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TMI Blog2012 (5) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,00,871/- was not realized in convertible foreign exchange in respect of the export receipts till the permissible time. The explanation of the assessee was that the claim was based on the certificate issued by BSR Co., a known firm of Chartered Accountants. The unrealized export proceeds were subsequently realized. This explanation was not accepted. It has been mentioned in the penalty order that the assessee knew that it had not realized export proceeds to the aforesaid extent. No revised return was filed in the course of assessment proceedings. The matter came to the notice only when the Assessing Officer directed the assessee to produce evidence regarding realization of export proceeds or grant of extension of time by the prescribed authorities. Therefore, penalty of Rs.17.50 lakhs was levied against minimum penalty of Rs.8,83,634/- and maximum penalty of Rs.26,50,902/-. 2. This penalty has been deleted by the learned CIT(A) by mentioning that the addition on account of non-realisation of export proceeds does not survive because the assessment order dated 30/03/2004 passed u/s 143(3) and the subsequent order dated 20/12/2006 passed u/s 143(3) read with section 263 have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10A(5) and 80HHE(4) of the Act , the deduct ion under these sections is not admissible unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant , as defined in the Explanation below sub-sect ion (2) of section 288, certifying that the deduct ion has been correctly claimed in accordance with the provisions of these sections. The assessee, in the instant case, merely made a bonafide claim for the deduct ion in terms of the said certificate while pointing out that the aforesaid amounts towards export were not realized within the stipulated period. Not even a whisper has been made in the penalty order as to which specific particulars were furnished inaccurate or were concealed. The expression '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 . Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found by the AO or the CIT (Appeals) or the Commissioner to be false, or such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income of such person as a result thereof shall for the purpose of clause (c) of section 271(1), be deemed to represent the income in respect of which particulars have been concealed. In other words, the necessary ingredients for attracting Explanation 1 to sect ion 271(1) (c) are that (i) the person fails to offer the explanation, 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. 7.2 If the case of any assessee falls in any of these three categories, then the deeming provision provided in Explanation 1 to sect ion 271(1) (c) come into pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property may not by itself be furnishing of inaccurate particulars. Even if the Explanations are taken recourse to, a finding has to be arrived at having regard to clause (A) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bonafide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income. 7.3 In the light of aforesaid observations of the Hon ble Apex Court, what is to be seen in the instant case, is whether the claim for deduction u/s 10A and 80HHE of the Act , on the basis of certificate of the accountant , made by the assessee was bonafide 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not amount to filing of inaccurate particulars of income. It can at best be a wrong claim not a false claim . In such circumstances, Hon ble Delhi High Court held in the case of Commissioner Of Income-Tax. vs Bacardi Martini India Limited., 288 ITR 585 (Del) that no penalty was leviable. In CIT vs. Harshvardhan Chemicals Minerals Ltd. (259 ITR 212) (Raj), Hon ble Rajasthan High Court upheld the finding of the Tribunal that when the assessee has claimed some amount though that is debatable, in such cases, it cannot be said that the assessee has concealed any income or furnished inaccurate particulars for evasion of the tax. Recently, Hon ble Apex Court in Reliance Petro Products(supra) held that a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Thus, merely because the assessee had claimed the expenditure in relation to exempt income, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, attract the penalty u/s 271(1)(c) of the Act. In the present case, we are of the opinion that the disallowance of claim for deductions u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed: "So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities include these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside." The situation in the present case is still better as no fault has been found with the particulars submitted by the assessee in its Return. 7.5 In view of the foregoing, we are of the opinion that mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, is no ground for levying penalty, especially when there is nothing on record to show that the explanation offered by the assessee was not bona fid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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