TMI Blog2015 (11) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... , which does not form part of the total income under this Act. There are decisions as per which unless the necessary satisfaction is recorded by the Assessing Officer rule 8D cannot be invoked. Therefore, once the assessee has advanced its claim, the Assessing Officer may reject the same but that does not lead to the conclusion that the claim advanced by the assessee was a false claim. The Assessing Officer in the assessment order or in the penalty order nowhere states that the assessee's claim was false and he has invoked rule 8D for computing the disallowance under section 14A. Therefore, this was merely a difference of opinion between the assessee and the Department on the computation of disallowance under section 14A. The decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidend from sale of mutual funds. The assessee had filed return of income declaring total income at ₹ 2,83,25,511. The Assessing Officer noticed that the assessee had shown dividend income to the tune of ₹ 2,43,67,057 but no separate expenses incurred by it in lieu of this income had been shown. The assessee further submitted that the expenditure had been incurred as administrative expenses and they were statutory or necessary expenses, hence should not be disallowed. The Assessing Officer computed the disallowance under section 14A at ₹ 35,71,608 and after reducing the disallowance of ₹ 2,43,670 made by the assessee in its computation, disallowed ₹ 32,27,938. He, accordingly, initiated penalty proceedings unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the submissions of both parties and have perused the record of the case. Admittedly the assessee on its own had disallowed a sum of ₹ 2,43,670 under section 14A but the Assessing Officer computed the disallowance as per rule 8D at ₹ 35,71,608. The provision of rule 8D comes into play only when the Assessing Officer records a finding that having regard to the accounts of the assessee he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income, which does not form part of the total income under this Act. There are decisions as per which unless the necessary satisfaction is recorded by the Assessing Officer rule 8D cannot be invoked. Therefore, once the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides for imposition of penalty in case the Assessing Officer, in the course of any proceeding under the Act, is satisfied that : (i) any person had concealed particulars of his income, or (ii) had furnished inaccurate particulars of such income. Further, after insertion of Explanation 1 to section 271(1)(c), the onus is on the assessee to show that there was no intention of concealment and not on the Revenue. 5.2 Mens rea was considered to be a necessary ingredient for levy of penalty as laid down by the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696 (SC). But after the introduction of Explanation 1 to section 271(1)(c), the Supreme Court held that the requirement of proof of mens rea on the part of the Revenue, would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) Though penalty proceedings under the Income-tax law may not be criminal in nature, they are still quasi-criminal requiring the Department to establish that the assessee has concealed his income. (vi) It has to be understood that the Explanation to section 271(1)(c) is an exception to the general rule raising a legal fiction by which the burden which is ordinarily with the Department is sought to be placed on the assessee. This burden on the assessee is subject to 'conditions precedent', which are required to be satisfied before the Explanation could be applied. It was also pointed out as held by the Supreme Court in K. C. Builders v. Asst. CIT [2004] 265 ITR 562 (SC) that 'deliberateness' is implied in the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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