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2015 (9) TMI 436 - AT - Income TaxLevy of penalty u/s.271(1)(c) - default u/s. 2(22)(e) - Held that:- Ignorance of law is no excuse, even as clarified in CIT vs. Alkesh K. Patel [2010 (3) TMI 416 - BOMBAY HIGH COURT] wherein the assessee-respondent pleaded similarly, admitting to a bona fide mistake in view of his being not aware of the relevant provision of law, being, in fact, the provision under reference, i.e., section 2(22)(e). The Hon’ble Court discountenanced the plea of a bona fide mistake on account of being unaware of the provision of law, which would be by itself not sufficient. All the relevant facts and circumstances of the case could though be considered to arrive at a finding of fact with regard to a bona fide belief, and which had not been evaluated by the tribunal. The matter was accordingly restored back to it for the purpose, to do so upon considering all the material facts and circumstances. The matter of bona fide belief, or a mistake on its basis, would thus have to be examined on its merits. The assessee in the instant case himself admits to have realized his mistake, implying of his knowledge of having, perhaps inadvertently, violated the law in-asmuch as he could not, as a substantial shareholder, have, except by way of dividend, diverted the profits of a company in which public is not substantially interested, for his personal purposes. Precisely what we are saying, i.e., that the assessee having realized his mistake well in time, with the default u/s. 2(22)(e) – the law on which is very clear, having been committed, he ought to have returned the said income in-asmuch as he has no reason for not so doing, preferring instead not to return his income – in the admitted facts of the case, in accordance with law. He could have, at least, while not returning the same, narrated the sequence of events leading to the attraction of the provision of section 2(22)(e), besides the subsequent events, pleading to an indulgence in non-invoking section 2(22)(e). It is though doubtful if this would have served the purpose in-as-much as the assessee himself admits to have realized his mistake, i.e., having become aware of the position of law, and which gets established by his ‘immediate’ returning the funds back to the company. The same, however, would have provided scope for consideration of the assessee’s explanation, which we find as absent in the instant case. In short, the assessee has no explanation for his conduct in not returning the impugned income and, further, not declaring the material facts per the return of income. This, despite being aware of the provision being attracted. We have, rather, as afore-stated, observed a shift in the assessee’s stand with time. No case for the non levy of penalty u/s.271(1)(c) in the facts and circumstances of the case is made out. In view of the foregoing, we confirm the levy of the penalty u/s.271(1)(c), which is at the minimum sum, i.e., in principle. We have already stated that the assessee having been allowed part relief by the tribunal, sustenance of penalty on the same is untenable, so that we direct its deletion to that extent. - Decided partly in favour of assessee.
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