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TMI Blog2010 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. In this connection, she relied upon a judgment of the Supreme Court in Union of India (UOI) and Ors. Vs. Dharamendra Textile Processors and Ors. reported in (2008) 306 ITR 277 (SC). 4. Upon a perusal of the impugned order, we find that the respondent-assessee had made full disclosure in the income tax return about the method of accounting employed for the subsidies. Moreover, the assessee's provision for encashment of leave, per se cannot be said to be mala fide. In fact, ITAT in the impugned order has observed as under:- "3. We have considered the facts of the case and rival submissions. On the basis of the audit report in form no.3CD, it is clear that the assessee had made a disclosure that it was following cash method in so far as grants and subsidies are concerned. This method may not be permissible in the case of a company. At the same time, this method may not be appropriate in view of the fact that the assessee had to follow either cash or mercantile system of accounting and a hybrid system is not permissible. Nonetheless, the fact remains that the disclosure has been made in the return of income about the method in which the receipts in respect of subsidies we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271(1)(c). Explanation-1 is applicable to the facts of the case and the assessee has furnished an explanation to the notice issued by the AO. The fact regarding accounting of subsidy on cash basis was disclosed in the return of income. The balance accrued portion of the subsidy was not included as in the perception of the assessee it was not reasonably certain whether the amount would be received or not. In our view, such a perception was not wholly unjustified and, thus, it cannot be said that the explanation was not bona fide. The learned DR had also relied on the decision of Punjab & Haryana High Court in the case of CIT vs. Lal Chand Tirath Ram (1997) 225 ITR 675. In that case, the AO noticed the difference between the stock shown in the books of account and stock kept in the warehouse. The explanation of the assessee was that some stock belonged to a third party who was a truck driver. No evidence could be produced to show that the truck driver owned agricultural land or cultivated it. In these circumstances, the explanation tendered by the assessee was held to be not substantiated by cogent and reliable evidence. Thus, the levy of penalty was upheld. We are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products Pvt. Ltd., (2010) 322 ITR 158 (SC) has observed as under:- "9. Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Joint CIT [2007] 6 SCC 329, this Court explained the terms "concealment of income" and "furnishing inaccurate particulars". The Court went on to hold therein that in order to attract the penalty under Section 271(1)(c), mens rea was necessary, as according to the Court, the word "inaccurate" signified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1)(c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate' has been defined as: "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." 11. We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. 12. It was tried to be suggested that section 14A of the Act specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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