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TMI Blog2011 (11) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... These two appeals filed on 15.10.2010 by the respective assessees against two separate orders dated 27th July, 2010 of the learned CIT(A)-XXVIII, New Delhi, raise the following similar grounds:- (i) The penalty order passed by the learned Assessing Officer is bad both in law and facts of the case. (ii) That the learned Assessing Officer based the penalty order arbitrarily without considering the facts and circumstances of the case. (iii) It is prayed that the penalty imposed may please be deleted. 2. Since, similar issues were involved, these appeals were heard simultaneously for the sake of convenience and are being disposed of through this common order. 3. Facts, in brief, as per relevant orders in the case of M/s HCIL ARSSSPL Triveni (JV), a joint venture of M/s Harish Chandra (India) Ltd.,M/s ARSS Infrastructure Projects Pvt. Ltd. And M/s Triveni Enterprises constituted in terms of an agreement entered on 28.9.2004., are that e-return declaring nil income filed on 01.11.2007 by the assessee, a civil contractor after being processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act) was selected for scrutiny wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be dropped. However, the AO did not accept the contentions of the assessee and imposed a penalty of ₹ 13,52,107/- @100% of the tax sought to be evaded for furnishing inaccurate particulars of income for claiming deduction u/s 80IA of the Act. 4.1 Likewise in the case of HCIL-Kalindee-ARSSPL, the AO imposed a penalty of ₹ 23,02,665/- , relying, inter alia, on the decision in the case of Som Engg. Corpn. v. CIT [2005] 277 ITR 92/144 Taxman 18 (All.); Madanlal Kishorilal v. CIT [2005] 277 ITR 209/145 Taxman 131 (All.) and Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277/174 Taxman 571 (SC). 5. On appeal, the learned CIT(A) upheld the levy of penalty in the following terms in the case of M/s HCIL ARSSPL Triveni(JV): 6. The question for consideration is whether the claim for deduction was bona fide. In the assessment order, the AO has observed that The assessee has not been able to substantiate with the evidence that his claims are true bona fide . The AO has further observed that That was not entitled to claim this deduction ab-initio as it was neither the owner of this infrastructure nor the infrastructure belongs to it. It has me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of facts that this is a bonafide mistake on the part of the appellant and not deliberate mistake committed by the appellant is also unacceptable. The appellant was clearly not eligible for deduction u/s 80-IA in view of the conditions specified in Section 80A(4). Whatever doubt may have existed in this regard stood clarified by the insertion of the Explanation below section 80-IA(13) w.r.e.f. 01.04.2000. This Explanation was on the statute book when the assessee filed his return. It is, therefore, clear that the claim for deduction u/s 80-IA was not bona fide and not based on any reasonable interpretation of law. 10. The above discussion shows that this is not a case where the Explanation given was bona fide and there was full disclosure of facts. The provisions of Explanation 1(B) to section 271(1)(c) are applicable because the assessee has offered an explanation before the Assessing Officer, which he is not able to substantiate and has also failed to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. In view of these facts, the penalty imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce from the Chartered Accountants who opined that the aforesaid expenses qualify for amortization over a period of 10 years under section 35D of the Act. That apart, when we find that it is not a case where two opinions about the applicability of section 35D were possible. Therefore, it cannot be a case of a bona fide error on the part of the assessee. As has been pointed out above, the relief available under section 35D of the Act to a finance company is ex facie inadmissible as that is confined only to the existing industrial undertaking for their extension or for setting up a new industrial unit. It was, thus, not a 'wrong claim' preferred by the assessee, but is a clear case of 'false claim'. In CIT v. Vidyagauri Natverlal [1999] 238 ITR 91, Gujarat High Court made a distinction between wrong claim as opposed to false claim and held that if the claim is found to be false, the same would attract penalty. We may also take note of the following observations of the Supreme Court in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277. In such a case it is difficult to accept the plea that error was bona fide. (ii) Kuttookaran Machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Jurisdictional High Court in CIT v. Dharam Pal Prem Chand Ltd. in IT Appeal no. 912 of 2010 contended that levy of penalty is unjustified, there being no concealment or furnishing of inaccurate particulars thereof. The ld. AR pointed out that amendment to provisions of section 80IA of the Act vide Finance Act, 2007 w.e.f dated 01.04.2000 was made just before the date of filing of the return and escaped the attention of the assessees and the auditors. He added that deduction having been claimed on the strength of prescribed report of the CA in terms of provisions of section 80IA(7) of the Act, penalty imposed may be cancelled. On the other hand, the ld. DR supported the findings of the ld. CIT(A). 7. We have heard both the parties and gone through the facts of the case as also the decision cited by the ld. AR. As is apparent from the facts of the aforesaid case, the assessee claimed deduction u/s 80IA of the Act in their return filed on 01.11.2007 even when the Explanation below section 80IA(13) of the Act was inserted by the Finance Act ,2007 w.e.f. 01.04.2000 while the Finance bill received the assent of the President on 11th May, 2007. Indisputably, the deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;has concealed the particulars of income' and 'has furnished inaccurate particulars of income' have not been defined either in section 271 or elsewhere in the Act. However, notwithstanding the difference in the two circumstances, it is now well established that they lead to the same effect namely, keeping off a certain portion of the income from the return. According to Law Lexicon, the word conceal means: to hide or keep secret. The word 'conceal' is con+celare which implies to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of ; to withhold knowledge of. The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. In Webster's Dictionary, inaccurate has been defined as : not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript. . 7.2 The penalty u/s 271(1)(c) of the Act is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation, or (ii) he offers the explanation which is found by the AO or the CIT (Appeals) or the Commissioner to be false, or (iii) the person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him. 7.3 If the case of any assessee falls in any of these three categories, then the deeming provision provided in Explanation 1 to section 271(1)(c) come into play, and the amount added or disallowed in computing the total income shall be considered as the income in respect of which particulars have been concealed, for the purposes of clause (c) of section 271(1), and the penalty follows. On the other hand, if the assessee is able to offer an explanation, which is not found by the authorities to be false, and assessee has been able to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him, the assessee shall be out of the clutches of Explanation 1 to section 271(1)(c) of the Act, and in that case, the penalty shall not be imposed. Hon'ble Supreme Court in the case of Dilip N. Shroff v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the instant case, is whether the claim for deduction u/s 80IA of the Act, on the basis of certificate of the accountant, made by the assessee was bona fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(l)(c) of the Act. The Assessing Officer has not been able to establish that the claim of the assessee for deduction under section 80IA of the Act was not bona fide. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars thereof by the assessee. Hon'ble Apex Court in CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/ 189 Taxman 322, after considering various decisions including Dilip N. Shroff (supra) and Dharamendra Textile Processors (supra) concluded that a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Following this decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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