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Commissioner of Income Tax Versus Smt. Anita Kumaran

2017 (3) TMI 390 - MADRAS HIGH COURT

Penalty under Section 271(1)(c) - claim made under Section 57 - Held that:- Assessee, having realised that the expenditure claimed towards travelling under Section 57 of the Act was not tenable, offered the amounts expended to be added to her income and, accordingly, paid the requisite tax and interest upon the same. In our opinion, this was not a case, where, the Assessee could be said to have either concealed particulars or furnished inaccurate particulars of her income. - It was, essentia .....

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with): 1. Allowed, subject to just exceptions. T.C.(A)Nos.139 to 141 of 2017: 2. These appeals are preferred by the Revenue as against the common order of the Income Tax Appellate Tribunal (in short 'the Tribunal'), dated 19.06.2015. 3. By virtue of the impugned judgment, a common order was passed qua Assessment Years (A.Y.s) 2008-09, 2009-10 and 2010-11. 4. The common issue, which arose before the Tribunal for consideration was, whether penalty under Section 271(1)(c) of the Income Tax .....

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a regular assessment order was passed. 5.2. In sum, the result of these proceedings was that the assessee, offered for tax, the sum expended on travel by having it included in the taxable income. Accordingly, both tax and interest were paid by the Assessee on the addition made on account of money expended on travel. 5.3. The Revenue, while concluding the reassessment proceedings, qua A.Ys.2008-09 and 2010-11, issued notice under Section 271(1)(c) of the Act, for initiation of penalty proceedings .....

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short 'CIT(A)']. The Assessee, however, did not meet with success. CIT(A) dismissed the appeals vide a common order dated 22.11.2013. 6. It is, in these circumstances, the matter travelled to the Tribunal. 6.1. The Tribunal, allowed the appeals of the Assessee and reversed the order of CIT(A). Aggrieved by the impugned judgment, the instant appeal has preferred. 6.2. Therefore, it would be relevant to examine the reasoning given in the impugned judgment. However, the reasoning given in t .....

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asked the assessee to produce supporting materials for the deduction claimed u/s 57 of the Act. The assessee explained before the Assessing Officer that no records were maintained, accordingly, it was offered for taxation voluntarily. Therefore, according to the ld. DR, it is a clear case of concealment of the income or furnishing inaccurate particulars with regard to the income of the assessee. The CIT(A), after considering the minimum penalty levied by the Assessing Officer, confirmed the sam .....

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sing Officer. Now the question arises for consideration is when the assessee claims a deduction while computing total income towards expenditure and the Assessing Officer disallowed the same for want of evidence, whether the same could be construed as furnishing of inaccurate particulars. The Hon'ble Apex Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. 322 ITR 158, had an occasion to consider an identical issue. When the assessee by furnishing all details claims a deduction whic .....

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d expenditure as income and paid the taxes also. In those circumstances, this Tribunal is of the considered opinion that levy of penalty u/s 271(1)(c) of the Act is not justified. Accordingly, the orders of the lower authorities are set aside and penalty levied by the Assessing Officer u/s 271(1)(c) of the Act is deleted..... " (Emphasis is ours) 7. Mr.J.Narayanasamy, learned counsel for the Revenue, says that the judgment of the Tribunal is erroneous, both on law and on facts. Therefore, t .....

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as per the explanation given by the Assessee, was "wrongly" made by the Accountant under Section 57 of the Act. Having realised that the expenditure incurred towards travelling could not be claimed under Section 57 of the Act, the said sums were offered for tax and, accordingly, both tax and interest was paid by the Assessee. 9.1. This apart, the Assessee, evidently, took a stand before the authorities below that the claim was made, albeit, on her behalf, by the Accountant, who was no .....

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the matter in issue would not come within the scope of Section 271(1)(c) of the Act, as it was not a case of furnishing inaccurate particulars. 10.1. Reliance in this behalf was placed by the Tribunal on the judgment of the Supreme Court rendered in CIT V. Reliance Petroproducts Pvt. Ltd., [2010] 322 ITR 158. 11. Mr.J.Narayanasamy, who appears for the Revenue, says that, a more apposite decision would be the judgment of the Supreme Court in: MAK Data (P) Ltd. V. Commissioner of Income-tax-II [2 .....

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es. 12.2. It is, in this context, the Supreme Court observed that it was not a case of "voluntary disclosure" and, therefore, penalty under Section 271(1)(c) of the Act was rightly levied. This aspect of the matter comes through, upon a close perusal of the following observation made in paragraph 9 of the judgment: ".....9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by th .....

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ion 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true i .....

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as issued. The Assessee took the stand that it was not a case of concealment of income or a case of having furnished inaccurate particulars. 13.2. The Asseessee, thus, took the stand that merely because the Revenue had a different view of the matter and had therefore, disallowed the claim, by taking recourse to provisions of Section 14A of the Act - that, by itself could not form the basis of imposing penalty on the Assessee. 13.3. The Supreme Court examined the issue threadbare and discussed at .....

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either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an .....

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ot think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Co .....

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rding to truth; erroneous; as an inaccurate statement, copy or transcript". We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incor .....

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iture incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in ac .....

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