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TMI Blog2009 (2) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that the Assessing Officer levied penalty under section 271(1)( c ) on two counts, namely, ( i ) on account of expenditure on project feasibility report and ( ii ) expenditure on market survey and research carried out by the assessee. He further pointed out that the revenue has challenged only one of the items in the ground of appeal. On the other hand, the learned DR pointed out that the revenue has challenged both the items under levy of penalty under section 271(1)( c ). 3. After hearing both the sides, we find that the revenue has challenged the order of CIT(A) wherein he has cancelled the penalty under section 271(1)( c ). Therefore, without going into technical argument, we find that the revenue has challenged the ground under section 271(1)( c ) which includes both the items on which the Assessing Officer has levied penalty. 4. Briefly, the facts of the case are that the assessee claimed expenditure of Rs. 6,68,86,331 on account of project feasibility report expenses. The assessee has also claimed expenditure of Rs. 10,00,198 on account of market research expenses. The Assessing Officer while making assess- ment, allowed 1/10th of such expenses by invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability 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 particulars of his income. The duty is enjoined upon him to make a complete disclosure of his income as well as a correct disclosure. Therefore, if the disclosure made of the particulars of income is incorrect, then also he commits breach of his duty. Such defaults entail the penal consequences contemplated by section 271(1)( c )( iii ). 5.2 That in return of income, an assessee is required to furnish particulars and accounts on which such return income has been arrived at. These may be particulars as per its books of account, if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Income from other sources. The aggregate of Item Nos. 1 to 6 was to be shown against Item No. 7. Thereafter, deductions specified below Item No. 7 were to be made in respect of brought-forward loss of earlier year and the balance was to be struck from which amount deductible under Chapter VI-A of the Act and the amount of annuity deposit were to be deducted, leading to the figure of the total income. In Part-II, deductions under Chapter VI-A were to be enumerated for working out the total deduction, which was to be carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt 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. 5.4 The income chargeable to income-tax under the head Salary is the nature of the income indicated in section 15 to be computed after making the deductions mentioned in section 16. The income under the head Income from house property under section 22 is to be computed after making deductions mentioned in section 24. The income chargeable under the head Profits and gains of business or profession is to be computed in accordance with the provisions contained in sections 30 to 43A as provided in sections 28 and 29 thereof. The income chargeable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5.5 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 made unless the assessee has been heard or has been given a reasonable opportunity of being heard. The opportunity of hearing given by the notice under section 271(1)( c ), obviously is against such concealment and inaccuracy as is detected in the assessment proceedings. This is to ensure that the assessee gets an adequate opportunity in respect of the default which is detected and alleged against him and which forms the basis of the issuance of the notice under section 271(1)( c ) and to ensure that he is not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars 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 invoke provision of section 271(1)( c ) on the basis routine and general presumptions. Whether it be a case of only concealment or of only inaccuracy or both, the particulars of income so vitiated would be specific and definite and be known in the assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a position to initiate the penalty proceedings on one or both of the grounds of default as may have been specifically and directly detected. 5.7 In addition to main provisions of concealment "has concealed the particulars of his income" or "has furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 particulars thereof is available to be drawn. 5.9 Part A of the Explanation to section 271(1)( c ) provides that if assessee 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. This explanation can, therefore, be applied only where the assessee has either not offered any explanation or where he has offered any explanation , the same found to be false by the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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