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TMI Blog2010 (5) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... making bogus purchases from various concerns belong to Mr. F.H. Rizvi. The following such purchases were noticed from the parties :- Name Amount (Rs.) Ashiyana International 18,670 R.K. Agencies 10,47,235 RV Chem 1,72,590 Wise Pharma 3,28,000 Total 15,99,295 5. During the course of assessment proceedings, it was asked the assessee to produce those parties but the assessee failed to do so despite repeat opportunities were given by the Assessing Officer. The Assessing Officer treated the said purchases of Rs. 15,99,295 as bogus purchases for assessment year 1996-97. The assessee filed appeal before the CIT(A), who confirmed the addition to the extent of 25 per cent of total purchases. The order of CIT(A) has been confirmed by the ITAT. The Assessing Officer levied penalty under section 271(1)(c), which has been confirmed by the CIT(A). The CIT(A) in principle confirmed the penalty levied by the Assessing Officer, however, he directed the Assessing Officer to recalculate the minimum penalty in respect of addition sustained. 6. The learned AR submitted that there is no conclusive material that the assessee has concealed particulars of its income or furnished inaccurate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome, he may direct that such person shall pay by way of penalty the sum mentioned in sub-clause (iii) of section 271(1)(c) of the Act. The expression used in clause (c) is 'has concealed the particulars of his income' or 'furnished inaccurate particulars of such income'. Therefore, both in cases of concealment and inaccuracy the phrase 'particulars of income' are used. The expressions "has concealed the particulars of income" and "has furnished inaccurate particulars of income" have not been defined either in section 271(1)(c) or elsewhere in the Act. The meaning of word "Particular" as noted from the judgment of the Apex Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 reads as under :- (Page 163) "As per Law of Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of account." 9. The meaning of the word "inaccurate" noted from the said judgment reads as under :- (Page 165) "In Webster's Dictionary, the word "inaccurate" has been defined as:- "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript."" 10. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im to the extent that the purchases were made from that particular party. Therefore, in the case under consideration the word "particulars" used in the section 271(1)(c) would embrace the meaning of the purchases made and not the party from whom it was made. As stated above that words "concealed", "particulars" and "inaccurate" are with regard to income not with regard to any others. From which party the purchases were made is not much important while computing the income. The important aspect in computing income is purchases. In the case under consideration, the purchases were recorded regularly in the books of account on day-to-day basis. The ITAT while deciding the quantum matter observed that the assessee must have made purchases from the market from unregistered dealers in cash and details could not be obtained from such dealers. The assessee, therefore, obtained hawala bills from Mr. F. H. Rizwi. The ITAT further observed that the CIT(A) was of the view that in these circumstances, the assessee must have inflated the purchase bills and on that account the disallowance to the extent of 25 per cent was found to be reasonable. The case of the Assessing Officer in quantum matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c facts are within the special knowledge of the assessee. Section 106 of the Indian Evidence Act, 1872, gives statutory recognition to this universally accepted rule of evidence. There is no discretion conferred on the 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 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight in the taxable turnover, was under a bona fide belief that the amount of freight did not form part of the sale price and was not includible in the taxable turnover. The contention of the assessee throughout was that on a proper construction of the definition of "sale price" in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958, and section 2(h) of the Central Sales Tax Act, 1956, the amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. This was the reason why the assessee did not include the amount of freight in the taxable turnover in the returns filed by it. Now, it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It was a highly arguable contention which required serious consideration by the Court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover, could not be said to be mala fide or unreasonable. What section 43 of the Madhya Pradesh General Sales Tax Act, 1958, requires is that the assessee should have filed a "false" return and a return cannot be said to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inclusion of the amount of freight in the taxable turnover of the assessee but allow the appeals insofar as they relate to imposition of penalty and set aside the orders passed by the Assistant Commissioner imposing penalty on the assessee." 14. If we apply the above discussions to the facts of the case under consideration we find that the assessee had tried to substantiate its claim by filing affidavit and other material in quantum matter. In quantum matter, the CIT(A) vide order sheet dated 9-1-2003 asked the assessee to produce Mr. Rizwi for examination but the assessee failed to do so. The Assessing Officer has also mentioned in the remand report, which was reproduced by the CIT(A) in quantum order in para No. 7 that summons under section 131 dated 11-10-2001 issued to Mr. Rizwi but the same was not complied by Mr. Rizwi. It was submitted by the Assessing Officer that the assessee has not availed opportunity as he did not impress upon Shri Rizwi to attend before the Assessing Officer. The grievance of the revenue is that the assessee has failed to produce party. It may be noted that when the assessee filed complete details of the party, the revenue authorities have ample p ..... 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