TMI Blog2012 (7) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act. This is not the case of a bonafide, honest or even plausible different interpretation. Two divergent views on interpretation of Section 2(7) of the Act are not possible. Discount on promissory note and bills of exchange drawn or made in India by express stipulation have been included in the word ‘interest’. What is excluded is ‘discount on treasury bills’. There is no ambiguity or doubt in the said words. The single sentence observations of the CIT(A) and the tribunal to the contrary are unsustainable - in favour of the appellant Revenue - ITA Nos. 243/2011 & 244/2011 - - - Dated:- 5-7-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. N.P. Sahni, Sr. Standing Counsel. For Respondents: Mr. M.S. Syali, Sr. Advocate with Mr. Mayank Negi, Ms. Hunsal, Syali, Advs. SANJIV KHANNA, J. These two appeals by the Revenue, which relate to the assessment years 1996-97 and 1997-98, impugn a common order dated 31st March, 2010, passed by the Income Tax Appellate Tribunal (tribunal, for short) in the case of Fortis Financial Services Limited, now known as Religare Technova Limited. The tribunal has upheld the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inaccurate particulars. 7. Assessing officer issued show cause notices for levy of penalty, in respect of two assessment years and after considering the reply, passed two orders under Section 13 of the Act imposing the penalty for concealment or furnishing accurate particulars of chargeable interest. The CIT (A), deleted the said penalty on the ground that the issue/question raised related to honest and bona fide difference of legal opinion on whether bill discounting charges should be treated as interest or not for the purpose of the said Act. The CIT (A) relied on circular No. 647/1993 dated 22nd March, 1993, issued by the Central Board of Direct Taxes. He, however, did not deal with the alternative submission raised by the assessee that the initiation of proceedings under Section 13 of the Act was invalid because of lack of satisfaction . The tribunal by the impugned order has approved and upheld the said decision. 8. Section 13 of the Act reads as under:- 13. Penalty for concealment of chargeable interest. If the Assessing Officer or the Commissioner (Appeals) in the course of any proceeding under this Act, is satisfied that any person has concealed the particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid part applies when an assessee furnishes inaccurate detail or details or a claim or a separate item of account. 10. It is settled that when two legal interpretations were plausible and there was honest and bona fide difference of opinion, penalty for concealment/furnishing of inaccurate particulars, should not and cannot be imposed. If the view taken by the assessee required consideration and was reasonably arguable, he should not be penalized for taking the position. The tax statutes are complex and there can be a bona fide difference of opinion on legal interpretation and understanding of a provision. In such cases, even when the interpretation placed by the Revenue is accepted, penalty should not be imposed if the contention of the assessee was plausible and bona fide. Of course full facts should be disclosed. The Supreme Court in Reliance Petroproducts Anr. (Supra), examined their earlier judgment in the case of Union of India vs. Dharmendra Textile Processors, [2008] 306 ITR 277 (SC) and it has been held as under:- 8. A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Joint CIT [2007] 6 SCC 329#, this court explained the terms "concealment of income" and "furnishing inaccurate particulars". The court went on to hold therein that in order to attract the penalty under section 271(1)(c), mens rea was necessary, as according to the court, the word "inaccurate" signified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1)(c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the Assessing Officer must be found to have failed to prove that his explanation is not only not bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or mens rea in most criminal proceedings is mandatory unless the legislature mandate is to the contrary but not so in the penalty proceeding under Section 13 of the Act. The earlier view that penalty proceedings were quasi criminal in nature and require establishment and proof of mens rea, has been discarded/disapproved in the judgment of the Supreme Court in Dharmanedra Textile Processor s case (supra). In the said decision, the view expressed in Dalip N. Shroff vs. Joint Commissioner of Income Tax, Mumbai Anr. (2007) 6 SCC 329, was overruled and after referring to series of decisions in Director of Enforcement vs. MCTM Corpn. (P) Ltd. (1996)2 SCC 471, JK Industries Ltd. vs. Chief Inspector of Factors Boilers, (1996) 6 SCC 665, R.S. Joshi vs. Ajit Mills Ltd. (1977) 4 SCC 98, Gujarat Travancore Agency vs. CIT (1989) 3 SCC 52, Swedish Match AB vs. SEBI (2004) 11 SCC 641, the following legal principle: A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. In Corpus Juris Secundrum, Vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plausible different interpretation. Two divergent views on interpretation of Section 2(7) of the Act are not possible. To state so would be to ignore the obvious. Discount on promissory note and bills of exchange drawn or made in India by express stipulation have been included in the word interest . What is excluded is discount on treasury bills . There is no ambiguity or doubt in the said words. The single sentence observations of the CIT(A) and the tribunal to the contrary are unsustainable. 16. Reliance placed by the assessee on Circular No. 647 dated 22nd March, 1993 (reported in (1993) 200 ITR Statute 230) is entirely misconceived. The said circular was issued to explain applicability of provisions of Section 194A of the Income Tax Act, 1961 and is not issued under the Act and does not explain Section 2(7) of the Act. The said circular has no application to the facts of the present case which pertains to interpretation of Section 2(7) and applicability of Section 13 of the Act. Thus, it is not possible to accept the contention of the respondent assessee that there was a genuine difference of opinion on the question; whether or not bill discounting charges could be treate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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