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TMI Blog2012 (7) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... vergence of legal opinion on the said question. The impugned order also disposes of two cross objections filed by the respondent assessee. 2. By order dated 18th April, 2012, the following substantial question of law was framed:- "Whether the Income Tax Appellate Tribunal was justified and correct in holding that penalty under Section 13 of the Income Tax Act, 1974 imposed by the Assessing Officer cannot be sustained?" 3. The respondent assessee is a company engaged in business of providing financial services. It is accepted position that "interest" earned by the respondent assessee is chargeable to tax under the Act. The Assessing Officer noticed that the respondent assessee in the return for the Assessment Year 1996-97 had shown Rs.46,63,619/- under the head "Interest others" but had not included in the said amount on which tax was payable under the Act. Similarly, Rs.4,13,82,323/- and Rs.5,28,16,681/- towards 'bill discounting charges', in respect of assessment years 1996-97 and 1997-98 were not included in the amount on which tax was payable. 4. For the assessment year 1996-97, the Assessing Officer included Rs.48,63,619/- under the head 'interest others' and bill discountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccurate particulars of such chargeable interest." 9. The said Section stipulates that penalty can be imposed when an assessee has furnished inaccurate particulars of interest or concealed particulars of chargeable interest. The Section does not use the word 'deliberately', 'willful' or 'willfully'. However, the Section does not have any explanation as in the case of Section 271(1)(c) of the Income Tax Act, 1961. To this extent the two provisions are not para materia. The net effect is that in the absence of "Explanation" the onus will not shift to the assessee. The purport and purpose behind Explanation to Section 271(1)(c) as explained in several decisions, is to shift the onus and impose an obligation on the assessee to prove and establish the reason/cause, and in case of failure to bonafidely elucidate and satisfy their conduct, penalty can be imposed under Section 271(1)(c) of the Income Tax Act. The Explanation raises a presumption which has to be rebutted by the assessee. In the absence of Explanation, the presumption or the shifting of onus does not take place but this does not mean that penalty cannot be imposed where an assessee has furnished inaccurate particulars or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular" is a detail or details (in plural sense) ; the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The learned counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT v. Atul Mohan Bindal [2009] 9 SCC 589, where this court was considering the same provision, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment in Dilip N. Shroff v. Joint CIT was upset. In Union of India v. Dharamendra Textile Processors, after quoting from section 271 extensively and also considering section 271(1)(c), the court came to the conclusion that since section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing return, there was no necessity of mens rea. The court went on to hold that the objective behind the enactment of section 271(1)(c) read with Explanations indicated with the said section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff v. Joint CIT was overruled by this court in Union of India v. Dharamendra Textile Processors, was that according to this court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in the case of Dilip N. Shroff v. Joint CIT. However, it must be pointed out that in Union of India v. Dh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision, the Supreme Court in Commissioner of Income Tax, Delhi vs. Atul Mohan Bindal, (2009) 9 SCC 589, has held that the said decision was confined to the particular Section i.e. Section 11AC of the Central Excise Act, 1944 in view of the peculiar and distinguishable words used therein. 13. Having considered and examined the contentions raised by the counsel for the parties, it appears to us that the assessee at best had lack of mens rea but this is not sufficient to quash the penalty under Section 13 of the Act. Declaration or statement in the return that the said amounts were not included for the purpose of tax may show/establish absence of mens rea but in the present case as elucidated below, this by itself does not justify cancellation or quashing of penalty as the ingredients of the provisions of Section 13 are satisfied. 14. What has been overlooked and not considered by the tribunal is the amendment made to Section 2(7) of the Act w.e.f. 1st October, 1991. Aforesaid Section after the amendment as applicable reads as under:- "(7) "interest" means interest on loans and advances made in India and includes- (a) commitment charges on unutilised portion of any credit s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, is to the effect that the facts indicate that there was a genuine difference of opinion, whether bill discounting charges should be treated as interest or not. There is no discussion or examination of the said aspect with reference to the statutory provision, basis of the interpretation put forward by the respondent assessee etc. The tribunal in respect of appeal for the assessment year 1996-97 has not even gone into and examined the following findings recorded by the Assessing Officer in the penalty order in respect of receipts of Rs.46,63,619/- under the "Interest others" :- "2. Briefly, the facts of the case are that during the course of assessment proceedings, it was also observed that the assessee company had shown receipt of Rs.46,63,619/- in the profit & Loss account on account of Interest Others but this receipt was not included in the computation of chargeable interest. On being asked to furnish the reasons for non-inclusion of the receipt referred above in the computation of chargeable interest, the counsel for the assessee had not advanced any argument. Hence, Rs.48,63,619/-, on account of interest other, was added to the chargeable interest of the assessee." 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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