TMI Blog2015 (7) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... passed an order under Section 271(1). It is, therefore not correct to say that the exercise calling for an explanation from the assessee was not undertaken. Clause (c) of Section 271(1) originally qualified an act of concealment of income or furnishing of inaccurate particulars with the expression ‘deliberately’ which was omitted by the Finance Act, 1964 w.e.f. 1.4.1964 as a result concealment of income or inaccurate particulars need not originally have been furnished deliberately. The use of the expression ‘deliberately’ was a pointer to show that mens rea was a necessary element. With the omission of the expression ‘deliberately’, mens rea is no longer a prerequisite for imposition of penalty. It is now a case of strict liability. In the case of Dilip N. Shroff – Vs- CIT reported in (2007 (5) TMI 198 - SUPREME Court), mens rea was considered to be a necessary ingredient for levy of penalty. But in the case of Union of India –Vs- Dharmendra Textile Processors reported [2008 (9) TMI 52 - SUPREME COURT ] it was held that the view in the case of Dilip. N. Shroff was not correct. It has been held that penalty under Section 271 (1) (c ) is a civil liability and the wilful concealm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made payments of ₹ 3,40,00,000/- to U.P. Distillers Association. A Search was conducted u/s 132 of the Act, in the office of the U.P. Distillers Association by the Directorate of Income Tax (Investigation) New Delhi. From the seized record the payment of ₹ 3,40,00,000/- was found, made by the assessee. It was submitted by the A/R that to avoid protracted litigation and to put a quitous to the whole issue the assessee had offered this amount as disallowable item u/s 37(1) of the Act, through the return dated 3rd April 2006. Since the amount was offered as income by the assessee this amount is added back in computation of Income, in addition to the assessments made u/s 143(3) dated 28.12.2005. The computation of income is made below:- Gross total income as per order u/s 143(3) dated 28.12.2005 Rs.47,08,27,975/- Added Back Provision of diminution in the value of investment inadvertently Omitted in assessment Rs.32,00,000/- ₹ 47,40,27,975/- Added Back: As per discussion Payment to UP Distillers Association Rs.3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of disallowance of expenditure under explanation to Section 37(1) of the Act. The assessee in its submission stated that to avoid protracted litigation and to put a quietus to the whole issue the assessee had offered this amount as disallowable item U/s. 37(1) of the Act. The tax was charged in the assessment U/s. 143(3), U/s.115JB of the Act. In the so called revised return the assessee increased the Book Profit by the amount of ₹ 3,00,00,000/-. Notice U/s. 271(1)(c ) was issued on 19.05.2006 and this notice was duly served on the assessee. The assessee filed reply on lst June, 2006. The assessee submitted that the so called revised return filed by the assessee on his own volition and no concealment was detected in course of assessment proceedings, and mere acceptance by the assessee of certain amount as his taxable income cannot mean that he deliberately concealed any part of the income. The assessee further submitted that the case of the assessee was covered by the decision in the case of C.I.T. Vs- Suresh Chandra Mittal (SC) reported in 251 ITR 009. The submission of the assessee is not acceptable because of the fact that the assessee disclosed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, we are offering the amount, representing the alleged payments made by us to UPDA during the Financial Years pertaining to A.Y. 2003-04, 004-05 05- 06 as our income and are also paying tax on it, to avoid protracted litigation and to put a quitous to the whole issue. In the light of our voluntarily surrendering the aforesaid sum as our income in the respective years to which they pertain, it is requested that no penalty/prosecution shall be imposed/launched against us . 15. The assessee also duly paid tax on the additional amount of income. All along the assessee has maintained that the additional income has been offered for the purpose of buying peace with the Department and to negate the course of a protracted litigation with the Department. The various decisions relied upon by the assessee and as discussed above and especially the one of the Supreme Court in the case of Suresh Chandra Mittal (supra) strongly support the view that no penalty is liable in this case proposition. It is also noted that the case of the assessee stands on a much better footing than the case of M/s. Enfield Industries Ltd. (supra) decided by the Hon ble ITAT, in as much as in that cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily made. Far less is that an act arising out of any pricking of conscience. In any case he added that the so-called voluntary disclosure cannot alter the consequences. He, in support of his submissions, relied upon a judgment of the Apex Court in the case of Mak Data Private Limited Vs. C.I.T. reported in 2014(1) SCC 674 wherein the following view was taken:- 5. THE AO, in our view, shall not be carried away by the plea of the assessee like voluntary disclosure , buy peace , avoid litigation , amicable settlement , etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. 6. ASSESSEE has only stated that he had surrendered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfaction in a particular manner or reduce it into writing. The scope of Section 271(1)(c) has also been elaborately discussed by this Court in Union of India vs. Dharmendra Textile Processors (2008) 13 SCC 369 and CIT vs. Atul Mohan Bindal (2009) 9 SCC 589. Mr. Kapoor, learned senior Advocate, appearing for the assessee drew our attention to the first Explanation to Section 271(1) which reads as follows:- 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 [Assessing Officer] or the [***] [Commissioner (Appeals)] [or the [Principal Commissioner or Commissioner]] to be false, or (B) such person offers an 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 and material to the computation of his total income have been disclosed by him], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is the final court of fact (see paragraph 16) He also drew our attention to paragraph 12 of the judgment, which reads as follows;- 12. The only contention raised by the learned counsel for the appellant is that the Tribunal is the final fact-finding authority and its decision on the facts can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In the absence of such a question having been claimed, the High Court was obliged to accept the findings of fact arrived at by the Tribunal and then proceed to decide the question of law referred to it. Relying upon the two judgments of this Court in K. Ravindranathan Nair v. CIT and T. Ashok Pai v. CIT, it was contended that the High Court exceeded its jurisdiction in coming to the conclusion that the findings recorded by the Tribunal were perverse as no question of law to that effect had either been claimed or referred by the Tribunal to the High Court for its opinion. He also drew our attention to a judgment of the Andhr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee admitted that these were the incomes of the assessee but that was not an admission that there was deliberate concealment. From agreeing to additions, it does not follow that the amount agreed to be added was concealed income. There may be a hundred and one reasons for such admission, i.e., when the assessee realises the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of a quasi-criminal offence. We find ourselves in agreement with the view taken by the Tribunal. It is well settled that under section 271(1)(c), the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority. However, the proviso to Explanation -1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. In the present case, though it is true that the assessee had not surrendered at all and that he had done so on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er rejected nor was it held to be mala fide. The Tribunal has recorded a pure finding of fact to the effect that the Revenue has not placed on record any material or evidence to discharge its burden of proving concealment. In the assessment order no such finding was recorded. The Department has simply rested its conclusion on the act of the assessee of having offered additional income in the return filed in response to the notice issued under section 148 of the Act. The Tribunal has further held that the additional income so offered by the assessee was done in good faith and to buy peace. The Tribunal has relied upon the decision of the apex court in the case of CIT v. Suresh Chandra Mittal (2001) 251 ITR 9, wherein the Supreme Court has upheld the decision of the Madhya Pradesh High Court, CIT v. Suresh Chandra Mittal (2000) 241 ITR 124 (MP), where in similar circumstances it was held that the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relatable to the assessment year 2003-04. Mr. Nizamuddin, learned advocate appearing for the Revenue, is also not aware as to whether the impugned judgment, in so far as the same is relatable to the assessment year 2003-04, has been challenged by any separate appeal. Mr. Kapoor submitted that in the absence of any challenge to the impugned judgment in so far as the same is relatable to the assessment year 2003-04, the present appeal is also bad because the law is that rule of consistency has to be applied. He submitted while on the same set of facts the order imposing penalty has been set aside by the learned Tribunal which is not under challenge for the assessment year 2003-04 then Revenue cannot be heard to maintain a challenge to the same judgment in so far as the same is relatable to the assessment year 2004-05. He in support of his submission relied upon an unreported order dated 4th September, 2012 passed by the Apex Court in the case of CIT, Kol. Vs. M/s. PFH Mall and Retail Management Pvt. Ltd., dismissing an appeal preferred by the Revenue applying the principle of consistency. The order reads as follows:- Heard learned counsel on both sides. Delay condoned. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our goodself has also informed that certain payments were made by us to UPDA which were in the records belonging to UPDA. At this stage, we would not like to make any comment about the genuineness of the aforesaid information. However, we are offering the amount, representing the alleged payments made by us to UPDA during the Financial Years pertaining to Assessment Years 2003-04, 2004-05 2005-06, as our income and are also paying tax on it, to avoid protracted litigation and to put a quitous to the whole issue. In the light of our voluntarily surrendering the aforesaid sum as our income in the respective years to which they pertain, it is requested that no penalty/prosecution shall be imposed/launched against us. The assessee thereafter filed a revised return under the cover of a letter dated 3rd April, 2006 stating therein, inter alia, as follows:- The computation of Total Income made in this Return is inclusive of a sum of ₹ 340.00 Lacs being the alleged payments made by us to U. P. Distilleries Association (UPDA) during the Financial Year relevant to the above mentioned Assessment Year, which are not allowable by virtue of Explanation to Section 37(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 2004-2005 under Section 139 includes an expenditure disallowable under Section 37 (1) of the I.T. Act, it would automatically follow that inaccurate particulars had been furnished in the return originally filed, assessment whereof was completed on 28th December, 2005. The provisions of Sub-section 1 of Section 271 noticed above suggests that if the assessee furnishes inaccurate particulars coupled with absence of satisfactory explanation, that would per se make the assessee liable to pay penalty. Concealment of income in that case shall be presumed provided assessment leads to addition or disallowance of any amount in computing his total income. In the case, before us the assessee on his own showing had furnished inaccurate particulars. The assessee admitted that the return originally filed by him included expenditure disallowable under Section 37(1) which occasioned the revised return filed by him by which a sum of ₹ 3.40 crores was added by the assessee himself to his total income originally returned. The submission advanced by Mr. Kapoor that the Assessing Officer did not call for any explanation from the assessee is not factually correct because it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgements cited by Mr. Kapoor are all distinguishable because they proceeded on the theory of wilful concealment. In the case of Sir Shadilal Sugar and General Mills (supra) Their Lordships opined that there may be a hundred and one reasons for such admission . because the relevant assessment year was with respect to pre-amendment period. The judgment of M. P. High Court in the case of CIT Vs- Suresh Chandra Mittal cited by Mr. Kapoor followed that judgment of the Supreme Court. The judgement is also distinguishable on facts because in that case the Tribunal had held that the assessee had no chance of carrying through his explanation . But, in this case explanation was called for and explanation was offered by the assessee which was found not acceptable in the order dated 30th March, 2007. The views expressed in the case of CIT Vs- Suresh Chandra Mittal also appear to be contradictory to the views expressed by the Apex Court in the case of Mak Data Private Limited (supra) wherein it was held that explanation to Section 271(1) raises a presumption of concealment when a difference is noticed by the AO between return and assessed income. The burden is then on the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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