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TMI Blog2010 (8) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... e, a director in Barbtie Consultants (I) (P.) Ltd., after being processed on 16-9-2004 under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) was selected for scrutiny with the issue of notice under section 143(2) of the Act on 26-4-2005. During the course of assessment proceedings, the Assessing Officer noticed that the assessee claimed exemption for an amount of Rs. 30,26,010 under section 10 of the Act out of salary of Rs. 36,31,212 while in the Form No. 16 only an amount of Rs. 68,742 had been claimed as exempt and tax had been deducted at source from the salary of Rs. 35,41,510. Inter alia, a letter dated 9-11-2001 from Head, Urban Development, India Resident Mission, Asian Development Bank was stated to have been enclosed by the assessee along with return, mentioning as under : "This is to certify that SUREN VAKIL has been engaged by the Asian Development Bank as a consultant for the above project in the capacity of Team Leader from the period 19 November, 2001 to 31 January, 2004. As agreed by the Government of India the consultant is entitled to the courtesies, facilities, privileges and immunities in accordance with the Articles of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose for payments stated in one certificate was Job work for a client and in the other certificate purpose was not stated. 2.3 The Assessing Officer further noticed that the aforesaid agreement provided for a Team Leader to co-ordinate the operations of the Personnel and these personnel were supposed to carry out the work of the ADB project. Appointment of the personnel, conditions of their work and payment to them was governed by separate clauses in the agreement. The word Consultant in the agreement was specifically assigned to Babtie Group Ltd. Section 12.02 of article - XI under general conditions to the agreement specifically provided that the consultants and the personnel shall have the status of experts performing missions for ADB and that they shall be entitled to the privileges, exemptions and immunities conferred upon such experts. Since the assessee was working as team leader, in the light of aforesaid letter dated 9-11-2001 from the Head, Urban Development, ADB and letter dated 23-6-2006 from Principal Procurement Specialist, Central Operations Services Division 1, Asian Development Bank, the assessee claimed exemption of emoluments received by him for h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 8-12-2006 and letters dated 7-10-2007 that all the material information for computation of income was disclosed in the statement of computation of income in the returns for these assessment years. While relying upon decisions in the case of CIT v. Manilal Tarachand [2002] 254 ITR 630 (Guj.), Sarabhai Chemicals (P.) Ltd. v. CIT [2002] 257 ITR 355 (Guj.) and T. Ashok Pai v. CIT [2007] 292 ITR 11 (SC), it was contended that the assessee did not file any inaccurate particulars nor concealed any income while the entire tax due on the assessed income had already been paid at the time of filing of return along with a note supporting his bona fide claim. However, the Assessing Officer did not accept these submissions of the assessee on the ground that the assessee claimed exemption despite being aware of full facts that he was not eligible for such exemption and even during the assessment proceedings, maintained his claim. Moreover, the assessee did not submit copy of Appendix B to clause 3 of the agreement, which contained list of personnel who had carried out the work for the Asian Development Bank. Accordingly, the Assessing Officer concluded that the contention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Asian Development Bank was submitted by him without Appendix-B to clause 3 which contains the list of personnel who carried out the work of Asian Development Bank. This single act of the appellant clearly proves the deliberate and intentional concealment of the facts by the appellant. In the given facts and circumstances, the appellant s claim of full and true disclosure of facts is not at all correct. In the given facts and circumstances, the judgments [ i.e., CIT v. Maneklal Tarachand 254 ITR 630 (Guj.) and CIT v. Sarabhai Chemicals (P.) Ltd. 257 ITR 355 (Guj.) and the judgment of the Hon ble Supreme Court in the case of T. Ashok Pai v. CIT, Bangalore ] relied upon by the appellant are not at all applicable to the facts and circumstances of the appellant. Keeping in view the aforesaid facts and circumstances, it is abundantly clear that the mere fact that some figure of some particulars have been disclosed by itself, even if takes out the case from the purview of non-disclosures, it cannot by itself take out the case from the purview of furnishing inaccurate particulars. In any case, disclosure, which has been made in part in the return which is incorrect or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (page 10 of the paper book) between ADB and Babtie Group, the ld. AR pointed out that the remuneration to be paid to the assessee was budgeted in Appendix C. To a query by the Bench, the ld. AR submitted that Appendix B was not available nor it was germane to the claim of the assessee. While relying upon decisions in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC) and Sarabhai Chemicals (P.) Ltd. ( supra ), the ld. AR contended that since all the facts were disclosed during the course of assessment proceedings, penalty cannot be imposed for furnishing inaccurate particulars of income or for concealment of income. The ld. AR while referring to decisions in New Sorathia Engg. Co. v. CIT [2006] 282 ITR 642 (Guj.), and decision of the ITAT Agra Bench in the case of ITO v. Chhail Behari [2010] 36 DTR 453 added that since charge was not precise, no penalty could be imposed. On the other hand, the ld. DR supported the findings of the ld. CIT(A) in the impugned orders. 9. We have heard both the parties and gone through the facts of the case as also the decisions relied upon. We find that penalty under section 271(1)( c ) had been levied by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing penalty under section 271(1)( c ) of the Act are different than those applied for making or confirming the additions. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in section 271(1)( c ) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. The provisions of section 271(1)( c ) of the Act stipulate that if the Assessing Officer or the CIT (Appeals) or the Commissioner, in the course of proceedings under this Act, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars thereof, he may direct that such person shall pay by way of penalty a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of the concealment of particulars of his income or furnishing inaccurate particulars thereof. Explanation 1 to section 271(1)( c ) of the Act mentions that where in respect of any facts material to the computation of the total income of any person under the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an explanation which is found by the Income-tax Officer or Appellate Assistant Commissioner or the Commissioner (Appeals) to be false" occurring in clause ( A ) of the Explanation 1 to section 271(1)( c ) refers to the quantum proceedings. Therefore, in the case where no explanation was given in respect of any facts material to the computation of total income in respect of the amount added or disallowed therein or the explanation given in respect thereof was already found in such assessment proceedings to be false, there would arise a presumption that particulars of such added or disallowed income were concealed. In such cases falling under clause ( A ) of Explanation 1, there can arise no question of allowing the assessee to urge that he had a bona fide belief in the explanation which was proved to be false or which never was given, for one cannot be said to have a reasonable bona fide belief in an explanation which never was given or an explanation proved to be false. Hon ble Supreme Court in the case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519 while considering the scope of the provisions under section 271(1)( c ) of the Act observed in the following terms : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once it is so established, the assessee cannot be held liable for concealment penalty under section 271(1)( c ) of the Act. Learned counsel for the assessee has contended that there was no concealment of particulars of income by the assessee nor did the assessee furnish inaccurate particulars and, therefore, the notice under section 271(1)( c ) was issued without any basis. It does appear from the impugned orders that the assessee had disclosed material having bearing on the claim for exemption. The aforesaid letter dated 9-11-2001 of the ADB filed with return and letter dated 23-6-2006 of the Principal Procurement Specailist, ADB filed along with the submissions during the assessment proceedings, bear testimony to the claim for exemption, which was ultimately negatived by the ld. CIT(A) in the assessment year 2004-05 while the assessee accepted the findings of the Assessing Officer in the assessment years 2002-03 and 2003-04. The Assessing Officer and the ld. CIT(A) either in the assessment proceedings or even during the penalty proceedings did not doubt the genuineness of the aforesaid letters dated 9-11-2001 and 23-6-2006 of the authorities in ADB nor even doubted the bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the said claim of exemption on the strength of aforesaid letters dated 9-11-2001 and 23-6-2006 of the ADB had been furnished by the assessee, in our opinion, it is not a fit case to attract the levy of penalty under section 271(1)( c ) of the Act on that score. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars of income, by the assessee. Hon ble Punjab and Haryana High Court in the case of CIT v. Ajaib Singh Co. [2002] 253 ITR 630 have observed that merely because certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that particulars furnished by the assessee were wrong. It was held that mere disallowance of expenses per se cannot mean that assessee has furnished inaccurate particulars of its income. In the case under consideration, the assessee had given all the particulars of income and had disclosed all facts to the Assessing Officer. In such circumstances, Hon ble Delhi High Court held in the case of CIT v. Bacardi Martini India Ltd. [2007] 288 ITR 585 that no penalty was leviable. In CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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