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TMI Blog2010 (3) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... e is directed against the order of the CIT(A)-I, Lucknow dt. 9th April, 2008 relating to asst. yr. 2003-04. 2. In this appeal, the Revenue has taken the following grounds: "1. Under the facts and in the circumstances of the case the learned CIT(A) erred in deleting the penalty by holding that concealment of income was not established whereas the facts of the case prove to the contrary. 2. Under the facts and in the circumstances of the case the learned CIT(A) erred in allowing relief to the assessee by holding that there was no concealment of income as the relevant facts were disclosed in the return of income whereas the facts of the case make it clear that excess exemption claimed under s. 10B was in the knowledge of assessee. 3. Appellant craves leave to amend any one or more of the grounds of appeal, as stated above as and when need of doing so arises." 3. This appeal by the Revenue is directed against the action of the CIT(A) in deleting the penalty of Rs. 7,96,200 levied by the AO under s. 271(1)(c) of the IT Act, 1961 (In short "the Act") for the asst. yr. 2003-04. The brief facts relating to this issue are that the assessee filed return of income on 29th March, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following decisions before the CIT(A): (1) CIT vs. Mohinder Singh (1983) 139 ITR 160 (All); (2) CIT vs. Smt. Shashi Aggarwal Ors. (2006) 201 CTR (All) 48 : (2005) 272 ITR 36 (All); (3) Banaras Textorium vs. CIT (1988) 67 CTR (All) 191 : (1988) 169 ITR 782 (All); (4) CIT vs. Mata Prasad (2005) 278 ITR 354 (All); (5) Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC); (6) Burmah Shell Oil Storage Distributing Co. of India Ltd. vs. ITO (1978) 112 ITR 592 (Cal); (7) K.G. Builders Anr. vs. Asstt. CIT (2004) 186 CTR (SC) 721 : (2004) 265 ITR 562 (SC); (8) Cement Marketing Co. of India Ltd. vs. Asstt. CST Ors. (1980) 124 ITR 15 (SC). 6. The CIT(A), after considering the submissions of the assessee, held that the concealment of income was not established, therefore, no penalty was leviable. 7. The Revenue preferred an appeal before the Tribunal and the Tribunal vide its order dt. 12th Sept., 2008 passed in ITA No. 564/Luc/2008 held as under: "8. We have considered the submissions of both the parties and carefully gone through the materials available on record. In the instant case it is not, in dispute that the assessee was engaged in the export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of report of chartered accountant given in Form 56G as per r. 16E of IT Rules 1962. Said report dt. 28th Oct., 2003 was given by Tripathi Jain, chartered accountants. Assessee claims that his assessment was bona fidely based on the report given by expert and nothing has been concealed from the Department. From the side of Revenue it has been stated that extension was granted upto 31st Dec., 2003 which was further extended upto 31st March, 2004 in respect of amount to be brought in India and since amount of Rs. 29,48,843 was not received till time of extension granted to assessee and as claim of exemption was in respect of total export sale and thus, assessee was well aware of the fact and it is in this background same lacked bona fides and blind reliance cannot be placed on the report of chartered accountant dt. 28th Oct., 2003 and in view of such subsequent development exemption was not admissible. Tribunal has considered the case of the assessee but all these development which had taken place after report has been given by chartered accountant dt. 28th Oct., 2003, i.e., extension of time upto 31st Dec., 2003 and further extension of time upto 31st March, 2004 in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R (All) 337 : (2005) 274 ITR 269 (All) wherein it has been held that the assessee did not offer any explanation regarding the source of deposit of Rs. 13,000 in the assessment proceedings or in the penalty proceedings. Hence, in view of cl. (A) of Expln. 1 to s. 271(1)(c), the amount of Rs. 13,000 had to be deemed to represent the income of the assessee in respect of which particulars had been concealed, the Hon'ble High Court has held that therefore the Tribunal was justified in invoking the provisions of explanation as they stood on 10th Feb., 1978 i.e., the date of filing the return. Shri Anadi Verma, learned Departmental Representative relied upon the decision of Tribunal, Calcutta Bench in the case of Asstt. CIT vs. Mcleod Russel (I) Ltd. (2006) 102 TTJ (Kol) 871 : (2006) 101 ITD 39 (Kol) in which it has been held that claiming of excess deduction also amounts to concealment of income. Shri Anadi Verma, learned senior Departmental Representative also relied on the following observations of the Tribunal, Pune Bench 'B' in the case of Praj Industries Ltd. vs. Jt. CIT (2009) 118 ITD 447 (Pune), the Pune Bench of the Tribunal has referred to its earlier decision in the case of Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see offered, should not be found to be false, so that the penalty would not be exigible. In other words, the explanation of the assessee if found to be false would attract penalty as envisaged in cl. (A) of Expln. 1 to s. 271(1)(c) of the Act. (vi) Merely because the assessee is not able to substantiate its explanation, penalty would not automatically be attracted if (i) such explanation is found to be bona fide and (ii) all the facts relating and material to the computation of total income have been disclosed by the assessee. (vii) Where there is nothing to suggest, gross or wilful neglect or fraud and the explanation offered by the assessee is found to be bona fide, the Expln. 1 to s. 271(1)(c) itself would not then help the Revenue to justify the penalty. (viii) The burden placed upon the assessee to rebut the presumption raised under Expln. 1 to s. 271(1)(c) would not be discharged by any fantastic or fanciful explanation. It is not the law that any and every Explanation by the assessee must be accepted. (ix) Mere offer of income by the assessee cannot justify cancellation of penalty. Though it cannot he laid down as a principle of universal application that whenever an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under s. 276C. Sec. 11AC of the Central Excise Act, 1944, and Rules 96ZO and 96ZQ of the Central Excise Rules, 1944, do not have a concept of discretion inbuilt therein. Wilful concealment is not an essential ingredient for imposing penalties thereunder." Shri Anadi Verma, learned senior Departmental Representative submitted that the Larger Bench of the Hon'ble Supreme Court in the case of Union of India vs. Dharamendra Textile Processors Ors. ruled that the object behind the enactment of s. 271(1)(c) r/w Explanations indicates that the section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under s. 276C of the Act. Shri Anadi Verma, learned senior Departmental Representative also relied on the decision of the Tribunal, Delhi Bench in the case of Naresh Kumar Verma vs. Dy. CIT (2009) 124 TTJ (Del) 156 : (20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand, Shri S.K. Garg, advocate, appearing for the assessee, reiterated the submissions made before the lower authorities. He further submitted that during the financial year 2002-03 relevant to the asst. yr. 2003-04, the assessee had made exports of the computer software and the export turnover was Rs. 2,33,66,220, which yielded a profit of Rs. 2,25,35,541. As per the statutory audit report in Form No. 56G, dt. 28th Oct., 2003, sums aggregating to Rs. 1,60,81,545 had duly been received in India (out of export turnover of Rs. 2,33,66,220 as aforesaid) in convertible foreign exchange. Shri S.K. Garg, learned counsel for the assessee further submitted that the return was due to be filed under s. 139 of the Act on or before 31st Oct., 2003. Thus, the statutory audit report depicted the position of remittances in India as existed upto date of audit report. The assessee had duly applied for extension of time, as per which first extension was granted upto 31st Dec., 2003. Subsequently, further extension was granted vide letter dt. 26th Dec., 2003 up to 31st March, 2004. Thus, as on the date of filing the return on 29th March, 2004, the assessee was armed with extension order dt. 26th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2009) 224 CTR (SC) 1 : (2009) 23 DTR (SC) 158. 12. We have heard the learned representatives of both the parties at length and have also carefully gone through the materials available on record. It is an undisputed fact that the assessee was engaged in the export of software and realising the amount out of export sales. During the year under consideration, the assessee had made exports of the computer software and the export turnover was Rs. 2,33,66,220 which yielded a profit of Rs. 2,25,36,542. There is no dispute that the assessee submitted a detailed report in Form No. 56G r/w r. 16E of the IT Rules, 1962 dt. 28th Oct., 2003. From this report, it would be clear that sums aggregating to Rs. 1,60,81,545 had duly been received in India (out of export turnover of Rs. 2,33,66,220 as aforesaid) in convertible foreign exchange. The assessee had claimed exemption under s. 10B of the Act on the basis of the aforesaid report. It is seen that the assessee had duly applied for extension of time and first extension was granted upto 31st Dec., 2003. Subsequently, further extension was granted vide letter dt. 26th Dec., 2003 upto 31st March, 2004. From these facts, it is clear that on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation was not accepted for the purpose of assessment." 14. In the instant case also the assessee gave a bona fide explanation and unreservedly gave all the documents and information without withholding any information relating to the computation of its total income. As we have already noted hereinabove that the AO has not said anything in the penalty order that the explanation offered by the assessee was false or there was lack of bona fides. At this stage, we may also observe that the AO himself was not sure whether the assessee has concealed the particulars of its income or has furnished inaccurate particulars of its income. In our considered view, the conduct of the assessee is to be seen at the time of filing the return for the simple reason that "return" is a media through which particulars of income are furnished, unless the "return" itself is non est or the same is revised/modified subsequently to make patently wrong claim. It is an undisputed fact that in the present case, the "return" was filed on 29th March, 2004, which was a valid return under s. 139(4) of the Act and there was no subsequent revision or modification of the said return (so far as the assessee is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b Alam, J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of s. 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed, equal to the duty determined under sub-s. (2) of s. 11A. That is what Dharamendra Textile decides. 24. It must, however, be made clear that what is stated above in regard to the decision in Dharamendra Textile is only insofar as s. 11AC is concerned. We make no observations (as a matter of fact there is no occasion for it) with regard to the several other statutory provisions that came up for consideration in that decision." 15. Applying the ratio laid down by the Hon'ble Supreme Court in the case of Rajasthan Spinning Weaving Mills to the facts of the present case, as we have discussed hereinabove, we are of the opinion that variation between the claim made by the appellant under s. 10B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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