TMI Blog2007 (5) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that penalty under section 271(1)(c) was not exigible in the present case?" Shom of all unnecessary details the facts of the matter are as under: The appellant is an individual. He is an engineering graduate. Apart from his income by way of salary, he was having shares of profit of a number of firms besides income from proprietorship business. He has also earned income from dividend and interest. The banker of the assessee was the Syndicate Bank. A power of attorney was given by the appellant in its favour. The shares of the companies which the appellant owned were lodged with and in the custody of the said bank. Under his instructions, the bank used to purchase shares of various companies and kept with it the physical possession thereof. It has also sold the shares of the appellant and delivered the same to the brokers or the parties and also used to pay or receive the sale proceeds and deposit the same in the bank account. The said arrangement continued for a number of years in the past. Tax matters of the appellant were being looked after for a number of years by the Law Agency Division of the Syndicate Bank, Manipal, which was authorised to file the returns of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The High Court compared the returns filed by the appellant under the Income-tax Act and the Wealth-tax Act and arrived at the following decision: "The principal is responsible for all the acts done by the agent. That apart, in the case on hand there is no material to show that the agent has acted in excess of his authority or in disobedience of the authority given by the principal. The stand taken by the bank manifestly makes it clear to us that they prepared the return of income on the basis of information furnished by the assessee. The assessee is an engineer and a tax payer for a number of years cannot contend that he signed the return of income by believing his power of attorney holder. This contention of the assessee cannot be believed for the reason that in his revised return dated January 12, 1990, again declared a loss of Rs. 1,04,531 and did not admit the capital gains and other income. The first appellate authority rightly holds that if the explanation of the assessee is accepted then every tax evader could take shelter by shifting the blame on his clerk and accountants who invariably prepare the return for them. The contention of the assessee that because of the negl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only when a finding of the Tribunal on fact is challenged as being perverse, in the sense set out above, that a question of law can be said to arise." Yet again in Century Flour Mills Ltd. v. CIT [2001] 247 ITR 276, it was observed by this court: "We have perused the order of the High Court and heard learned counsel and are in no doubt that the High Court was right. The Appellate Tribunal having arrived at the finding of concealment of income on the basis of the material on record, no question of law arose, reference of which could be called for." It is, therefore, trite that if an explanation given by the assessee with regard to the mistake committed by him has been treated to be bona fide and it has been found as of fact that he had acted on the basis of wrong legal advice, the question of his failure to discharge his burden in terms of the Explanation appended to section 271(1)(c) of the Income-tax Act would not arise. In Dilip N. Shroff v. Joint CIT (civil appeal arising out of SLP (C) No. 26831/2004) delivered today, this court observed: "The expression 'conceal' is of great importance. According to Law Lexicon, the word 'conceal' means: 'to hide or keep secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom a different angle. It is now a well-settled principle of law that the more stringent the law, the more strict a construction thereof would be necessary. Even when the burden is required to be discharged by an assessee, it would not be as heavy as the prosecution. The omission of the word "deliberate", thus, may not be of much significance. Section 271(1)(c) remains a penal statute. The rule of strict construction shall apply thereto. The ingredients for imposing penalty remain the same. The purpose of the Legislature that it is meant to be a deterrent to tax evasion is evidenced by the increase in the quantum of penalty, from 20 per cent. under the 1922 Act to 300 per cent. in 1985. "Concealment of income" and "furnishing of inaccurate particulars" carry different connotations. Concealment refers to a deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. We may notice that in Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244 this court dealt with the amendment of section 271(1)(c) made in the year 1964 to hold: "Even after the amendment of 1964, the penalty proceedings, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al provision. Such a provision has to be construed strictly and narrowly and not widely or with the object of advancing the object and intention of the Legislature." Referring to a large number of decisions, it was furthermore observed: "27. Every statutory provision for imposition of penalty has two distinct components: (i) That which lays down the conditions for imposition of penalty. (ii) That which provides for computation of the quantum of penalty. Section 271(1)(c) and clause (iii) relate to the conditions for imposition of penalty, whereas, on the other hand, Explanation 4 to section 271(1)(c) relates to the computation of the quantum of penalty. 28. The provisions of section 271(1)(c)(iii) prior to April 1, 1976, and after its amendment by the Taxation Laws (Amendment) Act, 1975 with effect from April 1, 1976, the later provisions being applicable to the assessment year in question, are substantially the same except that in place of the word 'income' in sub-clause (iii) to clause (c) of section 271 prior to its amendment by the Taxation Laws (Amendment) Act, 1975, the expression 'amount of tax sought to be evaded' have been substituted. Explanation 4 inserted fo ..... 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