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TMI Blog2011 (5) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... o.402 of 2005 - - - Dated:- 4-5-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. R. N. Bajoria. For the Respondent: Mrs. Asha Gourisaria Gutgutia. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated 8th August, 2005, passed by the Income-tax Appellate Tribunal, D Bench, Kolkata, in ITA No.283/Kol/2005 for the Assessment Year 1998-99 allowing an appeal filed by the Revenue against the order of CIT (Appeals) by which the CIT (Appeals) set aside an order of imposition of penalty under Section 271(1)(c) of the Income-tax Act amounting to Rs.5,52,00,300/-.Being dissatisfied, the assessee has come up with the present appeal under Section 260A of the Act. A Division Bench of this Court at the time of admission of this appeal formulated the following two substantial questions of law: (i) Whether the purported finding of the Tribunal that the claim made by your petitioner in the revised return for deduction under Section 80HHC of the Act in respect of the foreign flight catering business was not bona f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) The Assessing Officer disallowed the claim made by the assessee in the revised return for deduction under Section 80HHC of the Act and such disallowance was upheld in the appeal by the CIT (A) and on further appeal by the assessee. e) Against such order of the Tribunal disallowing the claim under Section 80HHC of the Act, the assessee filed an appeal under Section 260A of the Act before this Court which was admitted and is pending. The appeal was admitted by this Court on June 8, 2004. f) The Assessing Officer, in the meantime, initiated proceedings under Section 271(1)(c) of the Act against the assessee for making such claim for deduction under Section 80HHC of the Act in the revised return and by an order dated September 17, 2004 imposed penalty of Rs.5,52,00,300/- being the maximum penalty under the said section. g) Against the said order of the Assessing Officer under Section 271(1)(c) of the Act, the assessee preferred an appeal before the CIT (A) and the said appellate authority by his order dated November 29, 2004 set aside the order imposing penalty under Section 271(1)(c) of the Act. h) Against the said order of the CIT (A), the Revenue filed an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid contention of Mr. Bajoria and has supported the order passed by the Tribunal. According to Mrs. Gutgutia, the assessee knowing well that it had not exported the items, deliberately made wrong claim under Section 80HHC and thus, the Tribunal below rightly set aside the order passed by the CIT (A) and affirmed the order passed by the Assessing Officer with slight modification as to the quantum of penalty. Mrs. Gutgutia submits that the fact that the claim of the assessee under Section 80HHC having been refused up to the Tribunal was sufficient to initiate proceeding under Section 271(1)(c) of the Act. Mrs. Gutgutia, thus, prays for dismissal of the appeal. Therefore, the only question that arises for determination in this appeal is whether the Tribunal was justified in setting aside the order of the CIT (A) and restoring the order of the Assessing Officer with reduced amount of penalty. Before entering into the question, we keep on record that as a separate appeal under Section 260A of the Act at the instance of the assessee challenging the order of the Tribunal refusing the benefit under Section 80HHC is pending before this Court, we have in this case, not gone int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi v. Atul Mohan Bindal [2009(9) SCC 589] : (2010 AIR SCW 125), where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India v. Dharamendra Textile Processors [2008(13) SCC 369] : (AIR 2008 SC (Supp) 668 : 2008 AIR SCW 2038), as also, the decision in Union of India v. Rajasthan Spg. and Wvg. Mills [2009 (13) SCC 448] and reiterated in para 13 that :- "13. It goes without saying that for applicability of Section 271(1) (c), conditions stated therein must exist." Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under Section 276-C of the Act. The basic reason why decision in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and Anr. (cited supra) was overruled by this Court in Union of India v. Dharamendra Textile Processors (cited supra), was that according to this Court the effect and difference between Section 271(1)(c) and Section 276-C of the Act was lost sight of in case of Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and Anr. (cited supra). However, it must be pointed out that in Union of India v. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and Anr. (cited supra), where the Court explained the meaning of the terms "conceal" and "inaccurate". It was only the ultimate inference in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted the revised return claiming such benefit. The fact that such benefit has really been given to another assessee in the similar circumstances has not been denied. Thus, merely because the assessee claimed such benefit being encouraged by such fact cannot lead to penalty under Section 271(1)(c) of the Act when there is no false or inaccurate particular submitted by the assessee. We, thus, find that the case before us is covered by the decision of the Supreme court in the case of Reliance Petro-products Pvt. Ltd (supra), and the Tribunal below committed gross error of law in setting aside the order of the CIT (A) in the absence of any finding that any inaccurate particular was submitted by the assessee. Merely because, the Tribunal found that the claim was not tenable in the eye of law was not a ground of imposing the penalty. We, therefore, set aside the order of the Tribunal and restore the one passed by the CIT (A) by setting aside the order of penalty. Appeal is, thus, allowed by answering the first question in the affirmative and the second question in the negative, both against the Revenue.In the facts and circumstances, there will be, however, no order a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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