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TMI Blog2012 (5) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... duce evidence regarding realization of export proceeds or grant of extension of time by the prescribed authorities. Therefore, penalty of Rs.17.50 lakhs was levied against minimum penalty of Rs.8,83,634/- and maximum penalty of Rs.26,50,902/-. 2. This penalty has been deleted by the learned CIT(A) by mentioning that the addition on account of non-realisation of export proceeds does not survive because the assessment order dated 30/03/2004 passed u/s 143(3) and the subsequent order dated 20/12/2006 passed u/s 143(3) read with section 263 have been quashed. 3. Before us, it is the admitted position, admitted by both the parties, that the issue stands covered by the decision of "B" Bench of the Tribunal in the case of the assessee for assessment years 2003-04 and 2004-05 in I.T.A. No.861 & 862/Del/2011 dated 09/03/2012. Various sub paragraphs of paragraph No. 7 of the aforesaid order deal with this issue and finally it has been held that there is nothing on record to show that the explanation offered by the assessee is not bonafide or any material particulars have been concealed or inaccurate particulars have been furnished thereof. For the same of ready reference this paragraph is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the penalty order as to which specific particulars were furnished inaccurate or were concealed. The expression 'has concealed the particulars of income' and 'has furnished inaccurate particulars of income' have not been defined either in section 271 or elsewhere in the Act . However, notwithstanding the difference in the two circumstances, it is now well established that they lead to the same effect namely, keeping off a certain portion of the income from the return. According to Law Lexicon, the word "conceal" means: "to hide or keep secret . The word 'conceal ' is con+celare which implies to hide. I t means to hide or withdraw from observation; to cover or keep from sight ; to prevent the discovery of; to withhold knowledge of . The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the incometax authorities." In Webster's Dictionary, " inaccurate" has been defined as : "not accurate, not exact or correct ; not according to truth; erroneous; as an inaccurate statement, copy or transcript." 7.1. The penalty u/s 271(1)(c) of the Act is leviable if the AO is satisfied in the course of any proceedings under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 271(1) (c) are that (i) the person fails to offer the explanation, or (ii) he offers the explanation which is found by the AO or the CIT (Appeals) or the Commissioner to be false, or (iii)the person 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 have been disclosed by him. 7.2 If the case of any assessee falls in any of these three categories, then the deeming provision provided in Explanation 1 to sect ion 271(1) (c) come into play, and the amount added or disallowed in computing the total income shall be considered as the income in respect of which particulars have been concealed, for the purposes of clause (c) of sect ion 271(1), and the penalty follows. On the other hand, if the assessee is able to offer an explanation, which is not found by the authorities to be false, and assessee has been able to prove that such explanation is bonafide and that all the facts relating to the same have been disclosed by him, the assessee shall be out of the clutches of explanation 1 to sect ion 271(1) (c) of the Act , and in that case, the penalty shall not be imposed. In the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts which was material to the computation of his income." 7.3 In the light of aforesaid observations of the Hon'ble Apex Court, what is to be seen in the instant case, is whether the claim for deduction u/s 10A and 80HHE of the Act , on the basis of certificate of the accountant , made by the assessee was bonafide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(l )(c) of the Act . The Assessing Officer has not been able to establish that the claim of the assessee for deduction under sect ions 10A and 80HHE of the Act was not bonafide or that any specific particulars were concealed or furnished inaccurate. Likewise mere disallowance of Rs6,83,493/- in terms of provisions of sec. 14A of the Act or disallowance of Rs.10,000/- on account of penalty on the basis of tax audit report, does not ,in our view, attract levy of penalty. A mere reject ion of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars thereof by the assessee. Hon'ble Apex Court in CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Apex Court in Reliance Petro Products(supra) held that 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. Thus, merely because the assessee had claimed the expenditure in relation to exempt income, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, attract the penalty u/s 271(1)(c) of the Act. In the present case, we are of the opinion that the disallowance of claim for deductions u/s 10A & 80HHE in relation to unrealised exports or disallowance of an estimated amount, having recourse to provisions of sec.14A the Act cannot be considered as concealment of income or furnishing inaccurate particulars thereof, especially when all the relevant particulars were disclosed before the AO. The following observations made by the Hon'ble Apex Court in the aforesaid case of M/s Reliance Petro Products(supra) are relevant: "10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside." The situation in the present case is still better as no fault has been found with the particulars submitted by the assessee in its Return. " 7.5 In view of the foregoing, we are of the opinion that mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, is no ground for levying penalty, especially when there is nothing on record to show that the explanation offered by the assessee was not bona fide or any material particulars were concealed or furnished inaccurate . In these circumstances, we have no hesitation in upholding the conclusion of the ld. CIT(A) in respect of levy of penalty in relation to claim for deduction u/s 10A and 80HHE of the Act and even in relation to estimated disallowance having recourse to provisions of sec. 14A of the Act or disallowance of amount disclosed in tax audit report. Consequently, ground nos. 1 to 3 in these two appeals are dismissed." 4. As the Division Bench has already taken a view in this matter, therefore, respectfully following the same, it is held that the learned CIT(A) was right in dele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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