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TMI Blog2012 (9) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... on 271(1)( c ) - in favour of assessee. - INCOME TAX APPEAL NO.3899 OF 2010 - - - Dated:- 14-8-2012 - S.J. VAZIFDAR AND M.S. SANKLECHA, JJ. Mr.A.R. Malhotra with Ms.Padma Divakar for the Appellant. Mr.J.D. Mistry, Senior Counsel with Mr.Atul K. Jasani for the Respondent. JUDGMENT (PER S.J. VAZIFDAR, J.) :- 1. This is an appeal under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal dated 8.12.2009 dismissing the Revenue s appeal being ITA No.24/Mum/2006 and partly allowing the respondent's appeal being ITA No.85/Mum/2006 pertaining to the assessment year 2000-2001. 2. The appellant has sought to raise the following questions of law :- (A) Whether on the facts and in the circumstances and in law, the Tribunal was right in deletion of penalty to the extent of Rs.11,47,987/- as imposed by the A.O. on account of issue expenses under section 35D ? (B) Whether on the facts and in the circumstances and in law, the Tribunal was right in deletion of penalty to the extent of Rs.9,49,399/- as imposed by the A.O. on account of diminution in value of shares investment ? 3. The matter is clearly covered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon section 271(1)(c) which, in so far as it is relevant to this appeal, reads as under :- 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) If the Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person, or (a) ............................. (b) ............................. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. (d) .............................. he may direct that such person shall pay by way of penalty, - (i) ..................... (ii) .................... (iii) in the cases referred to in clause (c) [or clause (d)], [in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income [or fringe benefits] or the furnishing of inaccurate particulars of such income [or fringe benefits]. Explanation 1 Where in respect of any facts material to the computation of the total income of any person under this Act, - (A) ....................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an essential ingredient for attracting a civil law liability under section 271(1)(c) read with the explanation thereto. In other words, all that the judgment holds is that the concealment need not be willful to attract penalty. However to attract the provisions of section 271, the assessee must be held to have concealed the material particulars or to have furnished inaccurate particulars. At the cost of repetition in the present case, there was no concealment of any material particulars by the respondent. Nor did the respondent furnish inaccurate particulars. The respondent disclosed all material particulars and on the basis thereof, made certain claims which have been found purely as a question of law to be not sustainable. In the present case, Explanation 1(B) is inapplicable. This is in view of the fact that it is an admitted position that the respondent has neither concealed any particulars of income nor furnished inaccurate particulars of income. Explanation 1(B) would apply only where an assessee has concealed the particulars of his income or has furnished inaccurate particulars of income. Explanation 1(B) provides that in such cases if the reasons given for the concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT v. Atul Mohan Bindal (2009) 9 SCC 589, where this Court was considering the same provision, the Court observed that the assessing officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India v. Dharamendra Textile Processors as also the decision in Union of India v. Rajasthan Spg. Wvg. Mills and reiterated in para 13 that: (Atul Mohan Bindal case, SCC p. 597, para 13) 13. It goes without saying that for applicability of Section 271(1)(c), conditions stated therein must exist. 19. It was tried to be suggested that Section 14-A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form part of the total income. It was, therefore, reiter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case is still better as no fault has been found with the particulars submitted by the assessee in its return. (emphasis supplied) The Supreme Court also held that it was only on the point of mens-rea that in Union of India Ors. vs. Dharmendra Textile Processors Ors, the Supreme Court over-ruled the earlier judgment of the Supreme Court in Dilip N. Shroff vs. Jt. CIT, (2007) 291 ITR 519. 13. Mr.Malhotra submitted that Explanation 1(B) to Section 271(1) mandates the levy of penalty even where a claim for deduction is not upheld, even though the assessee has disclosed all material facts and has not suppressed any material facts. He submitted that a view to the contrary would render explanation 1(B) nugatory. His only response to the judgment of the Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd. was that the Supreme Court had failed to notice Explanation-1 to section 271(1). 14. We are unable to agree. In any event we are bound by the judgment of the Supreme Court. Merely because the Explanation was not referred to in the judgment of the Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd., it cannot be said that the judgment is per-incuriam. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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