribunal. The Tribunal noted that what the assessee had done was merely to treat the amount as revenue expenditure. This would be a difference of opinion. As the amounts were shown in the books the same would not amount to concealment. Reliance was placed in the judgment of the Supreme Court in the case of K.C. K.C. K.C. Builders vs. ACIT (2004) 265 ITR 552 (SC) Builders vs. ACIT (2004) 265 ITR 552 (SC) Builders vs. ACIT (2004) 265 ITR 552 (SC) wherein the Supreme Court had taken the view that the word "concealment" inherently carried with it the element of mens rea. The Supreme Court thereafter in Ashok Pai vs. Commissioner of Income Tax (2007) 292 ITR 11 (S.C.) has also considered the expression and has held that furnishing inadequate particulars signifies a deliberate omission for the purpose of furnishing inaccurate particulars and/or concealment. . In the present case the assessee had (-3-) disclosed in its books the expenditure incurred as capital expenditure. The issue only pertained to whether the same was to be treated as revenue or capital expenditure. Considering Section 273B of the Income Tax Act if an assessee offers explanation which is reasonable it is open to the authorities to exercise their discretion and not to impose penalty. In the instant case the C.I.T. (A) after considering the record exercised its discretion. The said exercise of discretion has been upheld by the I.T.A.T. Considering the above in our opinion the question as framed would not arise. Consequently, Appeal dismissed. (R.S.MOHITE, J.) (F.I.REBELLO,J.) (R.S.MOHITE, J.) (F.I.REBELLO,J.) (R.S.MOHITE, J.) (F.I.REBELLO,J.)