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TMI Blog2020 (8) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... t or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript , Supreme Court held that the two words i.e., inaccurate and particulars read in conjunction must mean that the details supplied in the return are not accurate, not exact or correct, not according to truth or erroneous. It was held that mere making of a claim which is not sustainable in law by itself would not amount to furnishing inaccurate particulars regarding the income of the assessee. In the present case, concealment of particulars of income was not the charge against the appellant, the charge being furnishing of inaccurate particulars of income. As discussed above, it is trite that penalty cannot be imposed for alleged breach of one limb of Section 271(1)(c) of the Act while penalty proceedings were initiated for breach of the other limb of Section 271(1)(c). This has certainly vitiated the order of penalty. Assessee had declared the full facts and the sale agreement at the first instance; the full factual matrix or facts were before the AO while passing the asessment order. It is clear from the facts that the appellant had never suppressed any material fact from the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant to furnish details of capital gains earned during the year under consideration i.e. Assessment Year 2005-06. Appellant furnished the requisite information alongwith a copy of the sale agreement to the respondent and after scrutinizing the same respondent accepted the capital gains arising on execution of the sale agreement as offered by appellant. Accordingly, assessment order was passed. (iv) During the Assessment Year 2006-07, a further consideration of ₹ 1,30,00,000.00 was received out of the balance remaining total consideration. Appellant filed return of income for the Assessment Year 2006-07 and offered to tax his share out of ₹ 1,30,00,000.00 received during the year, viz; ₹ 63,96,000.00. (v) During the financial year relevant to Assessment Year 2007-08 another installment of ₹ 15,00,000.00 out of the balance was received and appellant offered his share in the said amount (i.e. ₹ 7,38,000.00) to tax in the return of income filed for the Assessment Year 2007-08. (vi) The final outstanding balance amount of consideration i.e. ₹ 9,98,889.00 (₹ 2,60,00,000 ₹ 2,50,01,111) was not received and therefore con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gains arising pursuant to execution of the sale agreement with respect to the said plot of land. (xiii) The assessments for the Assessment Years 2006-07 and 2007-08 were completed keeping in mind the reassessment completed for the Assessment Year 2005-06. (xiv) After completing the above reassessment for the Assessment Year 2005-06, respondent issued notice dated 26.11.2008 under Section 271(1)(c) of Act calling upon the appellant to show cause as to why penalty should not be levied and called upon the appellant to attend the hearing for penalty proceedings by another notice dated 02.04.2009. (xv) By letter dated 13.04.2009, appellant furnished detailed reasons and circumstances under which the revised returns of income for the Assessment Years 2005-06 to 2007-08 came to be filed and also the details of taxes alongwith amounts that were due as a result of the revised returns which had promptly been paid by the appellant without raising any dispute. By another letter dated 13.04.2009 appellant also brought to the notice of the respondent that during the course of the original assessment proceedings for the Assessment Year 2005-06, appellant had furnished a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing ₹ 63,96,000/- as capital gains on Vasai Land being amount received during the year. E 36-42 5 16-11-2007 Return for A.Y. 2007-08 filed offering ₹ 7,38,000/- as capital gains on Vasai land being amount received during the year. F 43-45 6 21-04-2008 148 Notice issued by Respondents for A.Y. 2005-06 to bring to tax the entire gains in A.Y. 2005-06 7 20-08-2008 Revised return filed for A.Y. 2006-07 withdrawing offer of capital gains in view of offer of entire gains to be made in A.Y. 200506 revision not accepted in view of reopening of A.Y. 2005-06 I 50-56 8 21-08-2008 Revised return filed for A.Y. 2005-06 offering the entire gains to tax not accepted since the return was barred by limitation J 57-63 9 22-08-2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form 36 GOA ITAT Appeal Filed Y 112-114 24 31-05-2010 ITAT Order Z 136-146 25 MA Filed challenging the Tribunal s Order 26 27-08-2010 MA Order AA 147-159 5.1 From the above chronology of events, Mr. Thakkar has submitted before us that there was a complete disclosure made by appellant at all times and, therefore, it was not a case of the appellant furnishing inaccurate particulars of income or of concealing particulars of income. He submitted computation of income of all three years viz. Assessment Years 2005-06, 2006-07 and 2007-08 wherein it was specifically disclosed that the consideration offered to tax was on receipt basis and most importantly during the first Assessment Year i.e. 2005-06 scrutiny proceedings, appellant had furnished copy of the agreement for sale which was considered and accepted by the respondent. Appellant had filed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urate particulars of income as alleged by the respondent. Section 271(1)(c) contemplates two separate offences viz. furnishing of inaccurate particulars of income and concealment of particulars of income. In the present case, penalty proceedings were initiated against the appellant for furnishing of inaccurate particulars of income. Further, relevant provisions of the statutory notice issued under the provisions of Section 274 of the Act was blank i.e. not filled up or struck off. In the present case, initiation of penalty proceedings was done for one offence i.e. (for furnishing inaccurate particulars of income) but levy of penalty was for another offence i.e. (concealment of income) which is not permissible in law. Keeping the relevant portions of the notice issued under Section 274 of the Act blank led to a jurisdictional defect and showed complete non-application of mind on the part of the respondent- Assessing Officer. Orders passed by the ITAT and CIT Appeals upholding the order levying penalty passed by the respondent under the provisions of Section 271(1)(c) of the said Act therefore deserves to be quashed. 5.2 Mr. Thakkar laid emphasis and relied on the following judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of strict liability on the assessee for furnishing inaccurate particulars of income while filing return. Shri Malhotra referred to and relied upon the following judgments in support of his submissions. A Samson Maritime Ltd. Vs. Commissioner of Income Tax City 7 Bombay High Court B Dr. Amin s Pathology Laboratory Vs. P.N.Prasad, Joint Commissioner of Income Tax (2001) 252 ITR 673 (Bombay) C Union of India Vs. Dharamendra Textile Processors (2008) 174 Taxman 571 (SC) 7. The submissions made by learned counsel for the parties have been duly considered. Also perused the materials on record including the judgments cited at the bar. 8. Before we advert to the submissions made, it would be apposite to state the relevant legal provisions which are required to be considered in the facts and circumstances of the present case : Section 2(47) of the Income Tax Act, 1961: 2. In this Act, unless the context otherwise requires, (47) transfer , in relation to a capital asset, includes,- (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. In order that the provisions of Section 53A of the T.P. Act be attracted, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of Section 53A can be said to be attracted on the facts of a given case. Section 271(1)(c) is as under : 271(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - (i)...... (ii)...... (iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings as well as at the time of imposition of penalty, Assessing Officer was not clear as to which limb of Section 271 (1) (c) of the Act was attracted. At the time of hearing, learned counsel for the appellant argued that in the show-cause notice the inapplicable portion was not struck off; thus it was not indicated in the notice whether the penalty was sought to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income, which has vitiated the impugned order of penalty. We have already noted and analyzed the two limbs of Section 271(1)(c) of the Act and also the fact that the two limbs i.e. concealment of particulars of income and furnishing inaccurate particulars of income carry different connotations. We have also noticed that the Assessing Officer has to indicate in the statutory notice for which of the two limbs he proposes to impose the penalty and for this the notice has to be appropriately marked. If in the printed format of the notice the inapplicable portion is not struck off thus not indicating for which limb the penalty is proposed to be imposed, it would lead to an inference as to nonapplication of mind, thus vitiating imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing; a displayed sheet or placard giving news or information. It means to become aware of. In other words, to put someone on notice would mean warn someone of something about or likely to occur. Black s Law Dictionary, Eighth Edition, defines the expression notice to mean having actual knowledge of a fact; has received information about it; has reason to know it; knows about the related fact. In CST Vs. Subhash Company, (2003) 3 SCC 454 , Supreme Court deliberated upon the concept of notice and observed that the term notice has originated from the Latin word notifia which means being known or a knowing . Thereafter, Supreme Court referred to the definition of the word notice in various general and judicial dictionaries. Without adverting to the large number of definitions, suffice it to say notice would mean information, warning or announcement of something impending; notice in its legal sense may be defined as information concerning a fact communicated to a party by an authorized person or actually derived by him from a proper source; the term notice in its full legal sense embraces a knowledge of circumstances that ought to induce suspicion or belief as well as di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. This decision was followed by this Court in CIT Vs. M/s. Mansukh Dyeing Printing Mills, Income Tax Appeal No.1133 of 2008, decided on 24.06.2013. In CIT Vs. DCM Ltd., 359 ITR 101 , Delhi High Court applied the said decision of the Supreme Court and further observed that law does not debar an assessee from making a claim which he believes is plausible and when he knows that it is going to be examined by the Assessing Officer. In such a case a liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law. Threat of penalty cannot become a gag and / or haunt an assessee for making a claim which may be erroneous or wrong. Again, in CIT Vs.Shahabad Co-operative Sugar Mills Ltd., 322 ITR 73, Punjab Haryana High Court held that making of wrong claim is not at par with concealment or giving of inaccurate information which may call for levy of penalty under Section 271(1)(c) of the Act. 19. Reverting back to the present case it is quite evident that assessee had declared the full facts and the sale agreement at the first instance; the full factual matrix or facts were before the Assessing Officer while passi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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