TMI Blog2009 (3) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ressions has concealed the particulars of income and has furnished inaccurate particulars of income have not been defined either in section 271(1)( c ) or elsewhere in the Act. One thing is certain that these two circumstances are not identical in detail although they may lead to the same effect, namely, keeping off a certain portion of income. The former is direct and the latter may be indirect in its execution. The word conceal is derived from the latin concelare which implies con+celare to hide. Webster in his New International Dictionary equates its meaning to hide or withdraw from observation, to cover or keep from sight; to prevent the discovery of; 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. The duty is enjoined upon him to make a complete disclosure of his income as well as a correct disclosure. Therefore, if the disclosure made of the particulars of income is incorrect, then also he commits breach of his duty. Such defaults entail the penal consequences contemplated by section 271(1)( c )( iii ). We notice that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under section 80-I of Rs. 9,84,602, deduction under section 80HH of Rs. 7,87,681 and deduction under section 80HHC of Rs. 332. Against the order of the Assessing Officer, the assessee has filed appeal before the CIT(A). The CIT(A) deleted the deduction of addition of Rs. 7,87,681 made by the Assessing Officer under section 80HHC and the additions on account of sections 80-I and 80HHC has not been agitated by the assessee against the CIT(A). The Assessing Officer levied penalty on the ground that the assessee has made false claim by furnishing inaccurate particulars of income. 3. Before us, the learned AR submitted that the assessee has claimed deduction under section 80-I in respect of original industrial unit at Aurangabad, which commenced production on 13-10-1999. The assessee was eligible for deduction under section 80-I up to 1997-98. The assessee revised its return of income withdrawing the deduction under section 80-I as the same is claimed beyond the prescribed period in assessment year 1998-99. The learned AR submitted that the assessee has furnished all particulars of income and such a prima facie mistake, which cannot be treated and held as the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its execution. 5.1 The word "conceal" is derived from the latin concelare which implies con+celare to hide. Webster in his New International Dictionary equates its meaning "to hide or withdraw from observation, to cover or keep from sight; to prevent the discovery of; 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. There is strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability. It is obvious that the penal provisions would operate when there is concealment of particulars of income or a failure of duty to disclose fully and truly particulars of income, imposed under the Act and the Rules thereunder. The duty is enjoined upon a person to make a correct and complete disclosure of his income and it is only when he fails in his duty by not disclosing his income or part thereof, he conceals the particulars of his income. The duty is enjoined upon him to make a complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and complete and that the amount of total income and other particulars shown therein were truly stated and related to the previous year relevant to the assessment year in question. It was also to be stated therein on solemn declaration that no other income accrued or arose or was received by the assessee and that there was no other income including income of any other person in respect of which the assessee was chargeable to tax under the Act. It will also be noted from the contents of the prescribed forms of the return of income that the assessee is required to give various particulars of income under different heads. For example, in the Form No. 2 of return of income prescribed for persons other than companies and those claiming exemption under section 11 during the relevant assessment years, the statement of total income in Part-I covered six heads of income, namely, Salaries, Interests on Securities, Income from house properties (the particulars of which were to be given as per Annexure-II), Profits and gains of business or profession, (the particulars of which were to be given as per Annexure II), Capital gains and Income from other sources. The aggregate of Item Nos. 1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee, such as his name, address, status, etc. The forms of returns are obviously prepared in the context of the duty of a person to disclose his income from various sources under various heads of income as statutorily provided and his duty to disclose his total income in the return. The extent of his total income will determine the total income-tax liability of a person. Total income is defined in section 2(45) and it means the total amount of income computed in the manner laid down in the Act. Thus, for arriving at the total income, the income derived from all sources is to be considered as provided by section 5, when it is received or deemed to be received by a person. Certain incomes which are enumerated in section 10 are not included in the total income. All income for the purpose of charge of income-tax and computation of total income is required to be classified under distinct heads of income such as Salaries, Income from house property, Profit and gains of business or profession, Capital gains and Income from other sources, as enumerated in section 14. 5.4 The income chargeable to income-tax under the head Salary is the nature of the income indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dduced and considering all material gathered by the ITO as provided in section 143(3). It, therefore, follows that in the assessment proceedings under section 143(2)(3), the ITO can find out whether the return of income was correct and complete. If he holds that the return of income was not correct or that it was not complete in respect of the particulars of income which were required to be stated in the return, he will reach the correct figure of total income and determine the sum payable by the assessee or refundable on the basis of such assessment. If the income chargeable to tax has escaped assessment for any assessment year, by reason of omission or failure of the assessee to disclose fully and truly all material facts necessary for his assessment, reassessment proceeding can be initiated as provided under section 147. This again shows that full and true disclosure of income is a primary obligation of the assessee. 5.5 The Assessing Officer is to give opportunity of hearing to the assessee as required under the Act. Section 274 of the Income-tax Act, 1961 provides that no order imposing a penalty under this Chapter would be made unless the assessee has been heard or has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such dish/income. 5.6 There cannot be a straitjacket formula for detection of these defaults of concealment or of furnishing inaccurate particulars of income and indeed concealment of particulars of income and in accurate particulars of income may at times overlap. It depends upon the facts of the each case. In the assessment proceedings the ITO while ascertaining the total income chargeable to tax would be in a position to detect the specific or definite particulars of income concealed or of which false particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it would amount to concealment to that extent. In the same way where specific and definite particulars of income are detected as inaccurate, then such figure will also make the total income inaccurate in particulars to the extent it does not include such income. In other words the Assessing Officer cannot invoke provision of section 271(1)( c ) on the basis routine and general presumptions. Whether it be a case of only concealment or of only inaccuracy or both, the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether he can invoke the explanation or not. Explanation 1 comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1 , the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation; it should not be a fantastic or fanciful one. As indicated above, the consequence follows as a matter of law. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed the income or furnished inaccurate particulars thereof is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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