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TMI Blog2009 (3) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... n 73 and treated the same as deemed speculation loss and allowed to carry forward. The Assessing Officer has apportioned the interest and other expenses attributable to speculation business income at Rs. 10.73 lakhs and added the same to speculation loss and allowed to carry forward speculation loss of Rs. 34,82,000. The assessee filed appeal before the CIT(A) and CIT(A) partly allowed the appeal of the assessee. 3. Thereafter, the Assessing Officer levied penalty under section 271(1)(c) of Rs. 10,36,000 on the ground that on the one hand the assessee treated shares as its stock-in-trade and thereby deriving income from trading in shares whereas on the other hand the same shares have been treated as investment for the purpose of calculation of long-term capital gains. The CIT(A) cancelled the penalty by observing as under:- "2.5 I have gone through the facts of the case and also gone through the submissions made by the appellant. It has been held by various courts that there has to be a deliberate concealment on the part of the assessee before penalty can be levied. In the present case, main issue for levying penalty was that the appellant had claimed a particular item of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied to deeming provision, however, it being on estimate basis there cannot be penalty on estimate basis. The learned AR submitted that the assessee has neither concealed the particulars of income nor has furnished any inaccurate particulars of income for which penalty under section 271(1)(c) can be levied. The learned AR submitted that the CIT(A) has rightly cancelled the penalty. In support of his contentions, the learned AR has relied on the following decisions: 1.Alpha Associates v. Dy. CIT [2000] 66 TTJ (Mum.) 758. 2.ITO v. Roborant Investments (P.) Ltd. [2006] 7 SOT 181 (Mum.). 5.2 As regards the judgment of the Apex Court in the case of Dharamendra Textiles Processors (supra), on which reliance placed by the learned DR, the submissions of the learned AR are that on the facts the provisions of Central Excise and SEBI as regards penalty is entirely different. In Ushodaya Enterprises Ltd. v. CCT [1998] 111 STC 711 (AP) (FB); when there are two judgments of the Supreme Court which are contrary to each other, the court can follow the earlier decision which is backed by reasoning. Earlier judgments of the Supreme Court of three Judges are directly on Income-tax Act, hence sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of income. The former is direct and the latter may be indirect in its execution. 6.2 The word "conceal" is derived from the latin concelare which implies con+celare to hide. Webster in his New International Dictionary equates its meaning "to hide or withdraw from observation, to cover or keep from sight; to prevent the discovery of; to withhold knowledge of". The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. There is strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability. It is obvious that the penal provisions would operate when there is concealment of particulars of income or a failure of duty to disclose fully and truly particulars of income, imposed under the Act and the Rules thereunder. The duty is enjoined upon a person to make a correct and complete disclosure of his income and it is only when he fails in his duty by not disclosing his income or part thereof, he conceals the partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the annexure and statements accompanying it was correct and complete and that the amount of total income and other particulars shown therein were truly stated and related to the previous year relevant to the assessment year in question. It was also to be stated therein on solemn declaration that no other income accrued or arose or was received by the assessee and that there was no other income including income of any other person in respect of which the assessee was chargeable to tax under the Act. It will also be noted from the contents of the prescribed forms of the return of income that the assessee is required to give various particulars of income under different heads. For example, in the Form No. 2 of return of income prescribed for persons other than companies and those claiming exemption under section 11 during the relevant assessment years, the statement of total income in Part-I covered six heads of income, namely, Salaries, Interests on Securities, Income from house properties (the particulars of which were to be given as per Annexure-II), Profits and gains of business or profession, (the particulars of which were to be given as per Annexure II), Capital gains and In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... besides particulars other than those which related to the income of the assessee, such as his name, address, status, etc. The forms of returns are obviously prepared in the context of the duty of a person to disclose his income from various sources under various heads of income as statutorily provided and his duty to disclose his total income in the return. The extent of his total income will determine the total income-tax liability of a person. 'Total income' is defined in section 2(45) and it means the total amount of income computed in the manner laid down in the Act. Thus, for arriving at the total income, the income derived from all sources is to be considered as provided by section 5, when it is received or deemed to be received by a person. Certain incomes which are enumerated in section 10 are not included in the total income. All income for the purpose of charge of income-tax and computation of total income is required to be classified under distinct heads of income such as Salaries, Income from house property, Profit and gains of business or profession, Capital gains and Income from other Sources, as enumerated in section 14. 6.5 The income chargeable to income-tax unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar assessment assessed after hearing the evidence adduced and considering all material gathered by the ITO as provided in section 143(3). It, therefore, follows that in the assessment proceedings under section 143(2)(3), the ITO can find out whether the return of income was correct and complete. If he holds that the return of income was not correct or that it was not complete in respect of the particulars of income which were required to be stated in the return, he will reach the correct figure of total income and determine the sum payable by the assessee or refundable on the basis of such assessment. If the income chargeable to tax has escaped assessment for any assessment year, by reason of omission or failure of the assessee to disclose fully and truly all material facts necessary for his assessment, reassessment proceeding can be initiated as provided under section 147. This again shows that full and true disclosure of income is a primary obligation of the assessee. 6.6 The Assessing Officer is to give opportunity of hearing to the assessee as required under the Act. Section 274 of the Income-tax Act, 1961 provides that no order imposing a penalty under this Chapter would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has furnished inaccurate particulars of such dish/income. 6.7 There cannot be a straitjacket formula for detection of these defaults of concealment or of furnishing inaccurate particulars of income and indeed concealment of particulars of income and in accurate particulars of income may at times overlap. It depends upon the facts of the each case. In the assessment proceedings the ITO while ascertaining the total income chargeable to tax would be in a position to detect the specific or definite particulars of income concealed or of which false particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it would amount to concealment to that extent. In the same way where specific and definite particulars of income are detected as inaccurate, then such figure will also make the total income inaccurate in particulars to the extent it does not include such income. In other words the Assessing Officer cannot invoked provision of section 271(1)(c) on the basis routine and general presumptions. Whether it be a case of only concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer as to whether he can invoke the Explanation or not. Explanation 1 comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1, the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation; it should not be a fantastic or fanciful one. As indicated above, the consequence follows as a matter of law. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed the income or furnished inaccurate particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular are reproduced below:- "The Board must have issued instructions from time to time in regard to the attitude which the officers of the Department should adopt in dealing with assessees in matters affecting their interest and convenience. It appears that these instructions are not being uniformly followed. 2. Complaints are still being........... 3. Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officer should:- (a)....., (b).... 4. . . . 5. While officers should, when requested, freely advise assessees the way in which entrie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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