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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 ..... issioner of Sales Tax [ 1978 (10) TMI 138 - MADHYA PRADESH HIGH COURT] has examined the imposition of penalty on the assessee u/s 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 of Section 43(1). Therefore, in view of the above discussion, the Appellate Tribunal of IT has not committed any error while setting aside the order passed by the Assessment Officer as well as CIT in respect of the imposition of penalty under Section 271 (1) (c). We do not find any substantial question of law involved in favour of the appellant hence the question of law No.1 is answered against the appellant and in favour of the respondent. So far as issue No.2 is concerned, as discussed above no case of imposition of penalty under Section 271(1) (c) - Decided in favour of assessee. - Hon'ble Shri Justice Vivek Rusia And Hon'ble Shri Justice Amar Nath (Kesharwani) For the Appellant : Ms. Veena Mandlik, Advocate For the Respondents : Shri P.M. Choudhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (verification valuation) Rs.0,05,37,512/- 3 Wrong claim of exps. Under the head Publicity Rs.0,08,50,512/- 4 Addition towards shrinkage of cloth Rs.0,00,71,808/- 5 Compensation recd-from michelin- Rs.5,18,02,396/- 6 Additional on account of receipt of power subsidy Rs.0,04,66,116/- 2.3. Thereafter the respondent / assessee approached the Income Tax Appellate Tribunal and vide order dated 03.01.1997, the aforesaid assessment has been confirmed to the extent indicated below:- 1 Disallowance of depreciation Rs.0,42,89,325/- 2 Disallowance of expenses under the head (verification valuation) Rs.0,02,88,500/- 3 Wrong claim of exps. Under the head Publicity Rs.0,08,50,530/- 4 Addition towards shrinkage of cloth Rs.0,00,35,904/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 answered the issue in favour of the revenue and against the assessee by holding that the Tribunal was justified in taking the said view that the sum of Rs.5,18,02,396/- constitute a revenue receipt in the hands of the assessee. This Court has also held that amount of Rs.2,19,50,782/- accrued to the assessment in the Assessment Year, 1992 93 and rightly brought to tax in the said Assessment Year. 2.7. On the basis of the substantial addition of income in the reassessment proceeding, a penalty proceeding under Section 271(1)(c) of the Income Tax was initiated in respect of all the issues. The respondent/assessee filed a reply to the show-cause notice and vide order dated 31.03.2000, penalty @ 100% i.e. Rs.3,53,38,900/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven 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 appellant tribunal has rightly held that it is not a case of concealment of particulars of income or non-furnishing inaccurate particulars of such income. In support is his contention, learned senior counsel placed reliance upon several judgments delivered in the cases of Commissioner of Income Tax v/s Reliance Petroproducts Private Limited reported in (2010) 332 ITR 158 (SC) , Price Waterhouse Coopers Private Limited v/s Commissioner of Income Tax, Kolkata-1 Another reported in (2012) 11 SCC 316 , Union of India v/s Rajasthan Spinning Weaving Mills reported in (2010) 1 GSTR 66 (SC) , Dadabhoy's New Chirmiri Ponri Hill Colliery Company Private Limited v/s Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997, 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 months and claimed a deduction for the same under Section 54E. Likewise, as regards receiving the amount of Rs. 2,29,50,782/- in the assessment year 1993-94 concerned same was also claimed as capital receipt. Since the issue had been settled by this Court in ITR No.62/1997, therefore, appellate Tribunal has only examined the issue of penalty. 08. For ready reference section 271 is reproduced below:- 271. Penalty for concealment of income or improper distribution of profits .- 2 [(1) If the Income-tax Officer, the Appellate Assistant Commissioner [ 3 or the Appellate Tribunal], i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken 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-tax Officer, the 8 [Appellate Assistant Commissioner] 9 [or the Appellate Tribunal], in the course of any proceedings under this Act, is satisfied that the profits of a registered firm have been distributed otherwise than in accordance with the shares of the partners as shown in the instrument of partnership registered under this Act governing such distribution, and that any partner has thereby returned his income below its real amount, 10 [he or it may direct] that such partner shall, 11 [in addition to the income-tax and supertax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 inaccurate has been defined as: not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript. We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. 18. We must hasten to add here that in this case, there is no finding that any detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of Section 43(1). 13. Therefore, in view of the above discussion, the Appellate Tribunal of IT has not committed any error while setting aside the order passed by the Assessment Officer as well as CIT in respect of the imposition of penalty under Section 271 (1) (c). We do not find any substantial question of law involved in favour of the appellant hence the question of law No.1 is answered against the appellant and in favour of the respondent. So far as issue No.2 is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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