2009 (10) TMI 583 - AT - Income Tax

Penalty u/ s. 271(1)(c)- As per Hon ble Supreme Court in the case of Dilip N. Shroff vs. Jt. CIT & Anr. 2007 -TMI - 6564 - SUPREME Court held that the phrases concealment of income and furnishing inaccurate particulars are different. Both referred to deliberate act on the part of the assessee. Thus one cannot be substituted for the other - Even after the retrospective amendment, there is no provision that two limbs will be counted as one for the purpose of levy of penalty - Accordingly, even after retrospective amendment, there is no mistake apparent on record - The miscellaneous application is dismissed.

Summary

Issues:
1. Proper satisfaction for penalty under section 271(1)(c) - concealment vs. furnishing inaccurate particulars of income.
2. Retrospective amendment of Finance Act, 2008 - application of amended provision to penalty proceedings.

Analysis:

Issue 1: Proper satisfaction for penalty under section 271(1)(c) - concealment vs. furnishing inaccurate particulars of income:

The Tribunal, in appeal against the penalty under section 271(1)(c), observed that the satisfaction recorded by the Assessing Officer (AO) in the assessment order was for "furnishing inaccurate particulars of income," while the penalty was imposed for "concealment of particulars of income." The Tribunal, citing the case of Dilip N. Shroff vs. Jt. CIT & Anr., held that the AO lacked jurisdiction to levy penalty for concealment when the initiation of penalty proceedings was based on inaccurate particulars of income. The Tribunal emphasized the distinction between the two limbs of section 271(1)(c) and ruled in favor of the assessee, stating that the penalty cannot be imposed for reasons other than those for which the satisfaction was recorded during the assessment proceedings.

Issue 2: Retrospective amendment of Finance Act, 2008 - application of amended provision to penalty proceedings:

The Departmental Representative argued that the retrospective amendment introduced by the Finance Act, 2008, made it clear that a direction in the assessment order for the initiation of penalty proceedings would constitute proper satisfaction for penalty under section 271(1)(c). However, the counsel for the assessee contended that even after the retrospective amendment, the phrases "concealment of particulars of income" and "furnishing inaccurate particulars of income" remained distinct. The Tribunal agreed with the assessee's submission, emphasizing that the retrospective amendment did not erase the difference between the two limbs of section 271(1)(c). Citing the decision of the Hon'ble Gujarat High Court, the Tribunal held that the AO must clearly state the basis for levying the penalty, either for concealment or furnishing inaccurate particulars of income. Therefore, even with the retrospective amendment, the Tribunal concluded that there was no mistake apparent on record and dismissed the miscellaneous application.

In conclusion, the Tribunal maintained that the distinction between "concealment of particulars of income" and "furnishing inaccurate particulars of income" remained significant, and the retrospective amendment did not alter this distinction. The judgment highlighted the importance of proper satisfaction and the necessity for clarity in the basis of levying penalties under section 271(1)(c).