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A N Pahuja: These two appeals by the Revenue against two separate orders dated 13 t h January, 2009 of the ld. CIT(Appeals)-IV, Ahmedabad, for the Assessment Year 2005-06, raise the following common grounds:-

" [1] On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the penalty levied u/s 271(1)(c) of Rs.5,63,200/- on disclosure of interest income of Rs.19,63,940/- by Shri Ajay Kumarlal Tehalyani and Rs.5,78,000/- on disclosure of interest income of Rs.20,13,264/- by Smt. Radhaben K Tehalyani, in the return filed in response to notice u/s 153A, ignoring the fact that the said income was detected during the search u/s 132 of the Income Tax Act, 1961 and it was not reflected in the original return of income filed u/s 139(1), overlooking the ratio laid down by the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (2008) 306 ITR 277 (SC) wherein it was laid down that penalty u/s 271(1)(c) was civil wrong & mens rea is not is not required to be established.

5. On appeal, the learned CIT(A) cancelled the penalty in the case of Shri Ajay Kumarlal Tehalyani in the following terms:-

"2.0 I have carefully considered the contentions of the Learned Counsel as well gone through the records. On perusal of penalty order, it has been noticed that a search was conducted on the appellant's premises on 19.01.2006. The only effective issue raised in this appeal is that the Assessing Officer was not justified in imposing 100% penalty on account of disclosure of interest income earned on Foreign Currency Non- Resident(FCNR) FDRs of Rs.19,63,940/- in the return filed in response to notice issued u/s 153A declaring total income of Rs.24,95,420/- as against total income of Rs.5,31,480/- declared u/s 139(1). Based on such returns, the assessment was also completed u/s. 153A(a) r.w.s. 143(3) accepting the income returned. Learned Counsel contended that the Appellant's interest income was bonafide believed to be exempt u/s 10(15)(iv)(fa) of Income Tax Act, 1961. When the Appellant came to know, the correct legal position, the income was offered and tax paid thereon suo motu in the Return filed in response to the notice issued u/s 153A. Further, the sources of making investment in the relevant FCNR account were explained which were not doubted by the Assessing Officer. The disclosed asset was held by the appellant, there cannot be any intention not to disclose the interest accrued on Foreign Currency Non-Resident(FCNR) FDRs. However, it was not declared in the Return filed u/s 139(1) under the bonafide belief that the same continued to be exempt from tax u/s 10(15)(iv)(fa) of Income Tax Act, 1961. The Hon'ble Supreme Court in case of CIT Vs. Sureshchandra Mittal (251 ITR 009) has held that in this case, revised return showing higher income after search was filed to purchase peace and avoid litigation. The Tribunal held that burden of proving concealment is not discharged and penalty cannot be levied. The apex Court upheld above findings of ITAT. However, the Hon'ble Supreme Court in Union of India v/s. Dharmendra Textiles Processors (2008) has held that the penalty u/s 271(1)(c) is Civil Liability and the willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution u/s 276C. it has further been held that the mens rea is not an essential ingredient for imposing penalty under this section. However, Hon'ble Supreme Court has not held that in all cases where addition is confirmed, the penalty shall mechanically follow. The ratio decidendi of the judgment is confined to treating the willful concealment as not vital for imposing penalty u/s 271(1)(c). However, it may not be correct to infer that because the liability is civil liability, it 7 ITA nos.2295 & 2296/Ahd/2009 ceases to be penal in character. There is no contradiction in a liability being a civil liability and same liability being a penal liability though a civil liability cannot certainly be a criminal liability as well.

7. W e have heard both the parties and gone through the facts of the case as also the decisions relied upon. Indisputably, the assessee Shri Ajay Kumarlal Tehalyani claimed the status of RbNOR in the original return filed u/s 139(1) of the Act in the AYs 2000-01 to 2005-06 while Smt. Radhaben Kumarlal Tehalyani also claimed the same status in the AYs 2000-01,2001-02; 2004-05 & 2005-06 and non-resident in the AYs 2002-03 & 2003-04. Thus, for the year under consideration both these assessees reflected status of RbNOR in their returns filed u/s 139 of the Act even after amendment to provisions of sec. 6(6) of the Act by the Finance Act,2003 w.e.f 1.4.2004 and consequently these assessees did not reflect interest earned of their FCNR deposits, made out of remittances from UAE through banking channels on the bonafide belief that such income continued to be exempt u/s 10(15)(iv)(fa) of the Act. In terms of the amended provisions, the status of these assessees became R &OR and consequently, interest on FCNR deposits became liable to tax. However, these assessees claimed in their explanation that due to intricate and complex provisions of the Act and on the advise of the person who prepared their tax returns, status continued to be shown 9 ITA nos.2295 & 2296/Ahd/2009 as R bNOR and it was only after the search that this mistake was set right and amount of interest on FCNR deposits was offered to tax voluntarily. It is well established that making of wrong claim under some bonafide belief is not at par with concealment or giving of inaccurate information, which may call for levy of penalty under section 271(1)(c) of the Act. It is not the case of the Revenue that these assessees were not under the bonafide belief or the explanation offered by the assessee was found to be false or untrue.W e are of the view that making a wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty u/s. 271(1)(c) of the Act. Hon'ble Apex Court in CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/ 189 Taxman 322, after considering various decisions including Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/ 161 Taxman 218 (SC) and Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277 / 174 Taxman 571 (SC) concluded that a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars of regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Similar view was taken in CIT vs. Sidhartha Enterprises (2010) 322 ITR 80 (P&H) and CIT vs. Shahabad Co-op. Sugar Mills Ltd. (2010) 322 ITR 73(P&H). Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 held that there is no presumption that every person knows the law. Following this view, in ITO v. Chirag Family Trust 58 ITD 382, a co- ordinate Bench concluded that bona fide ignorance of newly inserted provisions of law, would not lead to levy of penalty under s. 271 (1) (c) of the Act .Likewise, in Sunilchandra Vohra vs. ACIT [2010) 127 TTJ (Mumbai) (UO) 100, it was held that bona fide ignorance of the law regarding applicability of provisions of the Act and the CA having not drawn the attention of the assessee to the relevant provisions of law, is a valid ground for not imposing penalty for concealment. In the instant case also, these assessees continued to claim status of RbNOR even after amendment to provisions of sec. 6(6) of the Act while the legal adviser ,who 10 ITA nos.2295 & 2296/Ahd/2009 prepared the original returns also did not draw the attention of these assessees to the relevant provisions and consequently, interest income from FCNR deposits continued to be claimed as exempt u/s 10(15)(iv)(fa) of the Act. Since the bank also did not deduct tax at source even after amendment in law, these assessees explained that they were under the bona fide belief that their income continued to be exempt. It was only after the search that they were advised that income was no longer exempt due to amendment in law and consequently, interest income from FCNR deposits in the bank was declared in their returns filed in consequence of search.