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TMI Blog2012 (6) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... curate particulars thereof. Ground No. 3: Without prejudice, the CIT (A) failed to appreciate that in the assessment order dated 22nd March, 1995 issued under section 143(3), there is no mention or discussion of the Bank having concealed any particulars of income or having furnished inaccurate particulars thereof. Also, no reasons have been given for initiating the penalty proceedings either in the assessment order or the said notice. Ground No. 4: Without prejudice, the CIT (A) failed to appreciate that the assessee has offered all details, as was required by the Assessing Officer, for the purposes of assessment. In other words, the assessee has neither failed to provide any explanation that was required by the Assessing Officer, nor has provided any explanation that was found by the Assessing Officer to be false. Further, all the explanations made by the assessee have been substantiated with facts and/or supported by case laws. The explanation so provided by the assessee are bonafide and all facts relating to the same and material to the computation of income have been disclosed to the Assessing Officer. Ground No. 5: Without prejudice, the CIT (A) failed to appreciate that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer examined the contention of assessee and observed that assessee has preferred miscellaneous application seeking rectification of the order of the Tribunal dated 15-02-2007. The said miscellaneous application was rejected by the ITAT vide order dated 12-01-2009. The said order was received by the Department on 24th February 2009. Therefore, the penalty proceedings were getting barred by limitation on 31-08-2009 as per provisions of section 275 of the Act. Accordingly the claim of assessee was rejected. 4. It was assessee's submission before the CIT (A) that ITAT order dated 15/02/2007 was received by the assessee on 28/02/2007 and the time limit for passing the penalty order as per section 275 (1)(a) has expired by 30.09.2007 and hence the penalty order passed on 31/08/2009 was barred by limitation. On this issue the CIT (A) considered as under: "1.4 I have considered the facts and perused the material on record. It is seen that disallowance of salaried paid to expatriate staff u/s. 40(a)(iii)was the subject matter of misc. application filed before Tribunal. The Tribunal vide Para 29 of its order dtd.12-1-2009 has confirmed the disallowance u/s. 40(a)(iii) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was laid down that the penalty proceedings would not be barred by limitation, where the penalty proceedings were kept in abeyance filing of appeal before Tribunal. Since, in this case also, penalty proceedings were kept in abeyance till disposal of Miscellaneous Application by the Tribunal, hence, in view of the ratio laid down by Hon'ble High Court, penalty order under consideration is not barred by limitation. In view of these facts, this ground of appeal is therefore treated as dismissed". 5. Coming to the merits, assessee declared taxable income of Rs. 78,29,86,150/- which was assessed at Rs. 112,17,74,590/-. In the assessment order the Assessing Officer disallowed a loss of Rs. 3,71,29,557/- amongst various other additions. The Assessing Officer observed that during assessment proceedings assessee had conducted large number of transaction on ready forward market basis with large number of person in approved non approved securities. The details were submitted as follows: Particulars Profit Loss Ready forward transactions in Bonds, Debenture, Shares etc. 84,72,300 Ready forward transactions without non-bank clients 16,67,154 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat with enactment of the explanation, mens-rea had not to be proved by the Department but assessee had to prove that there was no concealment, as settled in the case of CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14/30 Taxman 546H (SC), CIT v. KR Sadayappan [1990] 185 ITR 49/51 Taxman 304 (SC), Addl CIT v Jeevan Lal Sah [1994] 205 ITR 244/73 Taxman 182 (SC) B. A. Balasubramaniam & Bros. Co. v CIT [1999] 236 ITR 977/[2001] 116 Taxman 842 (SC) and K.P. Madhusudhanan v. CIT [2001] 251 ITR 99/118 Taxman 324 (SC). The Assessing Officer held that assessee is not able to substantiate the explanation offered by assessee. Accordingly, the AO considered the quantum of concealment at Rs. 3,38,35,551/- after reducing the transaction of Rs. 32,94,006/- from net loss of Rs. 3,71,29,557/-. In view of this, the Assessing Officer levied the minimum penalty @100% at Rs. 2,19,93,108/-on the quantum of concealed income of Rs. 3,38,35,551/-i.e. (Rs. 3,71,29,557- Rs. 32,94,006). 7. It was the submission of assessee before the CIT(A) that loss on account of ready forward transactions was normal business loss and these transactions resulted in both loss and profit, net income being profit. While assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31-08-2009 has been passed by the Assessing Officer. A perusal of the penalty order reveals that the Assessing Officer has rejected the contentions on the basis that the appellant has claimed the losses in illegal transaction against the legal income which is not permissible as per central government guidelines as well as per RBI Circular and directives . Thus, this is case where the appellant has concealed the particulars of his income by furnishing inaccurate particulars of his income and debiting irregular losses against the legal income which were not permissible in law and on facts also. The provisions of section 271(1)(c) reads as under: "(1) If the (Assessing] Officer or the Commissioner (Appeals)] (or the Commissioner] in the course of any proceedings under the Act, is satisfied that any person - (a) and (b) ** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of income], He may direct that such person shall pay by way penalty - (i) ** ** ** (ii) In the cases referred to in clause (b), (in addition to tax. if any, payable by him (a sum of ten thousand rupees for each such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing of inaccurate particulars of income as the transaction were not entered into by the Bank in their normal course of business. Therefore, the loss so incurred was not allowable as business loss and it was against the government policy. The appellant has claimed that at the time of passing the assessment order dtd 14-12-1993 the decision of Special Court in the case of AK Menon v Canbank Financial Services dated 14-12-1993 was available wherein BRs transfer was allowed. This contention of the assessee is of no help, firstly this decision was delivered on 14.12.1993, whereas, the appellant's transaction were completed well before accounting period 31.3.1992(long back). Secondly, this decision was reversed by Supreme Court in BOI Finance Ltd v. Custodian (10 SCC 488) dated 19-3-1997. Therefore, this logic of assessee is not of any help to the appellant. A perusal of RBI Circular No.BC.143A dtd.20.6.1992 reveals that this circular refers that RBI had also issued a Circular DBOD No.FSC.46/C 461-91-92 dtd.26.7.1991 wherein the banks were cautioned to refrain from undertaking certain transactions in securities which were irregular. Thus, prohibition in the ready forward transactions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars" It is seen that the appellant in this case indulged in the read forward transaction which were prohibited by law. The appellant has also not disclosed such transaction in the return of income. Thus this is not a legal claim but case of concealing facts of transaction which were discovered during the course of assessment proceedings. Hence the case law relied by appellant is distinguishable on facts. A presumption arises of concealment of income, if any addition made by the Assessing Officer is sustained by the appellate authority. This is correct when the presumption is not rebuttable. The finding' recorded in the assessment order means that the penalty has to be imposed automatically. Explanation I to section 271(1)(c) provides that the penalty would be deemed to attract where in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability, it is not more necessary for the Assessing Officer to establish whether the appellant has consciously furnished inaccurate particulars of income or concealed particulars of income. Therefore penalty is leviable if the claim for deduction made is not bonafide claim. 2.3.5 The Question whether in a particular case penalty u/s. 271(1)(c) of the Act is imposable or not is to be decided after taking into consideration all the facts and circumstances of each case. There cannot be any precedent on facts. Precedent can be only on the point of law. Every decision has to be understood in the light of the facts of that particular case. As rightly said by the Supreme Court in Willie (William) Slaney v. State of M.P., AIR 1956 SC 116; [1955] 2 SCR 1140, that "there is no such thing as a judicial precedent on facts that counsel and even judges, are sometimes, prone to argue and to act as if they were". A decision is available as precedent only if it decides a question of law. In other words, the principles laid down for arriving at a decision alone will bind as a precedent. Therefore it is not necessary to refer to all judgments relied upon by the AR of the appellant in the written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r amendment in the section the satisfaction deemed to have been exercised. Reliance is placed in the case of M. Sajjanraj Nahar & Others CIT [2006] 204 CTR (Mad) 53S wherein it was held that the Assessing Officer having recorded his satisfaction regarding concealment of income by indicating in the assessment order that penalty proceedings are initiated separately under section 271(1)(C)" there was satisfactory compliance with requirements of law. Similar view also held in case of Oriental Insurance Co Ltd v. ACIT, [2010-TIOL-02-ITAT- DEL- New Delhi (Dated: October 30, 2009) wherein it was held that the A.O. had at the end of the assessment order specifically stated that penalty proceedings are initiated separately thus in view of the decision of Madhushree Gupta it would have to be held that the A.O. has recorded his satisfaction. In view of these facts, this ground of appeal is dismissed. 2.3.8 Thus on the basis of discussion of the facts above it is held that the AO has rightly imposed penalty under section 271(1)(c) read with Explanation 1 thereto and appellant has not been able to substantiate its explanation before me that it had a valid basis to make a claim of loss. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ready forward transactions, assessee furnished the details of the transactions vide their letter dated 28.4.1994. With reference to the ready forward transactions in shares, the profit of Rs. 84,72,300/- was reported vide Annexure-I. Vide Annexure-II to the letter, ready forward transactions with non bank claims was reported with a net loss of Rs. 161,67,154/-. Likewise annexures upto 8 were furnished to the Assessing Officer detailing all the transactions undertaken by the assessee bank. The Assessing Officer originally discussed these issues in assessment year 1991-92 under the following heads: (i) Whether RBI guidelines/directives are binding on Banks. (ii) Whether the RBI guidelines/directives constitute law. (iii) Whether ready forward transactions in securities are violative of law. (iv) Whether illegal losses can be allowed as deduction from legal income. 10. Ultimately after analyzing various issues, net loss of Rs. 3,71,29,557/- was arrived which was considered as illegal and has not been allowed to be set off. The CIT (A) in his order while giving relief on certain issues, however, upheld the quantum of the amount with direction to set of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. After examining the issue whether there is any concealment of income so as to attract the penalty under section 271(1)(c), it is to be noted that at the relevant point of time, inspite of having the directions/circulars of the RBI, most of the Banks (not only the foreign banks but Indian scheduled banks including PSU Banks) were routinely and regularly involved in these transactions till the scam broke out. It was specifically prohibited by the RBI subsequently. Therefore, it cannot be stated that the assessee deliberately concealed the particulars or claimed the income so as to reduce the taxable income. It was submitted that on similar issues in 1991-92, no penalty was levied and no other Bank was also penalized by considering the penalty under section 271(1)(c) on the ready forward transactions considering them as illegal. In view of the facts, we are of the opinion that assessee has not deliberately claimed any loss so as to reduce the taxable income and as already stated above, if the directions of the CIT (A) and the ITAT were implemented by the Assessing Officer, the losses so arrived in the ready forward transactions would have to be set off to the profits arrived in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the provisions of section 275(1)(a) the Assessing Officer would get time to complete the proceedings only till the appeal under section 253 was decided by an order of the ITAT. Thus order of the ITAT under section 254(1) on an appeal preferred under section 253 was passed on 15/3/2007 in this case. The miscellaneous proceedings are continuation proceedings on the ITAT order, which does not extend limitation prescribed under section 275(1)(a). The decision in the case of Oriental Insurance Co. Ltd v. Asstt. CIT [IT Appeal No. 212 (Delhi) of 2008, dated 31-10-2009] wherein following the Hon'ble Supreme Court decision in the case of CIT v. Alagendran Finance Ltd [2007] 162 Taxman 465, it was held that period of limitation would apply from the assessment order in which the item was dealt with. Similarly in this case, the item of ready forward transactions was dealt with in the order dated 15/02/2007 and the appeal preferred by assessee under section 253 was disposed off. Therefore, we are of the opinion that the limitation prescribed under section 275(1)(a) does not extend the time limit till miscellaneous application was disposed off. Consider a case where after the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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