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TMI Blog2016 (3) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealed particulars of his income. Hence, the imposition of penalty under Section 271(1)(c) was rightly set aside both by CIT(A) and the learned Tribunal. - Decided in favour of assessee - ITA No. 291 of 2009 - - - Dated:- 2-2-2016 - Girish Chandra Gupta And Asha Arora, JJ. For the Appellant : Mr M P Agarwal, Adv. Mr P Dudhoria, Adv For the Respondent : Mr J P Khaitan, Sr. Adv., Mr Siddharth Das, Adv. and Mr Asim Choudhury, Adv ORDER Girish Chandra Gupta, J. The Revenue has come up in appeal u/s.260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') against the judgment and order dated 20th March, 2009 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') 'B' Bench, Kolkata in ITA No.1920 (Kol.) of 2008 for the assessment year 2005-06. The questions of law suggested by the revenue for consideration are as follows:- i) Whether, the mere disclosure of the amount of interest earned on the income-tax refund in the notes to accounts, without including the same in the computation of the total income, constituted bona fide belief of the assessee that such interest income was not exigib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings the assessee submitted a written reply on 29th May 2008 stating that:- The reasons for not offering the same were bona fide...we bona fide believed that the said amount is taxable only when the proceeding for those years will attain finality and no penalty can be levied for that. The assessee explained that there are two ways 0f accounting an income or an expense. Either accept and adjust the same after each and every event or alternatively acknowledge it when there is no more, possibility of its alteration. The company has been following the practice of accounting the interest income or interest expense only after the matter is fully closed because before that the values keep on vary (increase/decrease) according to the judgements at different levels. The assessing officer rejected the contention raised by the assesse and imposed penalty of ₹ 37.12 Lakhs vide order dated 27th June 2008 and observed as follows:- Therefore, penalty could be imposed both for the concealment of income as well as furnishing of inaccurate particulars of income. Though the assessee has disclosed the said interest income but failed to offer the said interest income received d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276- C of the IT Act. (d) That Section 271(1)(c) has to be read with clause (B) of Explanation 1 thereto which reads as follows:- Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) (B) such person offers an 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 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 purposes of clause (c) of this subsection be deemed to represent the income in respect of which particulars have been concealed. Had the assessing officer not conducted scrutiny assessment u/s.143(3) the interest income could never have been detected. Therefore the assessee had failed to substantiate his explanation and to prove that the same was bona fide. The assessee also failed to prove that he had disclosed all the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person- *** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. 8. A glance at this provision would suggest that in order to be covered, 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. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the learned counsel for the Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word particular is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word particulars used in Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. 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. Such claim made in the return cannot amount to inaccurate particulars. 12. 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, reiterated before us that the assessing officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty could not be imposed. (iii) On plain reading of the facts in the case of Avada Trading Co (P) Ltd (supra), it is clear that there was a conflict of opinion on the year of taxability of interest on income tax refund between two benches of Hon'ble Mumbai ITAT for which the Special Bench was constituted- Further, reliance is also placed on the decisions of Jurisdiction High Court in the case of CIT vs Jagabandhu Kumar Ruplal Sen Poddar [133 ITR 156] and CIT vs Bengal Jute Mills Co Ltd [174 ITR 402] deciding that penalty could not be imposed where two opinions were possible. Therefore, since the matter under appeal is similar to the matter in Avada Trading, it could be said that there were two possible views in Appellant's case. (iv) Further, reliance is also placed on decision of Hon'ble Delhi ITAT in Nuchem vs DCIT [47 ITD 487], where it was held that penalty could not be imposed where the appellant did not offer the interest earned on fixed deposits made for providing guarantee to Excise Department in respect of excise duty under dispute adopting a position that the same is contingent in nature since decision of Hon'ble Delhi High Court is pending. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the 12[* * *] Commissioner (Appeals) 13[or the Commissioner] to be false, or (B) such person offers an 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 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 purposes of clause (c) of this sub-section be deemed to represent the income in respect of which particulars have been concealed. The assessing officer in his order imposing penalty dated 27th June 2008 has observed as follows:- Therefore, penalty could be imposed both for the concealment of income as well as furnishing of inaccurate particulars of income. Though the assessee has disclosed the said interest income but failed to offer the said interest income received during the year for taxation. Hence the assessing officer himself admitted that the assesse had discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter XIII A of the Calcutta High Court Rules (Original Side) which is in pari materia with Sub-rule 5 of Rule 3 of Order 37 of The Code of Civil Procedure, 1908. In Kiranmoyee Dassi -Vs- J. Chatterjee reported in AIR 1949 Cal 478, the plaintiff had filed an application for final judgment under chapter XIIIA of the Calcutta High Court Rules in a suit for recovery of possession, arrears of rent and mesne profits. After an extensive review of the authorities this Court culled out the following principles:- (a) If the defendant satisfies the court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend. (b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. (c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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