2005 (11) TMI 62 - HC - Income Tax

Scope for applying section 271(1)(c) - Whether the wrong calculation on the basis of mistaken indexation could be treated to be furnishing of wrong particulars or concealment of income. - HELD THAT - There is a distinction between furnishing of wrong particulars and making a wrong calculation on the basis of the particulars furnished. If the particulars are furnished then there cannot be any question of concealment. A mistaken calculation is distinct from concealment. A mistaken indexation would not amount to furnishing of wrong particulars nor concealment within the scope of section 271(1)(c) a penal provision to be construed strictly. Thus we do not find any substance in the submission of Mr. Deb to the extent that calculation would also amount to an indirect concealment or a wrong furnishing of particulars as was held by the learned Tribunal. In our view the wrong calculation on the basis of a mistaken indexation does not come within the purview of section 271(1)(c). Hence the appeal succeeds and is allowed. The question as reframed in this order is answered in the negative.

Summary

Issues Involved:
Interpretation of section 271(1)(c) of the Income-tax Act, 1961 regarding concealment of income or furnishing wrong particulars based on mistaken indexation in calculation.

Analysis:

Issue 1: Interpretation of section 271(1)(c) - Penal nature and strict interpretation
The provisions of section 271(1)(c) are penal in nature and impose civil consequences on the assessee. The court emphasized the need to interpret the statute strictly as expressed by the Legislature through the language employed in the section. It was highlighted that the section applies when the assessee conceals income or furnishes wrong particulars.

Issue 2: Distinction between wrong calculation and concealment
The appellant argued that there is a difference between furnishing wrong particulars and making a wrong calculation. It was contended that all necessary particulars were disclosed, and the calculation was based on these disclosed details. The court noted that in this case, there was no finding of concealment, only a wrong calculation based on mistaken indexation.

Issue 3: Calculation based on mistaken indexation - Not concealment
The court examined whether a wrong calculation due to mistaken indexation could be considered concealment or wrong furnishing of particulars. It was clarified that if all particulars are disclosed, any mistake in calculation does not amount to concealment. A mistaken indexation was deemed distinct from furnishing wrong particulars or concealment under section 271(1)(c).

Conclusion:
The court rejected the argument that a wrong calculation based on mistaken indexation constitutes concealment or wrong furnishing of particulars under section 271(1)(c). The appeal was allowed, and it was held that the incorrect calculation did not fall within the scope of the penal provision. The court ruled in favor of the appellant, emphasizing the importance of accurate interpretation and application of tax laws.

This detailed analysis provides a comprehensive overview of the legal judgment, addressing the key issues involved and the court's reasoning in interpreting the relevant provisions of the Income-tax Act.