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TMI Blog2010 (7) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 - - - Dated:- 30-7-2010 - V. DURGA RAO JUDICIAL MEMBER J. A.L. GEHLOT ACCOUNTANT MEMBER J. Appellant by : Mr. S.E. Dastur/P.R. Toprani Respondent by : Mr. S.K. Pahwa/Mr. Keshave Saxena ORDER PER A.L. GEHLOT, A.M.: This appeal filed by the assessee is directed against the order of CIT(A)-XX, Mumbai, passed on 23-12-2008 for the assessment year 2004-05 wherein the assessee has raised the following effective grounds of appeal:- 1. The CIT(A) erred in law and on facts in upholding levy of penalty under section 271(1)(c) in respect of alleged wrong claim of deduction under section 80 HHC inasmuch as the same was made in the following manner: (a) While making the increase in terms of the Proviso to Sub-section 80 HHC the total turnover of export business was only considered and not the total turnover of business of the appellant. (b) while calculating deduction under section 80 HHC relief available under section 80-IA was not reduced. 3. The CIT(A) erred in law and on facts in upholding levy of penalty under section 271(1)(c) in respect of the alleged wrong claim of deduction of Rs. 5,90,000 under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut provisions of the law as well as against the spirit of the law and assessee nowhere disclosed this fact in its computation of income that it has not added the loss disallowable under section 94(7) on the basis of any bona-fide reasons. Before the ITAT, the assessee did not press this ground of appeal. The AO was of the view that the assessee not only furnished inaccurate particulars of income but has also concealed the facts regarding the income. Thus, he levied penalty against this issue under section 271(1)(c) of the Act. 5. As regards deduction of Rs. 5,90,000 under section 80GGB claimed by the assessee, the AO observed that this claim is clearly contrary to the provisions of the law as the assessee has donated the sum to General Electoral Trust and not to any political party while section 80GGB clearly says that amount has to be paid to political party for claiming deduction. Thus, assessee s claim is clear contrary to the provisions of the Act and regarding which assessee has not made any disclosure in its computation of income that it has claimed deduction under section 80 GGB without paying the same to any politically party. The ITAT vide order dated 10-02-2009, in IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has disclosed full particulars. He referred the relevant portion of return of income of which photo copy has furnished in the paper book. According to schedule C-Capital gain page 6 of the income-tax return form the assessee in column A state regarding detail of capital gain/loss where it is written Please refer Annexure II giving complete details the copies of those details have been filed which are placed on the record. The learned AR further submitted that there were no specific requirement in the return form as required in amended return form ITR-6, page 17, Schedule CG capital gain Sno. 3 (d) which is applicable from AY 2007-08. The learned AR while summing up his argument submitted that after full disclosure of facts the assessee made claim under those circumstances it is not a case of concealment of particulars of income or inaccurate particulars of income. The learned AR in support of his contentions relied upon following decisions:- 1. Reliance Petroproducts Pvt.Ltd. (322 ITR 158) (SC), 2. Jhavar Properties (P.) Ltd. Vs. ACIT, 28 ITR 26 (Mum.) 3. Glorious Realties Pvt. Ltd. Vs. ITO, 29 SOT 292 The learned AR submitted that similar arguments are in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) held that in penalty proceedings, the assessee is entitled to show that he has not committed the offence and for that purpose even fresh evidence could be submitted. We, therefore, do not find substance in the submission of the learned DR in this regards. Now we come to the main issue. The proceedings under section 271(1) (C) can be initiated only if the A.O or the first Appellate authority is satisfied in the course of any proceedings under the Act as per clause (c) of the section 271(1) that any person has concealed the particulars of his income or has furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty the sum mentioned in sub-clause (iii) of clause (c) of the section 271(1). The expression used in clause (c) of the section 271(1) 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. It will be noted that as regards concealment, the expression in clause (c) of the section 271(1) is has concealed the particulars of his income and not has concealed his income . The expressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing accurate particulars. It was further held that the assessee must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff s case (supra) was upset. In Dharamendra Textile Processors case (supra), after quoting from section 271 extensively and also considering section 271(1)( c), the Court came to the conclusion that since section 271(1)( c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etection of these defaults of concealment or of furnishing inaccurate partic ulars 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 AO 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 AO 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10.8 The issue relating to bonafide and false returns in imposing penalty on the assessee under section 43 of the Madhya Pradesh General Sales Tax Act, 1958, and section 9(2) of the Central Sales Tax Act, 1956 have been examined by the Apex Court in the case of Cement Marketing Co. of India Ltd. vs. Assistant Commissioner of Sales Tax [1980] 4 Taxman 44 (SC), 124 ITR 15 (SC). Facts in brief of this case were that the assessee-company eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it, it would not be right to condemn the return as a "false" return inviting imposition of penalty. The court held that if the view canvassed on behalf of the revenue were accepted, the result would be that even if the assessee raises a bona fide contention that a particular item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held liable for penalty in case his contention is ultimately found by the Court to be not acceptable. That surely could never have been intended by the Legislature. Under the circumstance of the case the Court was of the view that the assessee could not be said to have filed "false" returns when it did not include the amount of freight in the taxable turnover shown in the returns and the Assistant Commissioner was not justified in imposing penalty on the assessee under section 43 of the Madhya Pradesh General Sales Tax Act, 1958, and section 9(2) of the Central Sales Tax Act, 1956. 10.9. From the above discussion of scheme of the Act, two important things come out are that it is the duty of the assessee to furnish particulars of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. Such column in the return has been inserted by amendment in return form, ITR-6, at page 17, Schedule CG capital gain Sno 3 (d) which is applicable from AY 2007-08. The Apex Court in the case of Reliance Petroproducts Pvt. Ld. (322 ITR 158) (at page 164 ) regarding the word particulars used in this section, of the section 271(1) (C) has held that there can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. But in the case under consideration we find that the assessee has furnished full detail and has not concealed any particulars of income or has furnished any inaccurate particular of income. In the case of Reliance Petroproducts Pvt.Ltd. (322 ITR 158) (SC) the Hon ble Supreme Court held that where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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