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TMI Blog2012 (8) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... , which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - appellant cannot be held to be guilty of either furnishing of inaccurate particulars of income or has concealed particulars of income – penalty cannot be levied – In favor of assessee - IT Appeal No. 6559 (Mum.) of 2011 - - - Dated:- 13-4-2012 - G.E. VEERABHADRAPPA, AMIT SHUKLA, JJ. N.M. Porwal and H.S. Sanghvi for the Appellant. P.C. Maurya for the Respondent. ORDER Amit Shukla, Judicial Member The present appeal has been filed by the appellant against order dated 20.07.2011 passed by CIT (Appeals)-22, Mumbai in relation to the penalty proceedings u/s. 271(1)(c) of the I.T. Act for the Assessment Year 2007-08 on the following grounds of appeals :- 1. The learned Commissioner of Income Tax (Appeals) erred in confirming penalty of ₹ 13746512/- levied by the Assessing Officer under section 271(1)(c) of the Act. Provisions of the Act ought to have been properly construed and regard being had to facts of the case no such penalty should have been confirmed. Reasons assigned by him are wrong and insufficient to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 16,13,33,970/- Book Profit u/s. 115JB As per computation of income ₹ 67,44,11,568/- Tax on Book Profit ₹ 6,74,41,157/- Since the tax computed under the provisions u/s.115JB is higher than the tax computed on the income under normal provision of the Act, income computed u/s.115JB has been considered for taxation purpose. 3. During the course of the assessment proceedings, the Assessing Officer made disallowance with regard to the claim made by the appellant u/s. 80IB for sum amounting to ₹ 16,53,410/- and this was further reduced by disallowance of ₹ 4,44,24,914/-. He has made disallowance u/s.14A also for sum amounting to ₹ 58,57,339/-. At the time of assessment, it was noticed by him, that in the computation of income attached along with the return, the assessee has shown Short Term Capital Gain of ₹ 5,87,78,833/-. The Assessing Officer required the assessee to explain as to why this income should not be considered as income for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 306 ITR 277 (SC) iii. CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) 4. In the first appeal, the CIT (Appeals) though cancelled the penalty on the issue of disallowance made u/s. 80IA, however confirmed the penalty on income treated to be as speculation income u/s. 73 read with Explanation thereto by the Assessing Officer. The relevant finding of the CIT (Appeals) is reproduced herein below :- The A.O. has also imposed penalty on the income held as Speculation income u/s. 73 of the Act. The appellant before the A.O. during penalty proceedings stated that the issue is debatable and hence the same cannot be held as furnishing inaccurate particulars. A.O. however, was not convinced with the explanation offered and stated that the provision of section 73 are clearly attracted and hence there was a deliberate attempt on the part of the assessee to reduce its taxable liability. In this connection it may be noted that quantum appeal on this issue was withdrawn by the appellant and hence was dismissed. During appellant proceedings against penalty it was submitted that the STCG on sale of investment was rightly offered for tax and hence pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come has been determined u/s. 115JB, then also the additions made under the normal provision cannot be over-looked, as it is the part of the same assessment order, wherein detailed discussion has been made by the Assessing Officer in relation to the additions, which is the subject matter of the penalty and satisfaction has been recorded in the assessment order in relation to such additions only. On merits, he heavily relied upon the orders of the CIT (Appeals) and the reasoning given by the Assessing Officer in the penalty order. 7. We have heard the rival contentions of the parties and also gone through the orders of the Ld. CIT(A) and Assessing Officer and the decisions relied upon by the learned AR. From the arguments of the parties and the impugned orders, it seems that two issues are required to be adjudicated at this stage. Firstly, whether the penalty u/s. 271(1)(c) can be levied on the additions made under the normal provisions of the Act when the income in the assessment order has been finally computed on the basis of book profit u/s.115JB and secondly, whether the penalty can be levied if the assessee had shown the income under the head capital gain and the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a legal fiction, such a legal fiction has to be taken to its logical conclusion and it cannot be held that for the purpose of penalty, normal computation would be considered even though tax has not been levied under the normal provision/computation. 8.1 The above aspect of the matter has been elaborately dealt with by the Hon'ble Delhi High Court in the case of CIT v. Nalwa Sons Investments Ltd. [2010] 327 ITR 543/194 Taxman 387, wherein the lordship after analysing the Explanation 4 to section 271(1)(c) of the Act and the judgment of Hon'ble Supreme Court in the case of CIT v. Gold Coin Health Food (P.) Ltd. [2008] 304 ITR 308/172 Taxman 386 (SC) have observed and held as under :- 20. We have considered the rival submissions. The judgment of the Supreme Court in Gold Coin's case [2008] 304 ITR 308 clarifies that even if there are loss in a particular year, penalty can be imposed as even in that situation there can be a tax evasion. As per section 271(1)(c), the penalty can be imposed when any person has concealed the particulars of his income or furnished incorrect particulars of the income. Once this condition is satisfied, quantum of penalty is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed under section 115JB of the Act which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed under section 115JB of the Act. Hence, when the computation was made under section 115JB of the Act, the aforesaid concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. The upshot of the aforesaid discussion would be to sustain the order of the Tribunal, though on different grounds. Therefore, while we do not agree with the reasoning and approach of the Tribunal, for our reasons disclosed above, we are of the opinion that penalty could not have been imposed even in respect of claim of depreciation made by the assessee. This appeal is accordingly dismissed. 8.2 The aforesaid decision and the ratio laid down by the Hon'ble High Court has also been followed by the Co-ordinate Bench of the Mumbai Tribunal in the case of Ruchi Strips Alloys Ltd. ( supra ). Thus, respectfully following the aforesaid judgments, we hold that the penalty u/s. 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or produce any new material, he still may rely upon the existing material or explanation to prove that he is not guilty of concealment or furnishing of inaccurate particulars. The presumption raised by the Explanation 1 is a rebuttable presumption and it can be rebutted by giving an explanation that the assessee was in a bonafide belief in offering such income under the particular head. Rejection of an explanation cannot be considered as resjudicata in the way of the assessee for the purpose of penalty proceedings. The primary burden of the proof even under the Explanation is on the Revenue to establish that the explanation of the assessee is false and malafide, which here in this case has not been discharged by the Assessing Officer. The reliance of the Assessing Officer on the judgment of Hon'ble Supreme Court in the case of Dharmendra Textiles Processors ( supra ) will also not help to reach to any adverse conclusion on the present facts of the case, that the penalty would be automatic. One has to see, what was the circumstances and the belief entertained by the assessee at the time of filing of the return, because that is the starting point from where it can be seen wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of Reliance Petroproducts (P.) Ltd. ( supra ) squarely applies in the appellant's case, wherein their lordships after considering the judgment of Dharmendra Textiles Processors ( supra ) has observed and held as under :- A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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