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TMI Blog2019 (5) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty order u/s 271(1)(c). 2. It is contended that the Appellant Board had neither concealed nor furnished any inaccurate particular so as to attract provisions of section 271(l)(c) of the IT Act. hence the impugned penalty order is wrong and bad in law. 3. It is contended that the claim of benefit of weighted deduction under section 35 being an incentive and having made to recognized institution under section 35 cannot come under the purview of provisions of section 271(l)(c), since it is neither concealment nor furnishing of any inaccurate particulars. 4. It is contented that merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(l)(c) held in the case of CIT vs. Reliance petro products (P.) Ltd. [Civil Appeal No. 2463 of 2010, dated 17.03.2010 (SC). 5. The expression 'concealment of income' implies that an income is being hidden, camouflaged or covered up so as it cannot be seen, found, observed or discovered. The expression 'furnishing of inaccurate particulars of income' implies furnishing of details or information about income which are not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 The Grounds of appeal raised in ITA No. 4663/Del/2014 for assessment year 2006-07 are reproduced as under: 1. That the Ld. CIT both on facts and in law had erred in passing the penalty order u/s 271(l)(c). 2. It is contended that the Appellant Board had neither concealed nor furnished any inaccurate particular so as to attract provisions of section 271(1 )(c) of the IT Act. hence the impugned penalty order is wrong and bad in law. 3. It is contended that the claim of benefit of weighted deduction under section 35 being an incentive and having made to recognized institution under section 35 cannot come under the purview of provisions of section 271(l)(c), since it is neither concealment nor furnishing of any inaccurate particulars. 4. It is contented that merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(l)(c) held in the case of CIT vs. Reliance petro products (P.) Ltd. [Civil Appeal No. 2463 of 2010, dated 17.03.2010 (SC). 5. The expression 'concealment of income' implies that an income is being hidden, camouflaged or covered up so as it cannot be see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause, it should have been done hence a technical lapse. 9. That appellant craves to alter, amend, modify, add or delete any of the grounds of appeal at the time of hearing. 2.2 The Grounds of appeal raised in ITA No. 4664/12/2014 for assessment year 2007-08 are reproduced as under. 1. That the Ld. CIT has erred both on facts and in law in framing order u/s 271(l)(c). 2. It is contended that the Appellant Board had neither concealed nor furnished any inaccurate particular so as to attract provisions of section 271(l)(c) of the IT Act. hence the impugned penalty order is wrong and bad in law. 3. It is contended that the claim of benefit of weighted deduction under section 35 being an incentive and having made to recognized institution under section 35 cannot come under the purview of provisions of section 271 (l)(c), since it is neither concealment nor furnishing of any inaccurate particulars. 4. It is contented that merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271 (l)(c) held in the case of CIT vs. Reliance petro products (P.) Ltd. [Civil Appeal No. 2463 of 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of hearing. 3. Briefly stated facts of the case are that in the return of income filed for assessment year 2005-06, the assessee claimed deduction under section 36(1)(xii) of the Act, amounting to Rs. 78,14,68,000/- and also claimed deduction under section 35(1) of the Act amounting Rs. 5,23,00,000/-. The Assessing Officer declined both the deduction claimed by the assessee. On further appeal, the Ld. CIT(A) deleted the disallowance of Rs. 78,14,68,000/- on account of deduction under section 36(1)(xii) of the Act but sustained the disallowance of Rs. 5,23,00,000/- under section 35(1) of the Act. In assessment year 2006-07 the Assessing Officer also made disallowance of Rs. 5,50,00,000/-under section 35(1) of the Act. In assessment year 2007-08, the Assessing Officer made disallowance of Rs. 3,74,06,800/- under section 35(1) and disallowance under section 14A of the Act amounting to Rs. 40,69,000/-. The assessee did not prefer any appeal against the said finding of the Ld. CIT(A) on the issue of disallows under section 35(1) of the Act. 3.1 Consequent to the appeal giving effect under section 250/143(3) of the Act, the Ld. Assessing Officer issued showcause for penalty u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of common order observing as under: "4.7 I have carefully considered the submissions of the appellant and perused material on the records. The explanations offered by the appellant either during the penalty or appellate proceedings cannot be considered as a bonafide one to escape from the rigours of the penalty provisions. Here, direct evidences to prove the intent of concealment are available in all the three years as the appellant failed to offer any plausible explanation either before the AO or me regarding the disallowance of deduction u/s 35 and disallowance u/s 14A. The facts and circumstance of these cases establish that the appellant has concealed income and furnished inaccurate particulars of its income in all the three years. In the case of Shiv Narain Khanna Vs. CIT 107 ITR 542, the Hon'ble Punjab & Haryana High Court has held as under that no additional material is required for levy of penalty in addition to the material for which assessment is based: "The facts of the case would stare anyone in the face. The learned counsel for the assessee appears to be labouring under the impression that some additional material should always be available for the levy of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference between section 271(l)(c) and section 276C of the Income-tax Act was lost sight of in Dilip N. Shroff's case [2007] 8 Scale 304 (SC). The Explanations appended to section 272(l)(c) of the I.T. Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroff's case [2007] 8 Scale 304 (SC) has not considered the effect and relevance of section 276C of the Income-tax Act. The object behind the enactment of section 271(l)(c) read with the Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276C of the Income-tax Act." 4.10 The Hon'bie Delhi High Court, in the case of CIT v/s Mak Data Ltd., ITA No.415/2012, order dated: 22.01.2013 held that even the surrender of income without explanation attracts penalty. In the case of Mak Data Ltd. (supra), a survey u/s 133A was conducted on the assessee's premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as revenue and also claimed income tax paid as deduction. The Hon'ble High Court after considering the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Retro Products Pvt. Ltd., (2010) 322 ITR 158 (SC), upheld the levy of penalty by observing that: * The Bench cannot lose sight of the fact that the assessee is a company which must be having professional assistance in computation of its income, and its accounts are compulsory subjected to audit. In absence of any details from the assessee, it is difficult to appreciate how such deductions could have been left out while computing the income of the assessee company and how it could also have escaped the attention of the auditors of the company; * The explanation offered by the assessee company was not accepted either by the AO or by the CIT (Appeals). The view of Income Tax Appellate Tribunal regarding admissibility of the deduction or account of written off of certain assets, under Section 32(l)(iii) of the Act is wholly erroneous. The Tribunal has not recorded a finding that the explanation furnished by the assessee in respect of the deduction due to certain assets being written off was a bonafide expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therein nor what legally follows from the various observations made in it. It is not a profitable task to extract a suitable sentence here and there from a judgement and to build upon it (vide Ambica Quarry Works v. State of Gujarat, AIR 1987 Supreme Court 1073). 4.13 Had the AO not investigated these cases; then the Govt, exchequer would have been devoid of the quantum of tax levied on the income of Rs. 5,23,00,000/-, Rs. 5,50,00,000/- and Rs. 4,14,75,800/- in the AY 2005-06, 2006-07 and 2007-08 respectively. Here in these cases, the appellant's explanations have been rebutted or found unsubstantiated by the AO as evident from the details mentioned above in para 4.1 to 4.3 in respect of ail the AYs and in the impugned penalty orders of the AY 2005-06 to 2007- 08 and thus ail the facts and materials relating to the computation of the total income for the AY 2005-06 to 2007-08 are held to have not been disclosed by the appellant. Therefore, the Explanation-1 of section 271(l)(c) is clearly attracted in these cases for the AY 2005- 06 to 2007-08. Accordingly, the income of the AY 2005-06, 2006-07 and 2007-08 have been rightly treated deemed to have been concealed within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 35(1) of the Act was made under the bonafide belief that the institution to which grants were made i.e. M/s The Petroleum Conservation Research Association, New Delhi, was entitled as approved scientific research Association under section 35(1)(ii) vide Notification No. SO 904EUR (37/2006) dated 28/02/2006. The Ld. counsel submitted that further appeal on this issue was not filed before the Tribunal as the assessee was not granted any approval by the committee of dispute (COD) on this issue. According to the Ld. counsel in making the claim no inaccurate particulars been filed and merely making incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. 6. The Ld. counsel also submitted that there is no finding in the assessment order that the assessee has "concealed any income" or "furnished any inaccurate particulars of income" which are prerequisite for levy of penalty under section 271(1)(c) of the Act. In support of the submission, he relied on the decision of the Hon'ble Karnataka High Court in the case of CIT Vs Manjunatha Cotton Ginning Gactory ( 359 ITL 565). 7. The Ld. DR, on the other hand, relied on the order of the lower author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Conseguently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961." 5. CIT Vs Escorts Finance Ltd [183 Taxman 453 (Delhi)/[2010] 328 ITR 44 (Delhi)/[2009] 226 CTR 105] where Hon'ble Delhi High Court held that if claim made in return of income appears to be ex facie bogus, it would be treated as a case of concealment or furnishing of inaccurate particulars and penalty proceeding would be justified. 8. We have heard the rival submissions and perused the relevant material on record. The grants and contribution made by the assessee to various institution and deduction claimed thereon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products Ltd 322 ITR 158 it is held that: "Reading the words "inaccurate" and "particulars" in conjunction, the Apex Court opined that they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under s. 271(l)(c). A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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