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TMI Blog2018 (8) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no mens rea. Whether the assessee has been able to discharge the onus of establishing that there was no concealment or deliberate furnishing of inaccurate particulars of income, would depend on the facts and circumstances of the case. The initiation of penal proceedings is not automatic and depends upon the facts and circumstances of each case. In the case at hand, the learned Tribunal arrived at factual findings which ought not to be interfered with in an appeal under Section 260A of the Income Tax Act. In this case, the learned Tribunal, as observed above, arrived at the finding that the claim to the expenditure towards brokerage/commission was bogus and in effect, held that imposition of penalty was justified. No question of law - Decided against the revenue. - T. C. A. No. 266 of 2017 - - - Dated:- 6-8-2018 - Ms. Justice Indira Banerjee, CJ And Mr. Justice Abdul Quddhose For the Appellant : M/s. Karthick Ranganathan Mr. Vijyakumar Punna For the Respondent : M/s. S.Sridhar Mr. A. S. Sriraman JUDGMENT This tax case appeal has been filed by the Revenue, challenging the order dated 05.08.2016 passed by the Income Tax Appellate Tribunal, Madras B Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, the respondent assessee filed an appeal being I.T.A.No.116/04-05 before the Commissioner of Income Tax (Appeals)-I. The CIT (Appeals)-I vide his order dated 14.11.2005 confirmed the additions/ disallowances made by the Assessing Officer and dismissed the appeal filed by the respondent assessee. 5. Thereafter, the Assessing Officer completed penalty proceedings and by an order dated 29.3.2007, the Assessing Officer levied on the respondent assessee penalty of ₹ 31,61,994/- being the minimum penalty leviable u/s 271(1)(c) of the said Act for concealing his income and furnishing inaccurate particulars of income. 6. The respondent assessee filed an appeal being I.T.A.No.3/07-08 against the impugned order of penalty dated 29.03.2007 before the Commissioner of Income Tax (Appeals)-IX, Chennai, hereinafter referred to as CIT (Appeals). By an order dated 24.03.2008, the CIT (Appeals) allowed the said appeal and deleted the penalty, thereby giving in effecting a finding on facts that the respondent assessee had not concealed his income or furnished inaccurate particulars of his income. In a nutshell, the CIT (Appeals) observed: (i) Addition u/s 41(1)(a): The respondent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the judgment of the Apex Court in Reliance Petroproducts Pvt. Ltd (supra). Similarly, rental receipt was fund to be omitted in the return of income. The CIT (A) found that there was reasonable cause in not disclosing the same in the return of income. This Tribunal do not find any reason to interfere with the order of the CIT (A). 9. Similarly, for the disallowance of interest and commission and restricting the depreciation to 15% as against the claim of 25% by the Assessing Officer cannot be construed as furnishing inaccurate particulars of income. In view of the above, this Tribunal is of the considered opinion that the CIT (A) has rightly deleted the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT (A) and accordingly the same is confirmed. 9. Both the Commissioner of Income Tax (Appeals) and the learned Tribunal arrived at the factual finding that the respondent assessee had not concealed his income nor furnished inaccurate particulars of his income. 10. Aggrieved by the order of the Income Tax Appellate Tribunal, the appellant has filed this Appeal under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,47,123/- paid toward property tax and a sum of ₹ 79,300/- paid towards water tax had been claimed by the respondent assessee without furnishing any proof of payment of the same. On verification of the capital account of the respondent, no debit towards expenses on account of payment of corporation tax or water tax was found. 18. Counsel argued that the respondent had claimed deduction of interest without actually making payment which amounted to concealment and furnishing of inaccurate particulars to the extent of interest deduction claims. 19. Counsel further submitted that the Commissioner of Income Tax (Appeals) and the Tribunal having confirmed the additions/ disallowances made by the Assessing Officer ought not to have deleted the penalty proceedings against the respondent under Section 271(1)(c) of the Income Tax Act. 20. Learned counsel for the respondent assessee argued that the Commissioner of Income Tax (Appeals) and the learned Tribunal rightly deleted the penalty, since the respondent assessee had not concealed income nor furnished inaccurate particulars of income. In any case, in view of the concurrent factual finding of the Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, held not to be guilty of furnishing inaccurate particulars. The Supreme Court held that making an inaccurate claim cannot tantamount to furnishing of incorrect particulars. Merely because the assessee claimed deduction which has not been accepted by the revenue, penalty under Section 271(1)(c) is not attracted. 26. The short question before us is whether this appeal filed by the Revenue against the order of the Tribunal should be entertained? 27. Section 260A of the Income Tax Act, 1961, provides as follows: Section 260A. Appeal to High Court. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the date on which the order appealed against is recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Hero Vinoth Vs. Seshammal reported in (2006) 5 SCC 545, the Supreme Court followed Sir Chunilal V. Mehta Sons (supra) and other judgments and summarized the tests to find out whether a given set of questions of law were mere questions of law or substantial questions of law. 31. The relevant paragraphs of the judgment of the Supreme Court in Hero Vinoth (supra) are set out herein below : 21. The phrase 'substantial question of law', as occurring in the amended Section 100 CPC is not defined in the Code. The word substantial, as qualifying 'question of law', means - of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with - technical, of no substance or consequence, or academic merely. However, it is clear that the legislature has chosen not to qualify the scope of 'substantial question of law' by suffixing the words of general importance as has been done in many other provisions such as Section 109 of the Code or Article 133(1)(a) of the Constitution. The substantial question of law on which a second appeal shall be heard need not necessarily be a substantial q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. v. Rama Krishna Narain [1954 SCR 506 : AIR 1953 SC 521] also it was held that a question of law of importance to the parties was a substantial question of law entitling the appellant to a certificate under (the then) Section 100 CPC. 23. To be 'substantial' a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law 'involving in the case' there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case or not, the paramount overall consideration being the need for st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel appearing on behalf of the respondent assessee cited the Division Bench judgment of this Court in Commissioner of Income Tax vs. Balaha Chemicals Agencies reported in (2015) 94 CCH 0163. In the said case, this Court found that the Revenue had not been in a position to show that the payments of commission made by the respondent assessee were bogus in nature. There was also nothing on record to show that the assessee had concealed particulars of income or furnished inaccurate particulars of income. The appeals of the Revenue were, accordingly, found to be without merit and dismissed the same. 33. The learned counsel for the respondent assessee cited a Division Bench judgment of this Court in N.Ranjit vs. Commissioner of Income Tax-V reported in (2013) 85 CCH 0102 ChenHC, where the Division Bench upheld the decision of the Tribunal and dismissed the appeal of the Revenue with the following observations: 12. It is not that every case of addition warrants levy of penalty. The application of penal provisions are not automatic and the levy itself depends upon the facts and circumstances of each case. On the incorrectness of the returns originally filed, not disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utation of his total income had been disclosed by him. 37. Under Section 271(1)(c) of the 1961 Act, the imposition of penalty is not automatic whenever there is less income returned. The pre-condition for imposition of penalty is subjective satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or the Commissioner, as the case may be, that the assessee has concealed particulars of his income or furnished inaccurate particulars of such income. The furnishing of inaccurate particulars would have to be deliberate. 38. In view of Explanation I, referred to above, there is no requirement on the part of the Revenue to establish mens rea for the purpose of imposition of penalty. Mere satisfaction of concealment and/or furnishing of inaccurate particulars would in itself attract the penal provisions. 39. In Sir Shadilal Sugar General Mills Ltd. v. Commissioner of Income Tax, reported in (1987) 168 ITR 705, the respondent assessee had agreed to additions to his income to buy peace. The Supreme Court held that it did not follow that the amount that was agreed to be added was concealed income. The Revenue was, therefore, required to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. 43. After the insertion of the Explanation, it cannot be said that the onus lies on the Revenue to establish mens rea for concealment of income before imposition of penalty. If there was failure to return the correct income, there would be a presumption of concealment, unless the assessee was able to prove that his failure to return his correct income was not due to fraud or neglect. 44. In M.A.K.Data P. Ltd. v. Commissioner of Income Tax, reported in (2013) 358 ITR 0593 (SC), the Supreme Court held that the Explanation to Section 271(1)(c) of the Act raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the Explanation has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted the income of the assessee and not otherwise. 45. In the aforesaid case, the contention of the assessee of having surrendered the additional sum of ₹ 40,74,000/- to avoid litigation, buy peace and to channelize energy and resources towards pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276-C of the IT Act. 49. The proposition of law enunciated in Dharamendra Textile Processors (supra) is unexceptionable. However, in the present case, as observed above, the learned Tribunal, the fact finding body, has arrived at a finding on facts that there was concealment and hence, the interference of this Court under Section 260A of the Act is not warranted. 50. In Commissioner of Income Tax, Delhi v. Atul Mohan Bindal, reported in (2000) 9 SCC 589, the Supreme Court referred to and explained its earlier decision in Dharamendra Textile Processors case (supra) and found that there was an element of strict liability on the assessee for concealment and for giving inaccurate particulars in view of the explanation appended to Section 271(1)(c) of the Act. The Supreme Court concluded that for applicability of Section 271(1)(c) of the Act, the conditions stated therein must exist. 51. The proposition of law that emerges from the judgments referred to above is that in view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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