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TMI Blog2011 (11) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was not proved to be false. There was no dispute that all the relevant facts material to the computation of total income were duly furnished by the assessee and no deficiencies in furnishing of such facts has been pointed out by the A.O. There was thus no cause of action, for deeming fiction being triggered by the conduct of the assessee. Therefore, none of conditions stipulated in Section 271(1)(c) were satisfied - Decided in favor of assessee. - ITA Nos. 1554 (Kol) of 2010 - - - Dated:- 25-11-2011 - Mahavir Singh, C.D. Rao, JJ. Ajoy Kr. Singh for the Appellant A.K. Tulsyan for the Respondent ORDER C.D. Rao: This appeal by the department is directed against the order of ld. C.I.T.(A), Central-I, Kolkata dated 11/5/2010 for assessment year 2003-04. The only ground raised in this appeal by the department reads as under:- "1. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting penalty of Rs.1,54,84,193/- imposed u/s. 271(1)(c) for not reflecting capital gains and paying the due tax to the Central Government." 2. The Ld. A.O. initiated penalty proceeding u/s. 271(1)(c) of the Act on his observation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gain on sale of building being depreciable assets. Till the mistake has been detected by the Deptt. the same was not offered for taxation. Even in response to notice u/s 148, in its letter dt. 21.12.07 (filed on 24.12.07) the assessee stated that it had not come across any escapement of income and requested to treat the return filed u/s 139 as return in response to notice u/s. 148. The assessee has admitted the income only when the reasons recorded for notice u/s 148 was provided to them. The assessee's plea that all the facts were disclosed in its return is not tenable in view of Explanation-1 to section 147. That there was escapement of income and furnishing of inaccurate particulars in the return are very much apparent. Moreover, the assessee's filing of revised computation after detection cannot be said to be voluntary. Furthermore, mens rea is not required to be established for concealment of income or furnishing inaccurate particulars of income. Therefore, I consider it a fit case for imposition for penalty u/s. 271(1)(c) of I.T.Act, 1961" 3. On appeal before the ld. C.I.T.(A), the assessee made detailed submissions and placed reliance on several judicial pronouncements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the conduct of the assessee. This deeming fiction under section 271(1)(c) only shifts the onus of proof on the assessee, as this explanation itself provides that a penalty can only be imposed a) when there is no explanation by the assessee, (b) when the explanation given by the assessee is found to be false, and (c) when the assessee provides an explanation which he fails to substantiate and he fails to prove that the explanation was bona fide and that all the facts necessary for the same and material for computation of income have been duly disclosed by the assessee, In the instant case none of the above three conditions was satisfied. Therefore, under the scheme of section 271(1)(c), it was not a fit case for the imposition of penalty. 3.7. The Hon'ble Supreme Court in the recent judgment in the case of CIT vs Reliance Petrochemicals (P) Ltd (2010) 322 ITR 158 (SC) had opined that it must be shown that the conditions under s. 271(1)(c) must exit before the penalty is imposed. In the concluding para it was held as under: "In this behalf the observation of this Court in Shree Krishna Electricals vs State of Tamil Nadu (2009) 23 VST 249 (SC) as regards the penalty are appo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashed. 5. The learned counsel appearing on behalf of the assessee, on the other hand, by referring to the computation of income filed along with the return of income, which is placed at page-13 of the assessee's paper book, submitted that the assessee has already shown the profit on sale of fixed assets, but inadvertently not shown as capital gains. He further submitted that the assessment order, wherein the said mistake has been crept in, went upto the Tribunal on other issues and this issue has neither been pointed out by the revenue authorities nor noticed by the assessee upto the stage of the Tribunal and the said mistake was noticed only when notice u/s. 148 of the Act was issued. Since the assessee has filed all the relevant details, it cannot be construed that it has filed inaccurate particulars of income nor avoided tax. The ld. counsel, therefore, requested to uphold the action of the ld. C.I.T.(A). 6. After hearing the rival submissions and carefully perusing the material on record, we find that in the assessment order passed u/s. 147 of the Act, the penalty order passed u/s. 271(1)(c) of the Act as well as the order of the first appellate authority against which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of profit on sale of fixed assets and there could not be any concealment of income in such a situation. Explanation 1 to sec. 271(1)(c) of the Act provides that a penalty can be imposed (a) when there is no explanation by the assessee; (b) when the explanation given by the assessee is found to be false; and (c) when the assessee provides an explanation which he fails to substantiate and he fails to prove that the explanation was bona fide and that all the facts necessary for the same and material for computation of income have been duly disclosed by the assessee. In the instant case, as stated above, the assessee has given the explanation for omission and the same was not proved to be false. Further the assessee has substantiated its explanation by referring to computation of income, tax audit report u/s. 44AB etc. filed along with the return of income, which could not be denied by the department, in support of such bona fide mistake. Therefore, none of the above three conditions was satisfied to justify the levy of penalty u/s. 271(1)(c) of the Act. 6.1. The Hon'ble Supreme Court in the case of CIT vs. Reliance Petrochemicals Pvt. Ltd. [322 ITR 158 (SC)] has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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