TMI Blog2012 (4) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... R.S. Syal, R.S. Padvekar, JJ. R. Murlidhar and Ms. Anita Nair for the Appellant. A.K. Nayak for the Respondent. ORDER R.S. Syal, Accountant Member This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on 05.11.2009 upholding the penalty of ₹ 68,69,912 imposed by the Assessing Officer u/s 271(1)(c) of the Act, in relation to the assessment year 1994-1995. 2. Briefly stated the facts of the case are that the assessee filed its return declaring total income of ₹ 66.88 lakh. Such return was processed u/s 143(1)(a) and thereafter order u/s 154 was passed. Subsequently notice u/s 148 was issued on the ground that the assessee-company received an amount of ₹ 1,32,75,193 from the landlord as compensation on account of his failure to provide an alternate accommodation to the assessee on vacating one of its premises at Andheri which was wrongly claimed by the assessee as capital receipt not chargeable to tax. In the order u/s 147 r.w.s. 143(3) the Assessing Officer made the addition for the said sum by holding that it was income received on termination of warehousing agreement. The assessee re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 30.11.1994 making a claim that the amount is a capital receipt not chargeable to tax. In the Profit and loss account this amount was shown as 'Extra ordinary item' and vide Note no.11 to the annual accounts the assessee stated as under:- The failure of the Lessor to provide alternative accommodation to the Company, at one of its premises, has resulted in vacation of the premises and receipt of compensation of ₹ 13276. This has been shown as Extraordinary item, not exigible to tax, as per Tax Counsel's opinion. 5. In the computation of total income the assessee gave a specific note which is reproduced as under:- During the year, the Assessee has vacated one of its premises at Andheri for which it has received a compensation of ₹ 1,32,75,193/- because the landlord was not able to provide an alternate accommodation. This amount is a Capital Receipt not chargeable to tax and the same is shown in the Profit and Loss Account, under the head Extraordinary Items . Reliance is placed on the Supreme Court decision in the case of CIT v. B.C. Srinivasa Shetty (128 I.T.R. 294). 6. The above narration of facts clearly shows that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 271(1)( c ) reveals that the concealment of particulars of income or furnishing of inaccurate particulars of such income by the assessee is sine qua non for the imposition of penalty under this section. These two expressions have not been defined in the Act. Albeit these are different in their connotation, ambit and purview, yet their consequence is one i.e. the withholding of income by the assessee. First expression, that is, concealment of particulars of income contemplates that some income earned has not been offered for taxation. It is a direct attempt to hide an item of income or a portion thereof. On the other hand the second expression, being the furnishing of inaccurate particulars of such income envisages that though the income earned was offered for taxation but some other means were employed by the assessee which resulted into withholding of income. It is the indirect way of keeping back some part of income. However, it is fundamental that both the situations, viz., concealment of income or furnishing inaccurate particulars of such income, ultimately lead to evasion of tax which is intended to be curbed by the penalty provision. 9. In Dilip N. Shroff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e existence of conditions specifically stated in this section. It is only when these conditions are satisfied that the penalty will follow and vice versa . 10. It is important to note that the main provision of clause (c) of section 271(1) covers the cases of concealment of income and furnishing of inaccurate particulars of such income in a general way. Apart from that, there have been enshrined certain Explanations , some of which contain the cases of deemed concealment. These include the situations in which there may not be concealment etc. within the parameters of main provision but by the legal fiction contained in such Explanations , it is deemed as concealment of income. It is nobody's case that any Explanation, other than Expl. 1, applies to the facts of the instant case. Explanation 1, which, therefore, assumes significance, is reproduced as under :- Explanation 1. - Where in respect of any facts material to the computation of the total income of any person under this Act, - (A) such person fails to offer an explanation or offers an explanation which is found by the [Assessing] Officer or the [Commissioner (Appeals)] [or the Commissioner] to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under this category as well. Third category consists of cases where the assessee offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same were disclosed by him. Here it is relevant to mention that the above bracketed portion of clause (B) of the Expl. was inserted en bloc by the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1986 w.e.f. 10.09.1986. On reading of the clause (B) of the Expl. 1, it is clear that in order to encompass a case within its purview, the following two conditions must be satisfied:- (i) assessee offers explanation which he is not able to substantiate; and (ii) he fails to prove that such explanation is bona fide; and all the facts relating to the same have been disclosed by him. 14. At this juncture it would be relevant to take note that conjunction and has been used by the legislature between these two essential conditions of clause (B) of Explanation (1) to section 271(1)(c). It shows that both the above referred conditions must be cumulatively satisfied so as to bring a case within the mischief of this clause. If only one con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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