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TMI Blog2018 (1) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... that the two charges that may invite a penalty under Section 271(1)(c) of the Act can never co-exist. It is too broad a proposition to merit acceptance or rejection in the facts of the present case. No independent reasoning has been recorded by the assessing authority to conclude that the assessee had furnished inaccurate particulars of his income. At the same time, finding as to concealment of particulars of income was duly supported with reasoning (as extracted above). Tribunal has erred in setting aside the entire penalty order. It should have examined the other grounds of appeal raised by the assessee including the ground that mere rejection of a claim or withdrawal of a claim did not amount to evidence or proof of concealment. We find that the Tribunal has not adjudicated the challenge raised by the assessee to the imposition of penalty for concealment, on merits. Assessing officer having imposed penalty for concealment of particulars of income upon reasoning given by him, the said order could not have been set aside in entirety merely because the assessing officer, in the later part of the penalty order also mentioned that the assessee had furnished inaccurate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain at ₹ 1,11,14,748/- but at the same time he had claimed deduction in respect of the same. Later, scrutiny assessment proceedings were initiated under Section 143 (3) of the Act. It is on record that on 22.12.2014 the assessee was asked to furnish his explanation in respect of the long term capital gain claimed by him. It is at that stage that the assessee disclosed to his assessing officer that he had committed a mistake in claiming deduction in respect of long term capital gain. It may be noted that there is no dispute as to long term capital gain having arisen to the assessee. The revenue's doubt was confined to the allowability of the deduction claimed under Section 54F of the Act. The assessee admitted his mistake in claiming deduction under Section 54F of the Act against purchase of a land/plot from Kanpur Development Authority. Upon such admission, there remained nothing to be adjudicated by the assessing officer in that regard. Consequently, by the assessment order dated 28.03.2015 the assessing officer made an addition to the income of the assessee on account of long term capital gain of ₹ 1,11,14,748/-. He also issued a direction to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income, during the course of assessment proceedings. Therefore, the addition is not an concealment on his part but bonafide inclusion in his total income by way of revision as per advise of new counsel. 4. That under the facts and circumstances as stated hereinabove, the income assessed under the head LONG TERM CAPITAL GAIN amounting to ₹ 1,13,08,351/- is actually and factually included into total income before completion of assessment by the assessee himself as per advise of newly engaged counsel and is not within the purview of neither furnishing inaccurate particulars of income nor any concealment of income in his part liable to be penalized. 5. That assessee do hereby filing an affidavit in confirmation to the fact, as stated hereinabove proceeding paras from 1 to 4. In the premises set-forth-above, it is humbly prayed that the penalty proceedings initiated u/s 271(1)(c) of the Income Tax Act, 1961 vide show cause notice dated 5.5.2015 may very kindly be dropped. (emphasis supplied) Thus, clearly, the assessee took up a stand that he had, subsequent to his filing the return been advised that he was not entitled to claim deduction under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment proceedings in his case. By this act, assessee exposed himself for imposition of penalty under Section 271(1)(C) of the Act. (emphasis supplied) Thus, the assessing officer recorded a finding that the revised computation filed by the assessee was not voluntary and that the assessee had been forced to admit that the long term capital gain that had arisen to him was taxable under the Act. He rejected the explanation furnished by the assessee that the deduction had been wrongly claimed under the advise of his earlier counsel, one Sri Raj Kumar Gupta, who at the time of assessment being concluded was dead. The assessing officer found that there was no evidence in support of the explanation so furnished by the assessee. He also noted that it was the assessee who was ultimately responsible for the claim made by him which in the present case was found to be wholly unsubstantiated. On such reasoning the assessing officer concluded that the assessee had deliberately and willfully concealed the particulars of various components of his income that were detected by the revenue during the course of the assessment proceedings. On such reasoning the assessing officer impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer. For the aforesaid view, we rely on the cases of CIT Vs. Manu Engineering Works, 122 ITR 306 (Guj.) and New Sorathia Engineering Co. Vs. CIT, 282 ITR 642 (Guj.). In view of the above, we are inclined to delete the penalty levied under Section 271(1)(c) of the Act. Assailing the aforesaid finding recorded by the Tribunal, Sri Shubham Agarwal, learned counsel for the revenue submits that in the instant case the assessing officer had specifically charged the assessee of having concealed particulars of his income. Relying on the finding recorded in the penalty order, as extracted above, he submits that it admits of no doubt that the assessing officer imposed the penalty on account of concealment of income alone. Then, he submits that the mere observation recorded in the next paragraph of the penalty order i.e. paragraph 11 is merely an observation made in the passing. According to him, even if that observation is read to be inconsistent with the first part of the penalty order wherein the assessing officer had clearly considered the explanation furnished by the assessee together with the material and evidence on record and thereafter recorded his finding that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee while filing the original return and penalty is leviable in such a case. The relevant question is as to what was the intention of the assessee at the time of filing of the original return and if the assessee honestly and bona fide kept the ITO informed about the dispute between the assessee-firm and the Northern Railway, and the litigation between them and arbitration proceedings which took place in the course of that litigation, then, there is no reason to hold that the assessee was guilty of deliberate concealment of income at the time of filing of the original return. Opposing the appeal, Sri Rahul Agarwal, learned counsel for the assessee has submitted that the defect in the penalty order noted by the Tribunal goes to the very root of the penalty order and it was not curable. According to him, the penalty under Section 271(1)(c) of the Act may be imposed in either of two eventualities. First, the penalty could have been imposed if the assessee had concealed particulars of his income. Second, penalty under that provision could have been imposed if the assessee had furnished inaccurate particulars of his income. According to him, the aforesaid two eventu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged and established as a fact that the assessee did something so as to hide or not disclose such particulars. Similarly, in case the assessing officer alleged furnishing of inaccurate particulars of income he would have to establish which particulars of income furnished was/were inaccurate as may have had a material bearing on determination/assessment of the true income of the assessee. As a possibility, it is difficult to lay down, as a rule, that in a given set of facts the assessing officer may never be able to successfully allege and establish that an assessee had both 'concealment particulars of his income' and also 'furnished inaccurate particulars of income'. These are contingencies or facts and circumstances that must be specifically alleged and found to be existing in the peculiar facts of each case. There can be no presumption as to their co-existence or existence of even one of the two contingencies or infringements. Therefore, we are unable to accept the argument advanced by learned counsel for the assessee that the two charges that may invite a penalty under Section 271(1)(c) of the Act can never co-exist. It is too broad a proposition to merit ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablished by the assessing officer. The Tribunal has erred in not examining that issue. Therefore, according to us, the Tribunal has erred in setting aside the entire penalty order. It should have examined the other grounds of appeal raised by the assessee including the ground that mere rejection of a claim or withdrawal of a claim did not amount to evidence or proof of concealment. We find that the Tribunal has not adjudicated the challenge raised by the assessee to the imposition of penalty for concealment, on merits. Since, the Tribunal has not examined that issue on merits, further submissions made by learned counsel for the revenue seeking to establish concealment on part of the assessee and denial made by learned counsel for the assessee, does not merit our consideration in the present appeal. Those issues have to be left open to be decided by the Tribunal afresh upon remand that is proposed to be made to it. Question no.1 therefore, does not arise. It is being left unanswered at present. Question no.2 on which this appeal was admitted is answered thus: the assessing officer having imposed penalty for concealment of particulars of income upon reasoning given by him, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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