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TMI Blog2015 (1) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax (Appeals) has erred in deleting the penalty made in additions of Rs. 2,15,916/-, Rs. 14,09,286/-, Rs. 6,919/- and Rs. 4,11,512/- stating that the assessee has offered all the findings of disproportionate income for tax during the course of survey. 3. The Learned Commissioner of Income Tax (Appeals) has erred in not considering the above facts." ITA No. 254/PNJ/2013 : 3. In the above appeal filed by the Assessee, the Assessee has taken the following grounds of appeal : "1. The learned CIT(A) erred in upholding penalty in respect of disallowance of Rs. 342,902/- towards repairs & maintenance without appreciating the fact that the admission of additional income on the part of the appellant was in spirit of settlement rather than admission of concealment." 4. The Assessee, Munnalal R. Halwai has moved an application dt. 15.5.2015 in ITA No. 253/PNJ/2013 raising additional ground which reads as under : "1. On the facts and circumstances of the case and in law the CIT(A) erred in sustaining penalty u/s 271(1)(c) of the Income Tax Act, 1961 levied by Assessing Officer in respect of unsecured loans from relatives - when the transaction was recorded in books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l ground which survives for our adjudication, we heard the rival submissions and carefully considered the same. We noted that the Assessee is proprietor of M/s. S.M.B. Enterprises engaged in the business of supply of milk and milk products and grocery items to the hotels. Return declaring income of Rs. 6,23,948/- was filed on 31.10.2006. Subsequently, there was a survey u/s 133A on 16.3.2007. After processing of the return u/s 143(1), notice u/s 148 was issued on 3.12.2007. In response to question nos. 16 to 19 on the basis of statement recorded of Shri Ramachandra G. Halwai, the father of the Assessee on 16.3.2007 additional income of Rs. 28,34,352/- was offered for taxation for A.Y 2006-07. The AO brought to tax the additional income detailed as under : Sl.No. Particulars Amount 1 On Account of capital introduced (Q.16) Rs. 2,15,916 2 Out of Petrol & diesel expenses not explained (Q.17) Rs. 14,09,286 3 Agricultural tax claimed not explained (Q.18) Rs. 6,919 4 Vehicle repairs and maintenance double claim, unexplained (Q.18) Rs. 4,11,512 2 Unexplained unsecured loan towards Cessation of liability Rs. 7,90,719 Total additional income offered to tax Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to prove that he has not furnished inaccurate particulars of his income and concealed the particulars of his income. The Hon'ble Supreme Court in the case of Union of India Vs. Dharmendra Textile Processors (2008) 306 ITR 277(SC) has held that: i. The explanations to section 271(l)(c) indicate the element of strict liability on the assessee for concealment of income or giving inaccurate particulars while filing the return. ii. The section 27l(1)(c) has been enacted to provide remedy for loss of revenue. iii. The penalty u/s.27l(1)(c) is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability, as in the case of prosecution u/s 276C. 5. In view of the above discussion, I am satisfied that the assessee has concealed the particulars of his income and is liable for penalty u/s.271(1)(c) of the Income Tax Act, 1961. Accordingly, I impose minimum penalty of Rs. 9,54,042/- as against maximum penalty of Rs. 28,62,126/- under section 271(1)(c) of the Income Tax Act, 1961." We noted that the Assessee went in appeal before CIT(A). CIT(A) sustained the penalty in respect of addition made on account of surrender for unexplained secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome 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 incumbent upon the AO to state whether penalty was being levied for concealment of income or for furnishing of inaccurate particulars of income. In the absence of such findings, the order would be bad in law. The case of New Sorathia Engineering Co. Ltd., 282 ITR 642, Hon'ble Gujarat High Court has held as under: - "It is incumbent upon the assessing officer to state whether the penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. Held, that the penalty order and the order of the Commissioner (Appeals) showed that no clear cut finding had been reached. The Tribunal had failed to appreciate this legal issue. The ration in CIT V. Manu Engineering Works 132 ITR 306 (Guj) was applicable and the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd, 122 TTJ 721 (Pune). 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 interpretation of law. Accordingly, it was held that mere rejection of a legal claim would not amount to furnishing of inaccurate particulars of income. This view is fortified by the Supreme Court Judgment in the case of Reliance Petroproducts, 322 ITR 158 SC. In this case, the claim of 'Assessee' u/s 36(1) (iii) was rejected by the AO and the order of AO was upheld by the tribunal. As a result thereof, the penalty u/s 271(1) (c) was imposed on account of furnishing of inaccurate particulars of income. The penalty was held to be illegally imposed by the tribunal since factual details of income furnished by the 'Assessee' were found to be correct. The matter ultimately reached the SC and the Hon'ble court upheld the view of the Tribunal by holding that "mere making of the claim, which is not sustainable in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (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 has not brought out whether the assessee has concealed the particulars of income or whether the assessee has furnished inaccurate particulars of income. 17. In the case of the assessee, the AO has not initiated the proceedings for any particular charge. The penalty was initiated vide issue of notice dt. 29.12.2008. The notice reads as under: - "whereas in the course of proceedings before me for the assessment year 2006-07 it appears to me that you have concealed the particulars of your income or furnished inaccurate particulars of such income." 18. The AO in this case initiated the penalty without any mention of any particular default and levied the same again without mentioning any specific charge. In CIT v. Atul Mohan Bindal (2009) 9 SCC 589, where Hon'ble Supreme Court was considering the same provision, it observed that the assessing officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. Thus the satisfaction of the AO about the concealm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, if any addition is made, it does not mean that the penalty will automatically be levied. In the case of the Assessee, we noted that the Assessee during the course of the survey himself surrendered certain expenses and unsecured loan as its income although these expenses and unsecured loans were duly recorded in the books of accounts of the Assessee. It is not a case where the Revenue got evidence that the expenditure recorded and the unsecured loans are bogus. In the penalty proceedings the assessee is given an opportunity to explain his case if he successfully explains his position and is not trapped within the parameters of section 271(1) (c) along with the Explanations deeming the concealment of income, penalty cannot be imposed. In this case, the penalty has been imposed merely observing that the penalty is automatic and mandatory. Section 271(1) (c) deals with the two situations for imposing the penalty; has concealed the particulars of his income; or has furnished the inaccurate particulars of such income. Explanation 1 is applicable only in case of first situation i.e. amount added or disallowed in the total income be deemed to represent the income in respect of which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms concealment of income and furnishing inaccurate particulars. The Court went on to hold therein that in order to attract the penalty under section 271(1) (c), mens rea was necessary, as according to the Court, the word inaccurate signified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1) (c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term inaccurate particulars was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars, It was further held that the AO must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee is allowed while the appeal filed by the Revenue stands dismissed. ITA No. 254/PNJ/2013 : 25. So far as original ground is concerned, we noted that the ground taken by the Assessee is duly covered in favour of the Revenue by the decision of the Hon'ble Supreme Court in MAK Data P. Ltd. vs. CIT, 358 ITR 593 (SC) (supra) wherein the Hon'ble Supreme Court has held as under : "Voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. The Assessing Officer should not be carried away by the plea of the assessee such as "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", 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." We, therefore, dismiss the said ground. 26. As regards the additional ground taken by the Assessee, both the parties agreed that the issue involved is similar to the issue involved in ITA No. 253/PNJ/2013 in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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