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TMI Blog2011 (11) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... A.K. SIKRI, Acting Chief Justice 1. This appeal was admitted on the following substantial question of law: Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in law in deleting penalty of Rs. 10,94,657/- levied by AO on account of filing inaccurate particulars of income/concealment of income pertaining to deduction under Section 80HHF of the Income Tax Act, 1961. 2. The aforesaid penalty was levied by the Assessing Officer (AO) under Section 271 (1) (c) of the Income Tax Act (hereinafter referred to as the Act ) on the ground that the assessee had claimed wrongful deduction under Section 80HHF of the Act amounting to Rs. 29,78,659/-. The AO observed that the necessary conditions for claiming deduction under the said Section were not satisfied, as the assessee had not exported any software, but merely provided services of technicians and helpers for shooting by foreign clients. The AO, therefore, disallowed the deduction under Section 80HHF of the Act claimed by the assessee and determined the total income of the assessee at Rs. 62,12,980. The AO also initiated proceedings under Section 271(1)(c) of the Act. 3. Insofar as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s he is not able to substantiate and fails to prove that the explanation is bona fide. The Supreme Court in a recent judgment entitled Commissioner of Income Tax Vs. Atul Mohan Bindal, 317 ITR 1 (SC) explaining the aforesaid provision in the following terms: ..A close look at Section 271(1)(c) and Explanation (1) appended thereto would show that in the course of any proceedings under the Act, inter alia, if the Assessing Officer is satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income, such person may be directed to pay penalty. The quantum of penalty is prescribed in Clause (iii). Explanation 1, appended to Section 271(1) provides that if that person fails to offer an explanation or the explanation offered by such person is found to be false or the explanation offered by him is not substantiated and he fails to prove that such explanation is bona fide and that all the facts relating the same and material to the computation of his total income has been disclosed by him, for the purposes of Section 271(1)(c), the amount added or disallowed in computing the total income is deemed to represent the concealed income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and Anr. (2007) 8 SCALE 304. The question which arises for determination in all these appeals is whether Section 11AC of the Central Excise Act, 1944 (in short the `Act') inserted by Finance Act 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. Before the Division Bench, stand of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined. The assess on the other hand referred to Section 271(1)(c) of the Income Tax Act, 1961 (in short the IT Act ) taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 (in short the Rules ) and a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the claim of the assessee was duly audited by qualified CA. Therefore, the assessee had not suppressed or concealed any material of fact with respect to this claim. He further opined that it was not a case of furnishing of inaccurate particulars of income either. On the contrary, the claim of the assessee was rejected purely on legal grounds; there was not even a suggestion either in the assessment order or in the penalty order to hold that the assessee had knowingly or deliberately furnished inaccurate particulars of income; return was prepared as per the guidance/supervision of tax consultant; there was no basis to hold that the claim was dishonestly made in collusion with the auditors. This view is upheld by the Tribunal in the following words: 6. We have considered the facts of the case and the submissions made before us. The findings of the ld. CIT (A), which have been reproduced earlier, are that the claim of the assessee was rejected on legal ground. There is no suggestion in the assessment order or the penalty order that the assessee has deliberately or knowingly furnished inaccurate particulars of income. The claim was supported by audit report and there is no basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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