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TMI Blog2017 (9) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as 'Revenue' for the sake of convenience and clarity. 3(ii) F L Smidth Limited, Chennai, a company and therefore, a juristic person is the sole respondent before us and is hereinafter referred to as 'Assessee' for the sake of convenience and clarity. 3(iii) Assessment year, which is subject matter of the instant appeal, is 2002-03 and is hereinafter referred to as the 'said assessment year' for the sake of convenience. 3(iv) The other abbreviations used in this order for the sake of convenience, clarity and brevity are as follows : (a) Assessing Officer is referred to as 'AO' ; (b) Commissioner of Income-tax (Appeals)-6, Chennai is referred to as 'CIT(A)'; (c) Income Tax Appellate Tribunal 'B' Bench, Chennai is referred to as 'ITAT'. 3(v) Assessee is engaged inter-alia in the business of design, fabrication and supply of cement equipment. Assessee has filed its return of fringe income for the said assessment year on 31.10.2002 declaring a total income of ₹ 3,10,70,066.00. The assessment was completed under Section 143(3) of the IT Act, determining the income of Assessee as ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IT Act to the extent of amount transferred to the Foreign Projects Reserve Account. 4(iv) Assessee contended that restriction of deduction under Section 80HHB of the IT Act to the extent of the amount transferred to foreign policy reserve account was an inadvertent error. Assessee further contended that it had recomputed the business income and had also paid the entire tax dues thereon. 4(v) Pivotal and primary contention of the Assessee in the appeal before the CIT(A) was that the AO had failed to appreciate the fact that there was a mere inadvertent human error on the part of the Chartered Accountant (who according to the Assessee was different from the Chartered Accountant who issued certificates in earlier years) while issuing the certificate under Section 80HHB of the IT Act and as such, the AO has not examined the aforesaid facts. 4(vi) So contending, Assessee advanced it's case that the perspective of AO while proceeding to levy penalty under Section 271(1)(c) of the IT Act is erroneous. 4(vii) Per contra, the primary contention of Revenue, both before the ITAT and before us is that the Assessee has furnished inaccurate particulars and therefore, is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has correctly relied on a judgment of the Hon'ble Supreme Court of India in Price Waterhouse Coopers Private Ltd. Vs. CIT reported in (2012) 348 ITR 306 (SC) and also CIT Vs. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 (SC), wherein the Hon'ble Supreme Court held that mere making of a claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of Assessee. 4(xvii) Further more, this being an appeal under Section 260A of the IT Act, we cannot and therefore, we do not reexamine the factual findings. We take it that the factual finding arrived at by the authority below, namely, CIT(A), as confirmed by ITAT are conclusive, as no perversity has been pointed out by revenue in arriving at such findings. 4(xviii) Having said this, it takes us to the proposed substantial questions of law, on which the Revenue wanted this TCA to be admitted. Questions, which according to the Revenue are substantial questions of law as proposed by the Revenue, in the instant TCA, read as follows : 1.Whether in the facts and in the circumstances of the case the Appellate Tribunal was correct in deleting the penalty le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Hero Vinoth's case has clearly held that the substantial question of law occurring in Section 100 CPC is different and distinct from a mere question of law. Relevant paragraph reads as follows : 24.The principles relating to Section 100 CPC relevant for this case may be summarised thus: (i) An inference of fact from the recitals or contents of a document is a question of fact. But the legal effect of the terms of a document is a question of law. Construction of a document involving the application of any principle of law, is also a question of law. Therefore, when there is misconstruction of a document or wrong application of a principle of law in construing a document, it gives rise to a question of law. (ii) The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a question, answer to which affects the rights of parties to the suit) will be a substantial question of law, if it is not covered by any specific provisions of law or settled legal principle emerging from binding precedents, and, involves a debatable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1927-28) 55 IA 235 : AIR 1928 PC 172] the phrase substantial question of law as it was employed in the last clause of the then existing Section 100 CPC (since omitted by the Amendment Act, 1973) came up for consideration and their Lordships held that it did not mean a substantial question of general importance but a substantial question of law which was involved in the case. In Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] the Constitution Bench expressed agreement with the following view taken by a Full Bench of the Madras High Court in Rimmalapudi Subba Rao v. Noony Veeraju [AIR 1951 Mad 969 : (1951) 2 MLJ 222 (FB)] : (Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] , SCR p. 557) When a question of law is fairly arguable, where there is room for difference of opinion on it or where the Court thought it necessary to deal with that question at some length and discuss alternative views, then the question would be a substantial question of law. On the other hand if the question was practically covered by the decision of the highest court or if the general principles to be applied in determining the question are well settled and the only question was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g necessity of avoiding prolongation in the life of any lis. (See Santosh Hazari v. Purushottam Tiwari [(2001) 3 SCC 179] .) 4(xxiv) We applied the above tests to the instant case. There is no debatable question of law of substance necessary for determining the rights of the parties in the case. This is just a case where the question as to whether the assessee is liable to be mulcted with penalty under Section 271(1)(c) of IT Act in the given fact scenario / conduct needs to be answered by applying ratio in this regard, which has been indisputably settled by the Supreme Court of India in Price Waterhouse Coopers Private Ltd. Vs. CIT reported in (2012) 348 ITR 306 (SC) and also CIT Vs. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158 (SC). Therefore, we have no hesitation whatsoever in holding that the proposed questions of law are definitely not substantial questions of law. Owing to all that we have set out herein, in our considered view, we do not find any other substantial question of law arising in this case. 4(xxv) We are of the view that they may not even qualify as pure questions of law as they are all turning heavily on facts. 4(xxvi) We have held elsewh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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. 4. In view of Explanation I, referred to above, the amount added or disallowed in computing the total income of the assessee is, for the purpose of Section 271(1)(c), to be deemed to represent his income in respect of which particulars have been concealed, only if the assessee fails to offer an explanation or offers an explanation which is found by the Assessing Authority to be false or if the assessee offers an explanation which he is unable to substantiate and fails to prove that the explanation was bona fide and that facts material to the computation of his total income had been disclosed by him. 5. Under Section 271(1)(c) of the 1961 Act, the imposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. In K.P.Madhusudhanan (supra), the Supreme Court dissented from and disapproved its earlier view in Sir Shadilal Sugar General Mills Ltd. (supra) that the Revenue was required to prove mens rea for imposition of penalty. The proposition in Sir Shadilal Sugar General Mills Ltd (supra) that the Revenue is required to prove mens rea for imposition of penalty is no longer good law. 10. The case of K.P.Madhusudhanan (supra), is clearly distinguishable, as it was a case of concealment, where income of ₹ 93,000/- had not been disclosed. Only after explanation was called for, the Assessee in that case stated that it had obtained loans, which could not be established and ultimately, the concealed income was treated as additional income. In the background of the aforesaid facts, penalty was imposed. The Supreme Court rejected the contention that the onus lay on the Assessing Officer to establish mens rea. In effect and substance, the Supreme Court held that on receipt of a notice, it was for the Assessee to explain, that concealment was not deliberate. 11. After the insertion of the Explanation, it cannot be said that the onus lies on the Revenue to establish mens rea for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and a make believe one. The Assessee resisted the claim of the department contending that they were not aware of forged documents and contended that they had not concealed income nor furnished inaccurate particulars. There was no dispute that the documents were forged. 17. In the aforesaid case, the learned Tribunal had upheld the imposition of penalty. The Division Bench found that the conclusion was factual giving rise to no questions of law. Considering the limited scope of Section 260A of the Act, the Division Bench did not find any justification to disturb the order of the learned Tribunal and, accordingly, the appeal was dismissed. 18. In Union of India v. Dharamendra Textile Processors, reported in (2008) 13 SCC 369, the Supreme Court observed as under: 17. It is of significance to note that the conceptual and contextual difference between Section 271(1)(c) and Section 276-C of the IT Act was lost sight of in Dilip N. Shroff v. CIT, (2007) 6 SCC 329. 18. The Explanations appended to Section 271(1)(c) of the IT Act entirely indicates the element of strict liability on the Assessee for concealment or for giving inaccurate particulars while filing return. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessee. The Division Bench found that there was no question of law, far less any substantial question of law, arising for consideration in the appeal and, accordingly, dismissed the appeal. In this case too, there is no question of law, far less any substantial question of law. We are in full agreement with the Division Bench that when the appeal does not raise any substantial question of law, the appeal is liable to be dismissed. 23. The judgment of the High Court of Karnataka in United Breweries Ltd. v. Deputy Commissioner of Income Tax, Central Circle-2(3), Bangalore, reported in (2016) 72 Taxmann.com 102 (Karnataka), is clearly distinguishable on facts. That was a case where the Assessee had made advances to a Controlled Company and also incurred expenditure and debited these amounts to the account of the Controlled Company. The Tribunal opined that this might be prudent business practice or might have arisen because of the Assessee's anxiety to save its Controlled Company from facing financial crunch. However, this did not in itself afford nexus between the Assessee's business and the loss. The Tribunal was of the view that the loss could not be allowed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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