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TMI Blog2018 (12) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act . As in the case of COMMISSIONER OF INCOME TAX vs. HCIL KALINDEE ARSSPL (2013 (8) TMI 245 - DELHI HIGH COURT) has held that Penalty provisions are not criminal and do not require culpable mensrea. Whether or not the assessee had acted malafidely is not the relevant question to be asked and answered. The relevant question to be asked and answered is whether the assessee has discharged the onus and satisfied the conditions mentioned in Explanation 1 to Section 271(1)(c) of the Act. Absurd or illogical interpretations cannot be pleaded and become pretence and excuses to escape penalty. “Bonafides” have to be shown and cannot be assumed. Penalty confirmed - Decided against assessee. - ITA Nos. 4148,4147,4149/Del/2015 - - - Dated:- 6-12-2018 - Shri H.S. Sidhu, Judicial Member And Shri O.P. Kant, Accountant Member For the Assessee : Shri Anil Kumar Khanna, FCA For the Department : Shri B.S. Rajpurohit, Sr. DR ORDER PER O.P. KANT, A.M. The above-mentioned appeals of the assessee are directed against separate orders dated 24/04/2015 passed by the Ld. Commissioner of Income Tax (Appeals)-40( Exemption), New Delhi [in short the Ld. CIT(A)] for asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um proceedings is concerned, the factual position as mentioned by the Ld. CIT(A) in para 4.2 of the impugned order, is reproduced as under for ready reference: 4.2 So the assessee was earlier enjoying the exemption u/s 10(23) and has been enjoying the exemption u/s 11(1) subsequently but the assessee did not have any registration u/s 12AA(1) or notification u/s 10(23) during the period of 03 assessment years of 2003-04,2004-05 2005-06 for which the assessee had filed the application for registration u/s 12AA(1) dated 29/08/2003 but the same was rejected by the DIT(Exemption) in the order dated 24/07/2004. The assessee had claimed the routine exemption during the AY 2003-04, 2004-05 2005-06 but the same was denied by the AO and the AO had also disallowed the even the regular expenses claimed by the assessee. The assessee had filed the appeal against the order of the AO and the Ld. CIT(A) had allowed the all the regular expenses to the assessee. The department had filed the appeal against the order of the Ld. CIT(A) and the Hon'ble Tribunal in the consolidated order dated 27/07/2012 in ITA No. 2328, 2329 2330/De1/2009 had dismissed the appeal and thereafter the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s allowed only when the assessee is registered under section 12AA(1) of the Act . In view of the no registration, the claim of exemption under section 11 is a patently bogus claim made by the assessee. In the facts and circumstances of the case ,the Ld. CIT(A) upheld the penalty in assessment year 2003- 04 observing as under: 4.5 I have considered the order of the AD and the submissions of the assessee but I do not find any merit in the submissions of the assessee. That the assessee is a charitable institution but it is not only a mere coincidence that the assessee did not get the benefit of exemption during the A.Ys. 2003-04, 2004-05 2005-06 which the assessee had always enjoyed in all other years. 4.6 The assessee was very much aware that the assessee did not have the benefit of any exemption under any provision of the Act during these three years but still the assessee deliberately made the bogus claim of exemption in the return of income and took the chance that the department may overlook the matter otherwise there is no reason why the assessee should claim the benefit of exemption when it did not have any legal claim for this. It is a matter of great concern that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... besides being incorrect in law is mala-fide, Explanation 1 to Section 271(1) would come into play and work to the disadvantage of the assessee . (20) The Court cannot overlook the fact that only a small percentage of the Income Tax Returns are picked up for scrutiny. If the assessee makes a claim is not only incorrect in law but also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty u/s 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of selfassessment u/s 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn. The object behind enactment of section 271(1)(c) read with the Explanations indicate that the section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276C of the Act. 4.13 After considering all the facts and circumstances of the case, I am of the view that there is concealment of income and the addition made by the AO comes clearly within the meaning of furnishing of inaccurate particulars of income u/s 271(1)(c) read with Explanation -1 and as such the AO is justified to levy the minimum penalty @ 100% on the addition made by the AO and I do not find any substantial reason to interfere with the order of the AO and accordingly, the penalty levied by the AO is confirmed. 9. Identical findings have been given by the Ld. CIT(A) in assessment year 2004-05 and 2005-06. 10. It is evident that the assessee failed to give any bonafide explanation in respect of the bogus claim made in all the three assessment years and thus Explanation -1 below the section 271(1) ..... 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