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TMI Blog2022 (11) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings, it was noticed that the respondent started its commercial production on 4/5/1988 with business losses claimed in the AY 1989-90. Letter on the respondent claimed that commercial production was started on 1/31992 but the Assessment Officer did not accept the claim of the petitioner in respect of capitalizing the amount of Rs.6,00,91,886/- in respect of expenses and loss incurred up to 01.03.1992. The assessment was completed on 28.02.1995 determining total income of Rs.2,42,17,558/- with following conditions: - 1 Disallowance of depreciation Rs.0,67,58,503/- 2 Disallowance of expenses under the head (verification & valuation) Rs.0,06,46,956/- 3 Wrong claim of exps. Under the head Publicity Rs.0,08,50,530/- 4 Addition towards shrinkage of cloth Rs.0,00,71,808/- 5 Compensation received-from Michelin Rs.5,18,02,396/- 6 Additional on account of receipt of power subsidy Rs.0,04,66,116/- 2.2. Being aggrieved by the aforesaid assessment order, respondent/assessee preferred an appeal before the Commissioner of Income Tax (A) and vide order dated 08.12.1995, the appellate authority confirmed the same with additions to the following extent:- 1 Disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any right or relinquishment of any capital assets but was like reimbursement of the losses and accounts hence ought to have been shown as capital receipts but the Assessment Officer has wrongly construed the same as revenue receipts. The learned Commissioner did not accept the aforesaid contention and held that amount of Rs.5,18,02,396/- received under settlement on 21.11.1991 has rightly been taxed and business income by the Assessment Officer in the present Assessment Year i.e. 1992 - 93 and dismissed the appeal. 2.6. In pursuant to the aforesaid order, the Deputy Commissioner of Income Tax issued a revised notice of demand and challan. Thereafter, the appellant approached the Income Tax Appellate Tribunal along with an application for a stay. At the instance of the respondent /assessee, an Income Tax Reference was sent to the High Court on the issue of "whether in the facts and circumstance of case, the Tribunal was justified in concluding the computation of Rs.5,18,02,396/- received by assessee constituted revenue receipt and is liable to be assessed as revenue receipt" apart from other three questions. Vide judgment dated 06.07.2009 passed in ITR No.62 of 1997, this Court an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of particular income as well as furnishing inaccurate particulars. The First Appellate Authority has rightly imposed the penalty @ 100%. Merely the issue that was debatable in the appeal cannot be a ground for avoiding the penalty under Section 271(1)(2) of the Income Tax Act. In support of the aforesaid contention, she placed reliance upon the judgment delivered in the cases of Commissioner of Income Tax v/s Prakash S. Vyas reported in (2014) 272 CTR (Guj) 353 and Commissioner of Income Tax v/s Dharamshi B. Shah reported in (2014) 366 ITR 140 (Guj). 04. Per contra, Shri P. M. Choudhary, learned Senior Counsel appearing for the respondent/assessee contended that once this Court has given a finding that on a question referred by the Income Tax Department that Rs.5,18,02,396/- was revenue receipt and the respondent/assessee has been subjected to the tax, the High Court itself found that there is a debatable issue and adjudicated it, therefore, it cannot be held that the assessee concealed the particular of the income. In all fairness, the assessee disclosed the income, as per the advice given by his Tax Consultant / Chartered Accountant, as a business receipt, hence, the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l receipt. According to the appellant, the respondent deliberately shown these receiving of the amount of Rs.5,18,02,396/- as capital receipt. It is further submitted by the learned counsel for the appellant the respondent was having knowledge of the real nature of the transaction i.e. nature of such damage and the receipt, therefore ought to have correctly shown in the returns, thus the assessee furnished inaccurate particulars of such income by attempting to categorise them as a capital receipt which had been confirmed by this Court vide judgment dated 06.07.2009 passed in ITR No.62/1997, therefore, the assessment officer as well as Joint Commissioner of Income Tax have rightly held respondent for penalty under Section 271 (1) (c) on this issue. 07. Learned Income Tax Appellate Tribunal has examined the provision of section 271 (1) (c) under which penalty was levied on receipt of Rs. 2,88,51,613/- and Rs.2,29,50,782/-. It has been held that the company treated the aforesaid amount as payment towards extinguishment of rights and claimed in the nature of capital receipt and in order to avoid capital tax liability the said amount was invested in the IDBI capital bonds within six mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the agent of a person not resident in 5[the taxable territories] for failure to furnish the return required under Section 22 unless a notice under sub-section (2) of that section or under Section 34 has been served on him;] 6[(d) 7[when the person liable to penalty is a registered firm or an unregistered firm which has been assessed under clause (b) of subsection (5) of Section 23, then, notwithstanding anything contained in the other provisions of this Act, the amount of income-tax and supertax payable by the firm itself shall be taken to be] an amount equal to the tax which would have been payable by an unregistered firm on an income equal to the firm's total income, and, in the cases referred to in clauses (b) and (c), the amount of the income-tax and super-tax which would have been avoided if the income as returned had been accepted as the correct income, shall be taken to be the difference between the amount of the tax which would have been payable by an unregistered firm on an income equal to the firm's total income and the amount of the tax payable by an unregistered firm on an income equal to the income of the firm as actually returned by the firm.] (2) If the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e particulars of such income. In the present case, the respondent disclosed the source of income as a capital receipt. The source of receipt of the amount of Rs.5,18,02,396/- from Michelin Company was correctly disclosed. It might be on the basis of the opinion given the by tax consultant or Charted Accountant, it was shown in the capital receipt in the return however, that was a debatable issue, therefore, the reference was sent to High Court. 10. The Apex Court in the case of Commissioner of Income Tax v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) has held that to attract this provision of section 271 (1) (c), there has to be concealment of the particulars of the income of the assessee, the particular means the details of the claim made, hence, where the information given in the return is found to be incorrect or inaccurate, the assessee can be held guilty of furnishing inaccurate particulars. The relevant paragraphs are reproduced below:- 17. We are not concerned in the present case with mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make. The calibre and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present one, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. 16.We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars.'' 12. The Division Bench of this Court in case of Dadabhoy's New Chirmiri Ponri Hill Colliery Company Pvt. Ltd. Vs. Commissioner of Sales Tax (2004) 2 STJ 2006 (MP) has examined the imposition of penalty on the assessee under Section 43 (1) of the M.P. General Sales Tax Act, 1958 read with Section 9(3) of the Central Sales Tax Act, 1956 and opined that when facts are disclosed in a return and are misstated, the raising of a legal plea of the exemption cannot make the return a false return within the meaning o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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