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TMI Blog2007 (12) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee was not engaged in the business of providing technical services outside India in connection with the development or production of computer software, but only human resource services and in that view of the matter, the AO held that the assessee was not entitled for the benefit of deduction under s. 80HHE of the IT Act and disallowed the claim of the assessee. The CIT(A) confirmed the action of the AO. That order has become final, as the assessee has not agitated the matter any further. After the decision of the quantum appeal, the AO initiated penalty proceedings under s. 271(1) (c) of the Act on 19th Jan., 2000 and imposed penalty. Against that order, the assessee preferred appeal before the CIT(A), who has confirmed the order of the AO. The correctness of the said order was carried on by way of further appeal to the Tribunal by the assessee. The Tribunal held in favour of the assessee on the ground that there is no need to impose any penalty, as the assessee has never filed inaccurate particulars nor concealed the income and on that basis, the Tribunal allowed the appeal. Challenging the correctness of the same, this appeal is before us by formulating the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 80HHE of the Act. The Tribunal further recorded a clear and categoric finding to the effect that the assessee never filed inaccurate particulars nor concealed particulars of income so as to come within the mischief of s. 271(1)(c) of the IT Act. The very same provision, namely s. 80HHE of the Act came to be considered by the Supreme Court in the decision reported in T. Ashok Pai vs. CIT (2007) 210 CTR (SC) 259 : (2007) 292 ITR 11 (SC). The Supreme Court in that decision held as follows: It is therefore, trite that if an explanation given by the assessee with regard to the mistake committed by him has been treated to be bona fide and it has been found as of fact that he had acted on the basis of wrong legal advice, the question of his failure to discharge his burden in terms of the Explanation appended to s. 271(1)(c) of the IT Act would not arise. In Dilip N. Shroff vs. Jt. CIT [Civil appeal arising out of SLP (C) No. 26831 of 2004] delivered today [(2007) 210 CTR (SC) 228 : (2007) 291 ITR 519 (SC)], this Court observed : The expression conceal is of great importance. According to Law Lexicon, the word conceal means: to hide or keep secret. The word c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty proceedings, thus, the authorities must consider the matter afresh as the question has to be considered from a different angle. It is now a well-settled principle of law that the more stringent the law, the more strict a construction thereof would be necessary. Even when the burden is required to be discharged by an assessee, it would not be as heavy as the prosecution. [See P.N. Krishna Lal vs. Government of Kerala (1995) Supp 2 SCC 187]. The omission of the word deliberate , thus, mayor may not be of much significance. Sec. 271(1)(c) remains a penal statute. The rule of strict construction shall apply thereto. The ingredients for imposing penalty remain the same. The purpose of the legislature that it is meant to be a deterrent to tax evasion is evidenced by the increase in the quantum of penalty, from 20 per cent under the 1922 Act to 300 per cent in 1985. Concealment of income and furnishing of inaccurate particulars carry different connotations. Concealment refers to a deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. We may notice that in Addl. CIT vs. Jeevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said principle has been reiterated in Virtual Soft Systems Ltd. vs. CIT (2007) 207 CTR (SC) 733 : (2007) 289 ITR 83 (SC) : (2007) 2 Scale 612 (SC), where it was held : 24. Sec. 271 of the Act is a penal provision and there are well established principles for the interpretation of such a penal provision. Such a provision has to be construed strictly and narrowly and not widely or with the object of advancing the object and intention of the legislature. Referring to a large number of decisions, it was furthermore observed : 27. Every statutory provision for imposition of penalty has two distinct components: (i) That which lays down the conditions for imposition of penalty. (ii) That which provides for computation of the quantum of penalty. Sec. 271(1)(c) and cl. (iii) relate to the conditions for imposition of penalty, whereas, on the other hand, Expln. 4 to s. 271(1) (c) relates to the computation of the quantum of penalty. 28. The provisions of s. 271(1)(c)(iii) prior to 1st April, 1976, and after its amendment by the Taxation Laws (Amendment) Act, 1975 w.e.f. 1st April, 1976, the later provisions being applicable to the assessment year in question, are substantially th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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