TMI Blog2018 (4) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... reby the learned Tribunal has confirmed the deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961. 2. The respondent assessee is apparently a manufacturer of automobile components like fasteners, radiator caps, gear shifters etc. 3. The respondent assessee filed its return of income for the Assessment Year 2004-2005 on 1st November 2004 declaring total income of ₹ 68,36,53,980/-. Subsequently, a revised return was filed on 24th May 2005 returning income of ₹ 67,72,35,020/-. 4. The return was processed under Section 143(1) of the Income Tax Act, 1961 and thereafter, on 23rd August 2005, the case of the Assessee was selected for scrutiny. Fresh notices were issued to the respondent Assessee under Section 143(2) of the Income Tax Act, pursuant to which, the representative of the respondent assessee appeared before the Assessing Officer to explain the stand of the respondent assessee. Thereafter, an Assessment Order was passed on 29.12.2006. 5. From the order of assessment, it appears that the Assessee had claimed deduction under Section 80IB of ₹ 2,77,65,509/-, which was disallowed on the ground that all the four Units of the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m u/s 80IB was made by interpretation of the provisions of the said Section wherein by the process of interpretation the appellant company was found not eligible for the said deduction. For the purpose of levy of penalty u/s 271(1)(c) the main ingredient which is required to be justified is the defaulter should have concealed particulars of income or furnished inaccurate particulars. In my view the appellant company having furnished all the details relating to the claim and the claim having been disallowed only on account of interpretation of law has not defaulted u/s 271(1)(c) and hence I delete the penalty levied on disallowance of claim u/s 80IB. This ground of appeal is allowed . The appeal of the respondent assessee was thus allowed in part. 10. Both the Revenue and the respondent assessee appealed against the order of the Appellate Commissioner. The appeal of the respondent assessee being I.T.A.No.590/Mds/2012 and the Cross- Appeal of the Revenue being I.T.A.No.676/Mds/2012, have been disposed of by a common order under appeal. 11. The learned Tribunal found that the respondent Assessee had a reasonable basis to stake a claim for deduction under Section 80IB, which had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908) relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. 13. An appeal lies under Section 260-A of the IT Act, only when there is a substantial question of law. We find that there is no question of law involved in this appeal much less any substantial question of law. 14. In Sir Chunilal V. Mehta Sons Ltd. vs Century Spg. Mfg. Co. Ltd., reported in AIR 1962 SC 1314, the Supreme Court agreed with and approved a Full Bench Judgment of this Court in Rimmalapudi Subba Rao vs Noony Veeraju And Ors reported in AIR 1951 Mad 969 and laid down the principles for deciding when a question of law becomes a substantial question of law. 15. In Hero Vinoth Vs. Seshammal reported in (2006) 5 SCC 545, the Supreme Court followed Sir Chunilal V. Mehta Sons (supra) and other judgments and summarized the tests to find out whether a given set of questions of law were mere questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law. ...... 23. To be substantial a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law involving in the case there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding. 17. In M.Janardhana Rao Vs. Joint Commissioner of Income Tax, [2005 273 ITR 50 (SC)], the Hon'ble Supreme Court held that the principles contemplated under Section 100 of the Code of Civil Procedure would apply to Section 260-A of the Income Tax Act too. 18. Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal only in a case which involves substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal. 19. In the instant case, the learned Tribunal has arrived at the factual finding that there was no concealment nor furnishing of inaccurate particulars of income. 20. In K.P.Madhusudhanan v. Commissioner of Income Tax, reported in (2001) 251 ITR 0099 (SC), the Supreme Court held: 5. ..... The Explanation to Section 271(1)(c) is a part of Section 271. When the Income-tax Officer or the Appellate Assistant Commissioner issues to an Assessee a notice under Section 271, he makes the Assessee aware that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h mens rea. In effect and substance, the Supreme Court held that on receipt of a notice, it was for the Assessee to explain, that concealment was not deliberate. 22. The Explanation to Section 271 makes it clear that, if in cases of concealment of particulars of income or furnishing of inaccurate particulars of income, the assessee fails to offer an explanation or offers an explanation which is found by the ITO or the AAC to be false or offers an explanation which he is not able to substantiate, the amount added or disallowed in computing the total income of such person shall for the purpose of clause (c) i.e., for the purpose of concealment, be deemed to represent the income in respect of which particulars have been concealed. Proviso to Explanation makes it clear that the Explanation is not to apply to a case in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bonafide and all the facts relating to the same and material to the computation of his total income have been disclosed by him. 23. After the insertion of the Explanation, it cannot be said that the onus lies on the Revenue to esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not disclosing the transaction in shares, the proceedings subsequent to the statement filed certainly indicates the conduct of the Assessee. 28. Both M.A.K.Data P. Ltd., supra and N.Ranjit, supra, were clear cases of concealment of income. There can be no dispute with the proposition that the conduct of concealment is indicative of the conduct of the assessee. However, in this case, the disallowance was by reason of interpretation of Section 80IB of the Income Tax Act, 1961. The learned Tribunal, which is a fact finding body, arrived at the factual finding that there was no concealment of income. The judgments, referred to above, are clearly distinguishable. 29. However, we are in full agreement with the Division Bench that application of penal proceedings are not automatic and the levy depends upon the facts and circumstances of each case. In the case on hand, having regard to the particular facts and circumstances of this case, the Appellate Commissioner has allowed the appeal and deleted the penalty, which the learned Tribunal has confirmed. 30. In CRN Investments (P) Ltd. v. Commissioner of Income Tax, reported in (2008) 300 ITR 0342 (Madras), a Division Bench of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court referred to and explained its earlier decision in Dharamendra Textile Processors case (supra) and found that there was an element of strict liability on the Assessee for concealment and for giving inaccurate particulars in view of the explanation appended to Section 271(1)(c) of the Act. The Supreme Court concluded that for applicability of Section 271(1)(c) of the Act, the conditions stated therein must exist. 35. The proposition of law that emerges from the judgments referred to above is that in view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens rea in cases of concealment and/or short payment of tax. There is an onus on the Assessee. Whether the Assessee has been able to discharge the onus would depend on the facts and circumstances of the case. 36. In the instant case, the learned Tribunal, in effect, arrived at a clear finding that imposition of penalty was not justified having regard to the facts and circumstances of the case. 37. We do not find any question of law, far less any substantial question of law that warrants interference. 38. This appeal is, therefore, not entertained and accordingly dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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