TMI Blog2010 (4) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of income or for furnishing of inaccurate particulars of income - There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income - In the result, both the appeals filed by the Revenue stand dismissed - ITA Nos.593 & 594/Agr/2008 - - - Dated:- 15-4-2010 - SHRI R.K. GUPTA, SHRI P.K. BANSAL, JJ. Appellant by : Shri R.C. Sharma, Jr. D.R. Respondent by: Shri Pankaj Gargh, Advocate ORDER PER P.K. BANSAL, A.M.: These appeals have been filed by the Revenue against the orders of the CIT(A) dated 03.06.2008 by which the CIT(A) has deleted the penalty amounting to Rs.5,63,363/- for the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the partners. The AO disallowed such interest on the ground that the appellant has wrongly claimed deduction of interest to partners without reducing their capital by the amount of loss incurred. Such disallowance cannot be treated as concealment of income or furnishing of inaccurate particulars thereof. It shall be worthwhile to note here that mens rea is an essential ingredient of concealment and the AO has nowhere proved the required mens rea i.e. the guilty mind of the appellant during the course of penalty proceedings. The penalty proceedings being a quasi-criminal nature, the facts necessary to attract the penalty provisions shall be proved strictly. It has been held by Hon ble Supreme Court in the case of Anantharam Veerasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase for levy of penalty u/s. 271(1)(c) of I.T. Act. The penalty so levied by the AO at Rs.5,63,363/- is therefore deleted. 5. Similar type of finding given by the CIT(A) while deleting the penalty imposed for the A.Y. 2001-02. 6. Before us, the ld. D.R. vehemently contended that the claim of the assessee in respect of the interest to the partners and set off of unabsorbed depreciation was not bonafide and ultimately interest on capital was disallowed and similarly the claim of the set off of the brought forward loss it was also disallowed. The assessee has wrongly claimed the deduction in respect of the interest and remuneration to the partner amounting to Rs.14,63,278/- and due to the wrong claim the proceedings under section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished inaccurate particulars of such income, or (d) .. he may direct that such person shall pay by way of penalty, - Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, - (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false or (B) such person offers an explanation which he is not able to substantiate and [fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him], then, the amount added or disallowed in computing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts relating to the computation of total income have been disclosed by him. The presumption available under explanation to section 271(1)(c), cannot be drawn unless the case of the assessee falls under either of the clauses (a) or (b). 11. In this case, we noted that the A.O. has not brought out any specific charge for which the penalty has been imposed on the assessee under section 271(1)(c) of the Act. He has not brought out whether the assessee has concealed the particulars of income or whether the assessee has furnished inaccurate particulars of income. This is apparently clear from the finding of the A.O. given in his order. 12. We have gone through the decision of the Gujarat High Court in the case of New Sorathia Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it was held as under :- A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim, made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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