TMI Blog2012 (5) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... nue against the order dated 25.10.2010 passed by the Ld. CIT(A), Ghaziabad for the Assessment Year 2002-03. 2. The effective ground raised in the appeal of the Revenue is in respect of levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter). 3. The brief facts of the issue are that addition of Rs. 90,23,233/- was made by the Assessing Officer which has been confirmed by the I.T.A.T. in quantum appeal filed by the assessee in ITA No.203/Agr/2006 for Assessment Year 2002-03 order dated 27.02.2009. Some of the relevant portions of the finding of I.T.A.T. in quantum appeal are reproduced as under:- "5.9 The assessee has by way of an argument submitted that a similar addition made for A.Y. 2003-04 stands deleted by the Ld. CIT(A) in first appeal. We have gone through the said order (PB page 131 to 132). The same stands allowed following the decision by the Hon'ble jurisdictional High Court in the case of CIT v. Ramala Sahkari Chini Mills Ltd. ( supra ) and which stands distinguished by us vide the foregoing part of this Order. Further, we also observe that no such addition stands made by the Revenue in the assessment for A.Y. 2004-05. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned sum of Rs. 90.23 lacs as representing the assessee's income, so that the same stands rightly assessed as such by the Revenue as its business income u/s.28(1) of the Act, and the assessee's case as without merit in view of the foregoing factual findings, given the law as laid down by the Apex Court per the afore-referred decisions." 4. The Assessing Officer levied penalty on the ground that the assessee has furnished inaccurate particulars of income. The CIT(A) deleted the said penalty on the ground that the assessee has claimed such deductions from payment to Farmers in past years but no additions were made, even when the additions were made, same was deleted. It has also been noted by the CIT(A) that his predecessor has taken different stand on this issue. In the Assessment Year 2003-04, the CIT(A)'s predecessor held that such collection towards share deposit account was not in the nature of revenue receipt and hence was not taxable. The CIT(A) further noticed that the decision of I.T.A.T. in quantum matter is on the basis of legal interpretation. The claim of the assessee was on bona fide belief of past accounting practice and legal interpretation. 5. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come or part thereof, he conceals the particulars of his income. The duty is enjoined upon him to make a complete disclosure of his income as well as a correct disclosure. Therefore, if the disclosure made-of the particulars of income is incorrect, then also he commits breach of his duty. Such defaults entail the penal consequences contemplated by section 271(1)(c)(iii). There cannot be a straight jacket formula for detection of these defaults of concealment or of furnishing inaccurate particulars of income and indeed concealment of particulars of income and in accurate particulars of income may at times overlap. It depends upon the facts of the each case. In the assessment proceedings the ITO while ascertaining the total income chargeable to tax would be in a position to detect the specific or definite particulars of income concealed or of which false particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it would amount to concealment to that extent. In the same way where specific and definite particulars of income are dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the onus of rebuttal is on the assessee. The rationale behind this view is that the basic facts are within the special knowledge of the assessee. Section 106 of the Indian Evidence Act, 1872, gives statutory recognition to this universally accepted rule of evidence. There is no discretion conferred on the Assessing Officer as to whether he can invoke the Explanation or not. Explanation 1 comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1: the onus to establish that the explanation offered was bona fide and a:' facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the correctness of the decision in Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) has caused great uncertainty as to the penalty law for direct taxes. The decision in Dharamendra Textile Processors' case ( supra ) has been explained by the Supreme Court itself in Union of India v. Rajasthan Spinning and Weaving Mills [2010] GSTR 66 (SC), wherein the Supreme Court understood Dharamendra Textile Processors' case to be not applicable, where section 11 AC of the Central Excise Act is not applicable, especially since that was not even the stand of the Revenue in this case. The Supreme Court had further explained the decision in CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC) pointing out that Dharamendra Textile Processors' case has been explained in Rajasthan Spinning and Weaving Mills ' case ( supra ) and concluded in line with this decision that penalty under section 11AC of the Central Excise Act could not be levied in every case of non-payment or short payment of duty and that penalty in respect of section 271(1)(c) of the Income-tax Act would be leviable, subject only to the conditions there under. It required the matter to be considered not solely with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty in a number of decisions. Where an addition to an income was adjusted against the value of closing stock and explanation therefore was also found to be bona fide, penalty was found to have been rightly deleted in CIT v. Hindustan Computers Ltd. [2010] 322 ITR 88 (All). Cancellation of penalty for a wrong claim of deduction in computation of non-agricultural income bona fide made and for a wrong claim of relief under section 80P were found to be decisions on the facts on which no question of law would arise as held in CIT v. Shahbad Co-op. Sugar Mills Ltd [2010] 322 ITR 73 (P H). In the case of CIT v. Sidhartha Enterprises [2010] 322 ITR 80 (P H) it was held that "a wrong claim as business income of what should be treated as short term capital gains on the advice of the assessee's counsel, could not be treated as an instance of deliberate default". 5.8 In the light of the above discussions, if we consider the facts of the case under consideration we noticed that the assessee collected Rs. 90,23,233/- from purchase price given to farmers on the ground that such collection was to be utilized for issuance of shares. The submission of the assessee is that the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X
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