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TMI Blog2019 (6) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has concealed in entirety the factum of running a proprietary concern and the profits derived there on will undisputedly takes the character of concealment of income and hence in view of the above discussion, we decline to interfere with the order of the CIT (A). - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... er: Explanation 1. Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner 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. The implication of the Explanation as under: (1) Every difference between reported and assessed income needs an explanation. (2) If no explanation is offered, levy of penalty may be justified. (3) If explanation is offered, but is found to be false, penalty will be exigible. (4) If explanation is offered and it is not found to be false, penalty may not be leviable,- (a) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any cogent reply duly supported with documentary evidence to substantiate his claim. For the reasons discussed above in the penalty order, it is established beyond doubt that, whatever explanation has been given by the assessee has been found to be not reliable. Subsequent to the survey proceedings, altogether new submissions have been made. At the time of survey proceedings, it was admitted that assessee was the proprietor of M/s AVI Impex but later it was claimed that this concern was the AOP of M/s Gunjeev Saluja and others and it came to existence on 22.11.2003. But considering the detailed discussion on the above issue clearly establish that whatever claim has been made is devoid of any merit as entire claim is nothing but an after-thought to mitigate the tax liability and even the malafide intent of the assessee in the entire factual circumstances gets established. 4.1.4 Thus, it is established beyond doubt that, provisions of section 271(1)(c) are clearly applicable in the case of the appellant. With the insertion of Explanation 1 to section 271(1)(c) the onus is now on the assessee to establish his innocence and righteous conduct. It is held in the case of Kanbay Software ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of AO. On further appeal, ITAT allowed the plea of the assessee on the ground that there was no concealment and amount was voluntarily surrendered by assessee. Aggrieved by the order of ITAT, revenue took the matter to High court who pronounced the judgment against the assessee confirming the order of the AO. On appeal to Supreme Court it was held as under: Judgment of Apex Court: 1. Whenever there is a difference between the returned and assessed income, onus is on the assessee to substantiate the claim by cogent and reliable evidence. When initial onus placed by the Explanation-i to Section 271(1X0) is discharged by the assessee, burden of proving the ground to levy the penalty is on Revenue. (ii). Assessee's plea like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. are not recognized by the statute under Explanation-i. Voluntary disclosure made by the assessee does not release the appellant from the mischief of penal proceedings and income tax law does not absolve assessee from penalty when voluntary disclosure is made. 3.Surrender of income cannot be termed as "voluntary", as it was offered for taxation after detection was made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee with reference to facts of the case. Thus, the onus is on the assessee to rebut the inference of concealment. The onus laid down upon the assessee to rebut the presumption raised under Explanation 1 would not be discharged by any fantastic or fanciful explanation. It is not the law that any and every explanation has to be accepted. In CIT v. K.P. Madhusudanan [2000]246 ITR 218/[2002] 125 Taxman 265, Hon'ble Kerala High Court came to the conclusion that penalty was liable to be imposed in a case where the assessee could offer no acceptable explanation for the income not disclosed or the inaccurate particulars he had furnished in his return. - Hon'ble Apex Court in Union of India vs. Dharmendra Textile processors (SC) 306 ITR 277, Guljag Industries Ltd. vs. CTO (SC) 293 ITF 584 and CIT vs. Atul Mohan Bindal (SC) 317 ITR 1 have held that 'mens rea' not essential for civil liability of penalty- Penalties under fiscal statutes are for breach of civil liabilities - Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution u/s 276C. After distinguishing the decision in CIT vs. Reliance Petroprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO where inadmissible deduction claimed u/s 80IA was disallowed and added to the income of the assessee. In these cases also the appellant claimed that the deduction u/s 80IA of the Act were claimed on the basis of certificate of Charted Accountant. While upholding the penalty imposed by the AO, the Hon'ble Jurisdictional High Court have held as under: "Penalty provisions are not criminal and do not require culpable mens rea. 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. Penalty under Section 271 (l)(c) of the Act is imposed when an assessee has concealed his income or furnished inaccurate particulars. In terms of the explanation quoted above, we have to examine whether the case falls within sub-clause (A) or (B) and the effect thereof. Sub-clause (A) applies when the assessee fails to furnish any explanation or when an explanation is found to be false. In the present case, sub-clause (A) would not be applicable as asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2000. The CIT (Appeals) in the first appellate order has specifically mentioned that the "Finance Act, 2007 received the Presidential assent on 11.05.2007 [(2007) 291 ITR (St.) 1]. The returns of income were filed by M/s. HCIL Kalindee ARSSPL (JV) and M/s. HCIL ARSSPL Triveni (JV) on 01.11.2007. An amendment of this nature invariably attracts attention and is seldom missed. Such amendments become topic of discussion and conversation in the professional circles. To show and establish bonafides, the assessees had to show some more "tangible material" or basis as to why a clear statutory provision which excludes works contracts was ignored. 12. Penalty of concealment cannot be imposed because the assessee has taken a particular stand or had preferred an interpretation which was plausible and reasonable, but has not been accepted, unless the assessee had not disclosed facts before the authorities. Such cases have to be distinguished from cases where the claim of the assessee is farcical or farfetched. Dubious and fanciful claims under the garb of interpretation, are a mere pretence and not bonafide. 13. It is not the case of the respondent assessee that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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