TMI Blog2009 (8) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the order dt. 31st March, 2009 of learned CIT(A), Bikaner raises the solitary ground as under: "On the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting the penalty of Rs. 6,35,060 imposed under s. 271(1)(c) of the IT Act, 1961 by holding that the appellant has not concealed any particulars of income nor furnished inaccurate particulars of income; moreover, the appellant has not acted deliberately in defiance of law or is guilty of dishonest conduct, even when the assessee wilfully neglected on his part leads to a presumption of concealment of particulars of income or furnishing inaccurate particulars of such income and AO has rightly imposed the penalty on solid ground." 2. Briefly the facts of the case are that the assessee is a trust having registration under s. 12A of IT Act. The due date for filing of return of income is 31st Oct., 2003. Since no return of income was filed, the AO issued notice under s. 148 of IT Act requiring the assessee to furnish its return of income for the asst. yr. 2003-04 which was furnished by the assessee declaring nil income. The assessment under s. 143(3) was completed on 30th Aug., 2006 at an income of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and WDV for the same were not determinable. Such a plea by the assessee was taken merely to twist the facts and to evade tax thereon; (iii) the ignorance of law was also not to be taken as a sufficient ground for not imposing penalty in view of judgment reported in (1998) 145 CTR 191 (sic). Accordingly the AO held that the assessee is guilty of contumacious conduct and being of the opinion that in view of Expln. 1 to sub-s. (1) of s. 271, the assessee failed to substantiate his explanation and discharge the burden to prove that the explanation is bona fide and also having regard to the judgment rendered by Hon'ble jurisdictional High Court in Yashwant Singh vs. CIT (1995) 128 CTR (Raj) 12 : (1995) 212 ITR 207 (Ra)) and in the absence of any documentary evidence or material on record to support the explanation, he held that the assessee has knowingly furnished inaccurate particulars of income and committed default in terms of s. 271(1)(c) of IT Act. Accordingly penalty of Rs. 6,35,057 equal to 100 per cent of tax sought to be evaded amounting to Rs. 21,02,720, has been imposed on the assessee. 6. Before the learned CIT(A), the assessee pleaded that there was a rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to point out whether the initiation of proceedings is for concealment of the particulars or for furnishing the inaccurate particulars. On the basis of the said notice no penalty whatsoever can be levied. (ii) But in the instant case, the assessee had filed his return of income along with audited income and expenditure account showing each and every item of income and expenditure, audit report under s. 12A of IT Act and tax audit report under s. 44AB of IT Act along with a note on computation of total income i.e. "The assessee has applied for registration under s. 12A of IT Act to the learned CIT, Bikaner with retrospective effect i.e., from 1st April, 2002. That's why taxable income is claimed at 'nil' in accordance with the provisions of ss. 11, 12 and 13 of IT Act, 1961." (iii) All the relevant facts were disclosed in the IT return specifying the reason why there is no taxable income of the assessee. Therefore, there is neither concealment of particulars of income nor furnishing of inaccurate particulars of income. (iv) It is further submitted that mens rea is also an important concept in penalty proceedings. Mens rea is evil intention or knowledge of the wrongfulness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a technical nature only. There is no loss of revenue by this contravention of law. It is further submitted that when the assessee came to know about his liability to file IT return for the asst. yr. 2005-06 by amendment in s. 10(20) of IT Act the assessee had filed its return of income for the asst. yr. 2005-06 along with audit report, therefore, there is only venial breach of s. 139 and the purpose of s. 139 was achieved. (vi) In the instant case, the assessee has neither concealed his particulars of income. As and when he came to know his liability to file IT return, he has filed IT return along with full disclosure of all facts relevant to income of the assessee. He has not filed inaccurate particulars of his income as if depreciation has been allowed on WDV of fixed assets; there would not be any taxable income therefore, it is neither case of concealment of income nor furnishing of inaccurate particulars of income. It is a case of disallowance of depreciation. Depreciation is not allowed by the IT Department on WDV of fixed assets as on 1st April, 2004. (vii) Disallowance of an expense per se cannot mean that the assessee has furnished incorrect particulars of its in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 271(1)(c) of IT Act has not instructed the nature of default committed by the assessee as to whether this was for concealment of particulars of income or for furnishing inaccurate particulars of such income. The plea so raised by the assessee is not supported by any legal material. Even the notice issued under s. 271(1)(c) of IT Act to show whether the penalty has been initiated for both the offences or for one of the defaults being for concealment of particulars of income or furnishing inaccurate particulars of income has neither been laid before us nor the learned CIT(A) is shown to have adverted to this aspect of the matter. The record before Tribunal can be found explained by sub-r. (6) of r. 18 of ITAT Rules, 1963, that reads as under: "Documents that are referred to and relied upon by the parties during the course of arguments shall alone be treated as part of the record of the Tribunal." As the respondent placed no material on record before the Tribunal to support his plea, we do not consider it necessary to comment on the merits or demerits thereof more so when penalty under s. 271(1)(c) of IT Act, can also be imposed for the twin defaults being concealment of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he is guilty as a result of which he has concealed the income. However, such a presumption is rebuttable which could be on materials relevant and cogent. In the present case in appeal, the assessee for the first time raised the plea before the learned CIT(A) that he cannot be taken to have filed inaccurate particulars of his income in case depreciation is allowed to it on WDV of the fixed assets. If the depreciation is allowed there would not be any taxable income thereafter. The assessing authority has however, found that the assessee neither claimed depreciation nor filed details of assets owned by it. Even the surplus as per documents filed with the return of income revealed that the assessee had taxable income. 14. Before the learned CIT(A) also, the assessee did not lay any documentary evidence or material or basis to show as to how depreciation on the WDV of fixed assets is allowable to him when he has been assessed as a charitable institute. The particulars of the assets owned and eligible for depreciation or enabling rule or provision of the Act, were also not brought before the authorities below to substantiate such plea. Even before the Tribunal no such material o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's reliance on the judgments by various High Courts in CIT vs. Susai Kalyanamandapam (P) Ltd., India Cine Agencies vs. CIT and Bharat Rice Mill vs. CIT, are of no consequence as the judgment by Hon'ble apex Court will have a binding precedent under Art. 141 of the Constitution of India. 17. In the case of CIT vs. Gurbachan Lal, Hon'ble Delhi High Court at p. 161 of the Report says that the burden is on the assessee to discharge his onus that the amount added or disallowed in computing total income, could not be deemed to represent his income in respect of which the particulars have been concealed. The relevant passage in this respect is reproduced as under: "A conspectus of the Explanation added by the Finance Act, 1964 and the subsequent substituted Explanations makes it clear that the statute visualized assessment proceedings and penalty proceedings be wholly distinct and independent of each other. In essence, the Explanation (after 1964) is a rule of evidence. Presumptions which are rebuttable in nature are available to be drawn. The initial burden of discharging the onus of rebuttal is on the assessee. The rationale behind this view is that the basic facts, are within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty proceedings. Accepting the principle on which the Tribunal has acted would render the penalty proceedings for concealment in such case even if it is established from the evidence that entries made in the books of account were bogus to the knowledge of the assessee, no penalty proceedings under s. 271(1)(c) can be sustainable because as soon as entries in the books of account have been disclosed to the Revenue showing the cash credit entered with particulars thereof, there cannot be any concealment of particulars of income or furnishing of inaccurate particulars thereof. The expression of the principle that mere rejection of the explanation is not sufficient to sustain penalty is not backed up by necessary enquiry. It may be noticed that as per rule of evidence, there is distinction between set of facts 'not proved' and facts disproved and facts proved. Benefit of the principle that mere non-satisfactory nature of explanation furnished cannot amount to proof of falsity of explanation furnished can apply in case the fact finding authority reaches to a stage where it can only conclude that the fact alleged is 'not proved' which would result that except rejection of the explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his income is not taxable. In fact, at the time of filing of return the assessee has made reference to the claim of exemption under ss. 11 and 12 of IT Act and was assisted by competent professional person while making claim of exemption of whole income without working the surplus or taxable income as such. The facts being at variance with the judgment in the case of Chandra Pal Bagga, the said judgment also is of no help to the assessee. 22. In the present case in appeal, the assessee did not make the claim of depreciation in the return of income filed in response to notice under s. 148 of IT Act nor laid any particulars of eligible assets on which depreciation allowance can be granted to it. The AO found that the quantum of assets owned by the assessee and the WDV for the same were not determinable as the assessee had neither filed trial balance nor balance sheet during the course of assessment proceedings before him. There was also no material on record of learned CIT(A) to show as to how claim of depreciation allowance on construction work can be allowed to it in the-peculiar facts that the assessee is neither shown to be the owner thereof nor that the same has been used by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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