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TMI Blog2020 (6) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... s evident from the statement showing gross total income as annexed to the Paper Book before us. Question of bona fides cannot be decided against the assessee either. The conduct of the assessee is bona fide or not is essentially a question of fact and the related facts are always in the exclusive knowledge of the assessee. The Revenue may or may not agree with this understanding of law of the assessee but the fact that there can be a bona fide view to that effect cannot be ruled out. The human probabilities favour acceptance of this explanation for bona fides. It cannot always be feasible to prove the claim of bona fides to the hilt, nor, in our considered opinion, the assessee cannot be expected to do so. As long as the explanation given by the assessee in the light of the human probabilities, there are no factual errors or inconsistencies, and it is supported by rational supporting evidences regarding factual evidences embedded therein, if any, the bonafides should be taken as proved. We observe that the assessee s explanation regarding bonafides of the claim does not suffer from any apparent inconsistencies or factual errors and it is quite in tune with the human probab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract the appellant made claims on the said NMPT aggregating to ₹ 892,579,385/- for additional work performed. Counter claim to the tune of ₹ 138,500,039/- for the loss of revenue due to delay in completion of the said contract by the assessee was also made by the NMPT. On May 19, 1998 the Arbitral Tribunal was pleased its award in favour of the appellant upon which the said NMPT filed an appeal before Additional District Court. Ultimately by an order dated March 30, 2000 the Additional District Court of Mangalore was pleased to upheld the claim in favour of the appellant. Thereafter, an appeal before the Karnataka High Court was moved by the NMPT and during the F.Y. 2000-01 the said NMPT withdrew the appeal filed with the Karnataka High Court and paid the claim of the appellant to the tune of ₹ 307,870,463/- in the month of September, 2000. In fact, in the return of income filed by the appellant, this particular amount was reduced from its business profit for determining its taxable income. 4. The case of the appellant is this that the appeallant site office at New Mangalore Port being an independent PE; the same was not in existence on the date of accrua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. Senior Advocate appearing for the assessee. There was a complete disclosure in respect of the NMPT arbitration award which is evident from the note 7 annexed to the computation on income wherein the appellant has disclosed the arbitration award and explained the legal opinion of the assessee for not offering the same as taxable income. Thus neither concealment of income nor furnishing of inaccurate particulars of income can be alleged against the assessee as the argued by the Ld. AR and penalty is not liable to be levied under section 271(1)(c) of the Act. 5. On the other hand, the Ld. Representative appearing for the Revenue submitted before us that the assessee s action of offering the tax in respect of income of ₹ 100 lakhs on account of bad debts from Kandala Port Trust Project but not offering the income of ₹ 30.79 crores received by way of arbitration award shows the willful omission on the part of the assessee and the intention and/or desire to avoid payment of tax. According to him the assessee has not discharged its onus and no satisfactory explanation has been pointed by the assessee. On this aspect, he relied upon the order passed by the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed to the return of income filed by it. It is relevant to mention that Sec. 271(1)(c) of the Act provides that penalty may be levied, where in the course of any proceeding under the Act the AO is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. Though the expressions concealed the particulars of income and furnish inaccurate particulars of income have not been defined either in Sec. 271(1)(c) of the Act or elsewhere in the Act relying on different judicial pronouncement and as per the International Dictionary as we find, conceal implies to hide or withdraw from observation, to cover or keep from sight, or to prevent the discovery of or to withhold knowledge of . The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. Furthermore, there has to have a deliberate act on the part of the assessee for such concealment. According to the Shorter Oxford English Dictionary, 3rd edition, volume 1, concealment is the intentional suppression of truth or fact known to the injury or prejudice to another. Thus, the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars of income . However, even assuming that the deeming fiction under Explanation 1 to Sec. 271(1)(c) can be triggered by a wrong legal claim, it cannot be the case that merely because there is wrong claim, even if that be so, penalty under section 271(1)(c) can be imposed. This deeming fiction under section 271(1)(c) only shifts the onus of proof on the assessee, as this Explanation itself provides that a penalty can only be imposed (a) when there is no explanation by the assessee, (b) when the explanation given by the assessee is found to be false, and (c) when the assessee provides an Explanation which he fails to substantiate and he fails to prove that the explanation was bona fide and that all the facts necessary for the same and material for computation of income have been duly disclosed by the assessee. In the case before us in hand none of the conditions is fulfilled in favour of the Revenue for imposing penalty. As it appears on record that at the very onset of filing of return the assessee explained the reasons for not including the amount in question being 3.79 crores received as arbitration award in its taxable income by annexing Note 7 relying upon the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation regarding bonafides of the claim does not suffer from any apparent inconsistencies or factual errors and it is quite in tune with the human probabilities. We, therefore, find no reason to reject the reason as unacceptable. In that view the matter the case of the assessee is not even hit by the mischief of any of the three eventualities envisaged by the deeming fiction under Explanation 1 to Sec. 271(1)(c) of the Act. Neither we find any concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee in not including ₹ 30.79 crores received as arbitration award in its taxable income and thus imposition of penalty is not justifiable at all in the present facts and circumstances of the case. Hence, we direct the AO to delete the impugned penalty of ₹ 147,777,822/-. 7. In the result, assessee s appeal is allowed. 8. Before parting we would like to make certain observation relating to the issue cropped up under present scenario of Covid-19 pandemic as to whether when the hearing of the matter was concluded on 08.01.2020 the order can be pronounced today i.e. on 19.05.2020. The issue has already been discussed by the Co-ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now) , all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was seve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)] , Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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