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TMI Blog2025 (3) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... India & Ors. vs. Dharamendra Textile Processors & Others [2008 (9) TMI 52 - SUPREME COURT] held that the explanations appended to Section 271 (1) (c) of the Income Tax Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. It was further held that the judgment in Dilip N. Shroff [2007 (5) TMI 198 - SUPREME COURT] has not considered the effect and relevance of Section 276-C of the Income Tax. The object behind the enactment of Section 271 (1) (c) read with explanations indicates that the said Section has been enacted to provide for a remedy for loss of revenue. The penalty under the proceedings is a civil liability and willful concealment is not an ess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th August, 2024 passed by the Income Tax Appellate Tribunal, "B" Bench, Kolkata in ITA No.51/Kol/2011, for the assessment year 2015-16. 2. The Revenue has raised the following substantial questions of law for consideration: "(i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in deleting the penalty of Rs. 4, 61, 771/- u/s. 271 (1) (c) imposed by the A.O. on the addition of unexplained cash credit u/s. 68 to the tune of Rs. 14, 94, 407/- on sale of shares of penny stock M/s. Sulabha Engineering Ltd. falsely claimed by the assessee as Long-Term Capital Gains exempt u/s. 10 (38) of the IT Act, 1961 ? ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The undisputed fact is that the addition made by the Assessing Officer on the assessee under Section 68 of the Act was affirmed by this Court by judgment dated 8th July, 2022 in a batch of cases namely, PCIT vs. Swati Bajaj and Others, 2022 SCC Online Cal. 1572. The present proceedings arise out of penalty proceedings initiated under Section 271 (1) (c) of the Act to the tune of Rs. 4, 61, 771/-. Learned Tribunal in the impugned order noted that the addition made by the Assessing Officer on the ground of bogus claim of long term capital gain was affirmed by this court, observed that the penalty proceedings being a different proceeding than the matter concerning quantum addition during the assessment proceedings, the penal provisions of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, stricter yardstick of culpability is required to be established. This finding, in our view, is not legally sustainable. We support our conclusion by placing reliance on the decision of the Hon'ble Supreme Court in Union of India & Ors. vs. Dharamendra Textile Processors & Others, (2008) 13 SCC 369. The question which falls for consideration before the larger Bench in a batch of appeals was, whether Section 11-AC of the Central Excise Act, 1944 with the intention of imposing mandatory penalty on the persons who evaded payment of tax should be read to condone mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed medium. The assessee in the said case referred to Section 271 (1) (c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e light of the decision in Dharamendra Textile Processessors, the observations made by the learned Tribunal which appears to suggest that the culpability has to be established does not lay down the correct legal principle. In other words, the Tribunal cannot hold that wilful concealment/culpability is required to be established, which is not required to be done as the same is a civil liability as explained in Dharamendra Textile Processors [supra]. 8. Therefore, we are inclined to set aside that portion of the order passed by the learned Tribunal while interpreting the provisions of section 271 (1) (c) of the Act as it is not in consonance with the decision of the Hon'ble Supreme Court in Dharamendra Textile Processors. 9. As rightly poin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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