TMI Blog2016 (12) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be shown that there has been concealment of particulars of income and incorrect particulars have been furnished. - Decided in favour of assessee - Tax Cases No. 28, 29 of 1998 - - - Dated:- 15-12-2016 - Ramesh Kumar Datta And Smt Anjana Mishra, JJ. For the Petitioner s : Mr. D.V.Pathy, Advoate For the Respondent s : Mr. Archana Sinha, Sr. SC, IT Mr. Suman Kumar, Mishra, Jr. SC JUDGMENT ( Per Honourable Mr. Justice Ramesh Kumar Datta ) Heard learned counsel for the petitioner-Assessee and learned Senior Standing Counsel for the Income Tax Department. Both the references have been made at the instance of the assessee arising out of two appeals filed by the assessee, namely, ITA Nos. 8 44/Pat/1992 for the assessment years 1981-82 and 1983-84. The Tribunal has referred the following question of law for the opinion of this Court:- Whether on the facts and in the circumstances of the case the Tribunal was correct in law in upholding the levy of penalty under Section 271(1) (c) of the I.T. Act for the A.Ys. 1981-82 and 1983-84? The facts may be briefly noted. A search was conducted on the premises of the assessee under Section 132 of the I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in respect of assessment years 1977-78 to 1980-81. In the penalty proceedings initiated under Section 271(1)(c) of the Act, the Assessing Officer held the assessee guilty of concealment of income by claiming false deductions of interest on bogus cash credit in the two assessment years and also on account of bogus cash credit of ₹ 10,000/- in the name of M/s. L.N.Poddar Sons (HUF) in the assessment year 1983-84 and penalties were accordingly imposed. On appeal the Deputy Commissioner of Income Tax (Appeals) had confirmed the penalties. The further appeal filed by the assessee before the ITAT was dismissed confirming the penalty. Learned counsel for the petitioner submits that the Tribunal has erred in confirming the penalty on the ground that even after the filing of the settlement application the intention of the assessee were not honest and that the assessee had surrendered the cash credit as income in the course of hearing of the settlement application when he would have found that the goings were not favourable to it before the Commission. It is further submitted that the Tribunal was wrong and has erroneously concluded that since the returns for the 2 assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the Revenue, to ascertain whether a particular amount is revenue receipt. No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding. That is how the law has been understood by this Court in Anwar Ali (supra), and we believe that to be the law still. It was also laid down that before a penalty can be imposed the entirety of the circumstances must be taken into account and must point to the conclusion that the disputed amount represents income and that the assessee has consciously concealed particulars of his income or deliberately furnished inac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT Vs. Atul Mohan Bindal (2009) 9 SCC 589, where this court was considering the same provision, the court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This court referred to another decision of this court in Union of India Vs. Dharamendra Textile Processors (2008) 13 SCC 369 as also, the decision in Union of India Vs. Rajasthan Spg. Wvg. Mills [2009) 13 SCC 448 and reiterated in paragraph 13 that: (page 13 of 317 ITR): 13. It goes without saying that for applicability of section 271(1) (c), conditions stated therein must exist. 9. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff Vs. Joint CIT was overruled by this court in Union of India Vs. Dharamendra Textile Processors, was that according to this court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in the case of Dilip N. Shroff Vs. Joint CIT. However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors, no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint CIT, where the court explained the meaning of the terms conceal and inaccurate . It was only the ultimate inference in Dilip N. Shroff Vs. Joint CIT to the effect that mens rea was an essential ingredient for the penalty under section 271(1)(c) that the decision in Dilip N. Shroff Vs. Joint CIT was overruled. Learned counsel for the respondent, on the other hand, submits that the present case is clearly a case where the Assessing Officer has come to the conclusion that the loans claimed by the assessee were bogus and therefore the interest on such loans claimed in the two years were false claims raised by the assessee making it liable fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear from the judgment under appeal. We have considered the submissions of learned counsels for the parties. One important fact that stands out is that when the assessments were made on 21.3.1984 and 31.3.1986 respectively for the two assessment years, the status of the cash credit loan of the assessee was a matter pending before the Settlement Commission and thus no final view could have been taken about them in anticipation of what the Settlement Commission would decide even if the settlement application was for the assessment years 1977-78 to 1980-81 and did not comprise the assessment years in question before the Assessing Officer. The status of the cash credit thus could only have been decided with reference to the case in which the settlement application has been filed as it is the admitted position that the borrowings have been claimed in those earlier assessment years before the Settlement Commission and the only issue before the Assessing Officer thus pertains to interest on those borrowings. Moreover, as clearly held by the Apex Court in Anant Ram s case (supra) that the penalty can be imposed only after taking into account the entirety of the circumstances which must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the loan amount may not apply to the interest claimed thereon but the effect shall normally be to the extent of disallowance of the said interest as expenditure in the few succeeding assessment years, particularly when the claim had been made much before the final surrender of the said cash credit before the Settlement Commission. Finally it has to be held that the present matter is squarely covered by the decision of the Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) wherein it was held that making an incorrect claim cannot tantamount to furnishing incorrect particulars and it has to be shown that there has been concealment of particulars of income and incorrect particulars have been furnished. In this regard reliance by learned counsel for the revenue upon the decision of the Apex Court in Dharmendra Textiles (supra) is also of no avail in view of what has been explained by the Apex Court with regard to the said decision in para-9 of the judgment in Reliance Petro Products case (supra). Thus on a consideration of the entire matters, this Court is of the view that the question of law referred by the Tribunal has to be answered in the negative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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