TMI Blog2009 (2) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 treating the same as unexplained cash credit under s. 68 of the Act. Thereafter, the AO levied maximum penalty of ₹ 1,61,943 under s. 271(1)(c) which has been confirmed by the CIT(A). 4. The learned Authorised Representative submitted that the assessee has furnished all the necessary details including reconciliation and conformation of the parties. He further submitted that the necessary explanation regarding the difference in the accounts maintained by the assessee and maintained by the parties were also explained. The learned Authorised Representative submitted that the assessee and other parties were maintained a different system of accounting as the assessee was maintaining net system of accounting. The assessee has also explained that due to clerical error of accountant, the assessee has wrongly posted some entries of other parties which has related to them. The learned Authorised Representative in this regard drew our attention to a copy of letter dt. 17th Jan., 2004 given to the AO and the same has been placed on pp. 1 and 2 of assessee's paper book. The learned Authorised Representative has also drawn our attention to p. 24 of the paper book where a rectific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the latin concelare which implies contcelare to hide. Webster in his New International Dictionary equates its meaning to hide or withdraw from observation, to cover or keep from sight; to prevent the discovery of; to withhold knowledge of . The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the IT authorities. There is strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability. It is obvious that the penal provisions would operate when there is concealment of particulars of income or a failure of duty to disclose fully and truly particulars of income, imposed under the Act and the rules thereunder. The duty is enjoined upon a person to make a correct and complete disclosure of his income and it is only when he fails in his duty by not disclosing his income or part thereof, he conceals the particulars of his income. The duty is enjoined upon him to make a complete disclosure of his income as well as a correct disclosure. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her particulars shown therein were truly stated and related to the previous year relevant to the assessment year in question. It was also to be stated therein on solemn declaration that no other income accrued or arose or was received by the assessee and that there was no other income including income of any other person in respect of which the assessee was chargeable to tax under the Act. It will also be noted from the contents of the prescribed forms of the return of income that the assessee is required to give various particulars of income under different heads. For example, in the Form No. 2 of return of income prescribed for persons other than companies and those claiming exemption under s. 11 during the relevant assessment years, the statement of total income in Part I covered six heads of income, namely, salaries, interests on securities, income from house properties (the particulars of which were to be given as per Annex. II), profits and gains of business or profession, (the particulars of which were to be given as per Annex. II), capital gains and income from other sources. The aggregate of item Nos. 1 to 6 was to be shown against item No. 7. Thereafter, deductions specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context of the duty of a person to disclose his income from various sources under various heads of income as statutorily provided and his duty to disclose his total income in the return. The extent of his total income will determine the total income-tax liability of a person. 'Total income' is defined in s. 2(45) and it means the total amount of income computed in the manner laid down in the Act. Thus, for arriving at the total income, the income derived from all sources is to be considered as provided by s. 5, when it is received or deemed to be received by a person. Certain incomes which are enumerated in s. 10 are not included in the total income. All income for the purpose of charge of income-tax and computation of total income is required to be classified under distinct heads of income such as salaries, income from house property, profit and gains of business or profession, capital gains and income from other sources, as enumerated in s. 14. 6.4 The income chargeable to income-tax under the head 'Salary' is the nature of the income indicated in s. 15 to be computed after making the deductions mentioned in s. 16. The income under the head 'Income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings under s. 143(2)/(3), the ITO can find out whether the return of income was correct and complete. If he holds that the return of income was not correct or that it was not complete in respect of the particulars of income which were required to be stated in the return, he will reach the correct figure of total income and determine the sum payable by the assessee or refundable on the basis of such assessment. If the income chargeable to tax has escaped assessment for any assessment year, by reason of omission or failure of the assessee to disclose fully and truly all material facts necessary for his assessment, reassessment proceeding can be initiated as provided under s. 147. This again shows that full and true disclosure of income is a primary obligation of the assessee. 6.5 The AO is to give opportunity of hearing to the assessee as required under the Act. Sec. 274 of the IT Act, 1961 provides that no order imposing a penalty under this chapter would be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. The opportunity of hearing given by the notice under s. 271(1)(c), obviously is against such concealment and inaccuracy as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income and in accurate particulars of income may at times overlap. It depends upon the facts of the each case. In the assessment proceedings the ITO while ascertaining the total income chargeable to tax would be in a position to detect the specific or definite particulars of income concealed or of which false particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it would amount to concealment to that extent. In the same way where specific and definite particulars of income are detected as inaccurate, then such figure will also make the total income inaccurate in particulars to the extent it does not include such income. In other words the AO cannot invoked provision of s. 271(1)(c) on the basis routine and general presumptions. Whether it be a case of only concealment or of only inaccuracy or both, the particulars of income so vitiated would be specific and definite and be known in the assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Expln. 1, the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation; it should not be a fantastic or fanciful one. As indicated above, the consequence follows as a matter of law. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed the income or furnished inaccurate particulars thereof is available to be drawn. 6.9 Part A of the Explanation to s. 271(1)(c) provides that if assessee fails to offer an explanation or offers an explanation which is found by the AO or the CIT(A) or the CIT to be false. This Explanation can therefore, be applied only where the assessee has either not offered any ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot help the case of Revenue as the facts of the said case are different. The learned Departmental Representative has also relied upon the judgment of the Kerala High Court in the case of CIT vs. Issac John Co. (supra) the facts of that case are also different from the facts of the case under consideration. The learned Departmental Representative has also relied upon the judgment of the Hon'ble Supreme Court in the case of Union of India Ors. vs. Dharmendra Textile Processors Ors. (supra) wherein it has been held that penalty under s. 271(1)(c) is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability. In the case under consideration, the case of the assessee is that the assessee has furnished all the relevant material which are necessary for computation of total income. The assessee neither furnished inaccurate particulars nor has concealed any particulars of his income. The assessee furnished explanation which was not found false by the AO. The explanation furnished by the assessee has also been substantiated by necessary material evidence, in the form of books of account which was maintained on a particular system of accounti ..... 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