TMI Blog2012 (8) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction u/s 80-IB was withdrawn and tax duly paid on the same. CIT (A) is justified in deleting the penalty - Decided against Revenue - IT APPEAL NO. 175 (PNJ) OF 2011 - - - Dated:- 8-6-2012 - P. K. Bansal And D. T. Garasia, JJ. T. N. C. Shridhar for the Appellant Shrinivas Nayak for the Respondent ORDER D. T. Garasia, Judicial Member This is appeal filed by Department against the order passed by CIT(A) Panaji dt. 16/08/2011 for A.Y. 2006-07. The following grounds are raised by the department in the appeal: - (1) The Ld CIT(A) has erred in allowing the appeal of the assessee thereby deleting the penalty imposed by the Assessing Officer. (2) The Ld CIT(A) has failed to appreciate that the assessee has not filed the revised return and has filed only revised statement of income on 26/02/2008 (3) The Ld CIT(A) while arriving at the decisions has erred in ignoring that the assessee has filed the statement of income after the issue of notice u/s 143(2) dt. 28/09/2007. The assessee's statement that the notice issued was a routine notice and there was no proposition from the AO to disallow deduction u/s 80-IB in the said noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment would not automatically entitle revenue to impose penalty. Thus, there was nothing on record to show that fraud, gross or wilful neglect could be attributed to the appellant. Besides, it is not a case that the AO has made independent inquiries and detected the false claim of the appellant but the appellant itself on realizing the mistake, corrected the same by filing revised statement of income and made payment of taxes before being detected by the AO. In view of the above facts and taking into consideration overall facts and the case laws discussed above, the penalty levied of ₹ 1895792/- u/s 271(1)(c) is not tenable and therefore deleted. 4. Ld. DR submitted that in respect of claim u/s 80-IB it was noticed that assessee claim deduction u/s 80-IB of ₹ 5590433/- in return of income though a period of 10 consecutive years has elapsed beginning with initial assessment year. The assessee did not filed revised return of income and has only filed revised statement of income only on 16/02/2008 after issue of notice u/s 143(2) dt. 01/10/2007 after the case was selected for scrutiny assessment. The assessee has not filed suo mottu revised statement but filed afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises v. CIT [2000] 246 ITR 571 (Delhi) iii. CIT v. Vikas Promoters (P.) Ltd. [2005] 277 ITR 337/145 Taxman 300 (Delhi) iv. CIT v. Super Metal Re-Rollers (P.) Ltd. [2004] 265 ITR 82/135 Taxman 407 (Delhi) v. Shri Bbagwant Finance Co. Ltd. v. CIT [2006] 280 ITR 412/[2005] 147 Taxman 53 (Delhi) vi. CIT v. Ranjan Co. [2007] 291 ITR 340/[2005] 146 Taxman 271 (Delhi) vii. CIT v. Munish Iron Store [2003] 263 ITR 484/[2004] 137 Taxman 391 (Punj. Har.) viii. CIT v. Dajibhai Kanjibhai [1991] 189 ITR 41/57 Taxman 16 (Bom.) ix. CIT v. Rampur Engg. Co. Ltd. [2009] 309 ITR 143/176 Taxman 211 (Delhi) x. Ms. Madhushree Gupta/British Airways PLC v. Union of India [2009] 317 ITR 107/183 Taxman 100 (Delhi) xi. Devsons (P.) Ltd. v. CIT [2010] 329 ITR 483/[2011] 196 Taxman 21/[2010] 8 taxmann.com 87 (Delhi) xii. New Sorathia Engg. Co. v. CIT [2006] 282 ITR 642/155 Taxman 513 (Guj.) xiii. CIT v. Atul Mohan Bindal [2009] 183 Taxman 444 (SC) (para 5) 6. Ld. AR submitted that assessee has in his explanation stated that revised statement of income was prepared and tax was paid thereon out of which 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Assessing Officer noticed that assessee has claimed the deduction u/s 80-IB even after the expiry of 10 consecutive assessment years. The assessee during the course of assessment proceedings has not filed the revised return of income but he has filed the revised statement of income withdrawing the deduction claimed in the original return of income. In view of this the AO has disallowed the deduction u/s 80-IB. The AO has initiated the penalty which was deleted by CIT(A). As per section 271 (l)(c) which reads as under 271 (1) If the Assessing Officer or the Commissioner (Appeals) [or the commissioner] in the course of any proceedings under this Act, is satisfied that any person - (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d)** ** ** He may direct that such person shall pay by way of penalty, -Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, - (A) Such person fails to offer an explanation or offers an explanation which is found by the AO or the Commissioner (Appeals) or the Commissioner to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty proceedings are initiated, if otherwise it is discernible from record that the AO has arrived at prima facie satisfaction for initiation of penalty proceedings. The issue is of discernibility of the satisfaction arrived at by the AO during the course of proceeding before him.' The presence of prima facie satisfaction for initiation of penalty proceedings was and remains a jurisdictional fact which cannot be wished away as the provision stands even today, i.e. post amendment If there is no material to initiate penalty proceedings; an assessee will be entitled to recourse to a court of law. 10. This is the settled law that the penalty proceedings and assessment proceedings are different. The penalty proceedings can be initiated on 2 charges i.e. i) concealment of particulars of income and ii) furnishing of inaccurate particulars of income. Both the charges are entirely different. If the proceedings are initiated on charge of concealment, then penalty cannot be levied on the charge of furnishing of inaccurate particulars of income and vice versa. Thus, there must be a clear finding about the charge for which penalty is imposed or initiated. It is incum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not correct, true or accurate, it would amount to furnishing of inaccurate particulars of income. For example, in case of businessman, if a particular transaction of sale is not shown in the books, it would amount to concealment of particulars of income while sale is shown but at a lesser value, it would amount to furnishing of inaccurate particulars of income. 12. It is pertinent to note that thrust of the legislature is upon the particulars of income which are either concealed or furnished inaccurately by the assessee. Therefore, one must understand the meaning of the words particulars of income . The Income Tax Tribunal had to consider the meaning of the expression furnishing of inaccurate particulars of income appearing in section 271(1)(c) in the case of Kanbay Software India (P) Ltd ; ( supra ). It was held that the expression 'particular' refers to facts, details, specifics or the information about someone or something. Thus, the details or information about the income would deal with factual details of income and cannot be extended to areas which are subjective such as status of the taxability of an income admissibility of a deduction and interpretatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t absolute one but is rebuttable one. It only shifts the onus on the assessee. Explanation 1 refers to the two situations in which presumption of the concealment of the particulars of income is deemed. It is not applicable where the charge against the assessee is furnishing inaccurate particulars of the income. The first situation is where the assessee in respect of any fact material to the computation of his total income fails to offer an explanation or offers an explanation, which is found by the AO or the Commissioner to be false. The second situation is where the assessee in respect of any facts material to the computation of his total income offers an explanation, which, the assessee is not able to substantiate and also fails to prove that such explanation was bona fide one and that all the facts relating to the computation of total income have been disclosed by him. The presumption available under explanation to section 271(1) (c), cannot be drawn unless the case of the assessee falls under either of the clauses (a) or (b). 16. In this case, the AO has not brought out any specific charge for which the penalty has been imposed on the assessee u/s 271(1) (c) of the Act. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra ), the Supreme Court has observed that the finding as to suppression or inaccurate particulars in the return are necessary for attracting the penal provision under section 271(1) (c) of the Income-tax Act, 1961. This judgment does not overrule the Explanations appended to section 271(1) (c). It even held that the object behind the enactment of section 271(1) (c) read with Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Thus, the ratio laid down in this judgment was confined to treating the wilful concealment is not essential for imposing the penalty u/s 271(1) (c) of the Act. Where an assessee genuinely makes a claim for a particular deduction by disclosing all the necessary facts relating to the same, that cannot be regarded to be concealment even if the assessee's claim is rejected. This is the settled law that penalty proceedings are distinct from the assessment proceedings and, therefore, if any addition is made, it does not mean that the penalty will automatically be levied. In the case of the assessee even no disallowance for 80-IB was made, rather the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jt. CIT [2007] 291 ITR 519 (SC) and approved the decision in Chairman, SEBI v. Shriram Mutual Fund [2006] 5 SSC 361. In the said case, the Supreme Court held: - 27. The Explanation appended to section 271(1)(c) of the Income-tax Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroffs case [2007] 8 SCALE 304 (SC) has not considered the effect and relevance of section 276C of the Income-tax Act. The object behind the enactment of section 271(1) (c) read with the Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability as is the case in the matter of prosecution under section 276C of the Income-tax Act 22. The aforesaid decision was taken note of in Reliance Petroproducts (P.) Ltd. ( supra ). While considering the phrase concealment of particulars, the Apex Court referred to section 271 and held as follows: - 9. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 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. Dharmendra 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. Dharmendra Textile processors, no fault was found with the reasoning in the decision in Dilip N. Shroff v. Joint CIT, where the court explained the meaning of the terms conceal and inaccurate. It was only the ultimate inference in Dilip N. Shroff v. Joint CIT to the effect that mens rea was an essential ingredient for the penalty under section 271(1)(c) that the decision in Dilip N. Shroff v. Joint CIT was overruled. 23. From the perusal of the aforesaid decisions, it is apparent the in none of the decision of Hon'ble Supreme Court as relied by the AO, it has been held that the penalty u/s 271(1)(c) is mandatory or automatic wherever the addition or disallowances are made by the AO. The assessing officer merely observed that the penalty is mandatory as he was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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