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TMI Blog2017 (8) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... ee before imposing the penalty by the Income Tax Officer. The assessee furnished his explanation, which has been taken into consideration in the order. The mandatory requirement of obtaining the previous approval of the Inspecting Assistant Commissioner was followed. The penalty imposed by the Income Tax Officer was reduced by the Appellate Authority. There was no arbitrary exercise of discretion and the reasons are recorded after taking into consideration the explanation submitted by the assessee. The exercise of jurisdiction in respect of quantum of penalty is neither unjust nor beyond jurisdiction. - Decided against assessee. - Income Tax Reference No. 21 of 2008 - - - Dated:- 22-8-2017 - Shri S.N. Bhattad, Advocate for Respondent R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished the inaccurate particulars of such income. Apart from this, there were other contentions, which were raised. 3. The Income Tax Officer, considering the facts and circumstances of the case, held that this is a fit case of levy of penalty under Section 271(1)(c) of the Income Tax Act for the act of concealing particulars of income by the assessee by furnishing inaccurate particulars of income in the return filed on 1-10-1987. The maximum penalty imposable under the said provision was 200%; however, the Income Tax Officer imposed minimum penalty equivalent to the tax sought to be evaded of ₹ 4,60,000/. Accordingly, the order was passed on 3-3-1989 after seeking prior approval of the Deputy Commissioner of Income Tax, as requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a reasonable opportunity of being heard? 7. Shri K.P. Dewani, the learned counsel appearing for the assessee; and Shri S.N. Bhattad, the learned counsel appearing for the Department, have cited before us several decisions of the Apex Court as well as of the different High Courts in support of their rival contentions. Shri Dewani urged that the grant of approval by the Inspecting Assistant Commissioner results in civil consequences of imposition and recovery of penalty, which could only be done after giving a reasonable opportunity to furnish an explanation and of being heard in the matter. According to him, the power to grant prior approval conferred upon the Inspecting Assistant Commissioner is quasi judicial in nature, and even if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income : Provided that, if in a case falling under clause (c), the amount of income (as determined by the Income tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twentyfive thousand rupees, the Income tax Officer shall not issue any direction for payment by way of penalty without the previous approval of the Inspecting Assistant Commissioner. 9. The aforesaid provision confers a discretion upon the competent authority (in the present, the Income Tax Officer) in respect of the quantum of penalty, which ranges between twenty per cent to twice (i.e. 200%) of the amount of tax sought to be levied. While imposing penalty, the competent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty without the previous approval of the Inspecting Assistant Commissioner. 12. The provision of Section 271(1)(c)(iii) of the Income Tax does not attract the rule of presumption of mens rea and it cannot be equated with the provision in the Criminal Statute. The penalty is for default in complying with the provision, i.e. of furnishing true and correct particulars of the income in the return. The penalty is imposable for breach of the civil obligation. It is only the reasonable opportunity of being heard in the matter, which is required to be provided to the assessee. The enquiry seems to be of summary in nature, which does not even call for issuance of show cause notice in respect of the quantum of penalty proposed to be imposed. Whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position of penalty under Section 271 of the Income Tax Act is found to be bad in appeal under Section 246 of the said Act or thereafter, the previous approval granted therein shall collapse or would not survive, even in the absence of specific challenge to it. 14 We have gone through the several decisions cited before us by the learned counsels appearing for the assessee and the Department of Income Tax. The decisions cited by Shri Dewani for the assessee are not on the provision of Section 271 of the Income Tax Act, as it existed when the order of penalty was passed. It is not possible for us to accept the contention that wherever the Act prescribes the requirement of obtaining previous approval, the compliance of the principles of nat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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