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2009 (6) TMI 682 - AT - Income TaxPenalty levied u/s 271(1)(c) - non-disclosure of deemed dividend income - plea of ignorance of law - explanation tendered by the assessee having not been found to be false, hence no justification in levying the penalty - shifting of onus on assessee and the nature of liability - business of supply and replacement of ship parts and accessories - assessee obtained loan from the closely held company having 99 per cent shareholding - taking the loan did not figure in the final balance sheet filed along with the return of income of the assessee - being an Engineer by profession, claimed that he was not conversant with the provisions of the Income-tax Act and hence he was filing the return by taking the assistance of C.A. from year to year. HELD THAT:- The tax authorities have not disputed, in principle, about the incorrect guidance by the C.A. They were of the opinion that the assessee ought to have informed the AO voluntarily ignoring the fact that as per the procedure prescribed under law the burden is not cast upon the assessee to annex the copy of the books of account along with return of income. It is also not the case of the Revenue that the return of income and the annexure thereto are not as per the requirements of the provisions. Merely because loan was cleared within the year and thus do not find place in the Balance Sheet, one cannot jump to the conclusion that the assessee withheld the information till an enquiry was made during the course of assessment proceedings. The tax laws in this country are so complex and complicated that even a person specializing in this field, including tax administrators, may not understand the law in the correct perspective or a particular provision may go unnoticed because of the number of amendments made to the tax enactments from year to year. Under these circumstances, it would be a travesty of truth and justice to hold that an assessee ought to have known the correct law and comply therewith, even though he was not aware of the provisions. In the case of Kaushal Diwan v. ITO [1982 (11) TMI 74 - ITAT DELHI-A], the ld AM observed, on an analogous situation, that the tax provisions are so complex that even he was not aware of the provision in question till the matter was placed before the Bench. Similar view was taken in the case of WTO v. S.P. Jaya Kumar [1982 (7) TMI 178 - ITAT MADRAS-A]. The Bench observed that the plea of ignorance of law can be treated as a proper explanation. Such explanation can be said to have been substantiated when it is shown that : (a) he was assisted by a professional C.A. who has not brought to his notice the applicability of provisions of section 2(22)(e) of the Act and (b) by making a statement that this is the first year in which these provisions came to be applied in assessee’s case. It could thus be seen that the assessee tendered an explanation which was substantiated and thus the burden is cast upon the Revenue to prove that the explanation is false so as to invoke Explanation 1 to section 271(1)(c). Except merely stating that the assessee ought to have furnished the loan particulars voluntarily, along with the return of income, no other reason was assigned by the tax authorities to dispute the bona fides of the explanation. Under the peculiar facts and circumstances and in the light of decisions cited by the learned counsel for the assessee, we are of the view that the explanation of the assessee is bona fide and hence the case falls outside the ambit of Explanation 1 to section 271(1)(c). We, therefore, set aside the Orders of the tax authorities and cancel the penalty levied by the AO. Appeal filed by the assessee is allowed.
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