TMI Blog2017 (8) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to above is that in view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens rea in cases of concealment and/or short payment of tax. There is an onus on the Assessee. Whether the Assessee has been able to discharge the onus would depend on the facts and circumstances of the case. In the instant case, the learned Tribunal, in effect, arrived at a clear finding that imposition of penalty was not justified having regard to the facts and circumstances of the case that it was not the case of the Assessing Officer that the Assessee's claim was false or bogus. Neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) had examined the claim of the Assessee that the Assessee had given money to M/s.Alpha Commercials for the purpose of investment in residential property. The Assessee's remittance of demand raised by the department cannot be a reason for levy of penalty. Assessee had bona fide believed that M/s.Alpha Commercials had, as per mutual agreement, invested the money in residential property to enable the Assessee to claim the benefit of Section 54F/54B of the Act. - Decided in favour of assessee. - Tax Case (Appeal) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain. (2) The amount of the capital gain which is not utilised by the Assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the Assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the Assessee for the purchase of the new asset together with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural lands or to have deposited the same in the Capital Gains Account Scheme within the period stipulated in the Act. The long term capital gain of ₹ 1,90,27,203/- was, thus, brought to tax. 9. Pursuant to the notices, the Assessee's representative gave a reply stating that the Assessee had instructed M/s.Alpha Commercials to pay the money to the seller of the agricultural land at Mahabalipuram and had claimed exemption under Section 54B of the Act in good faith. 10. As M/s.Alpha Commercials had used the money for business purposes and had not used the money for purchase of agricultural land on behalf of the assessee, as per the agreement with the Assessee, the Assessing Officer arrived at the finding that the Assessee had not actually invested the amount received from sale of land in purchase of property and that no payment for purchase of agricultural land had been made to M/s.Alpha Commercials. The Assessing Officer was satisfied that it was a fit case for levy of penalty and imposed minimum penalty of ₹ 39,13,426/-. 11. Aggrieved by the imposition of penalty, the Assessee appealed to the Commissioner of Income Tax (Appeals), who dismissed the appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner or an Assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the Assessee or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. (b) [***]; (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (2A) The High Court may admit an appeal after the expiry of the period of one hundred and twenty days referred to in clause (a) of sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importance as has been done in many other provisions such as Section 109 of the Code or Article 133(1)(a) of the Constitution. The substantial question of law on which a second appeal shall be heard need not necessarily be a substantial question of law of general importance. In Guran Ditta v. Ram Ditta [(1927-28) 55 IA 235 : AIR 1928 PC 172] the phrase substantial question of law as it was employed in the last clause of the then existing Section 100 CPC (since omitted by the Amendment Act, 1973) came up for consideration and their Lordships held that it did not mean a substantial question of general importance but a substantial question of law which was involved in the case. In Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] the Constitution Bench expressed agreement with the following view taken by a Full Bench of the Madras High Court in Rimmalapudi Subba Rao v. Noony Veeraju [AIR 1951 Mad 969 : (1951) 2 MLJ 222 (FB)] : (Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] , SCR p. 557) When a question of law is fairly arguable, where there is room for difference of opinion on it or where the Court thought it necessary to deal with that question at some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case or not, the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis. (See Santosh Hazari v. Purushottam Tiwari [(2001) 3 SCC 179] .) 24.The principles relating to Section 100 CPC relevant for this case may be summarised thus : (i) An inference of fact from the recitals or contents of a document is a question of fact. But the legal effect of the terms of a document is a question of law. Construction of a document involving the application of any principle of law, is also a question of law. Therefore, when there is misconstruction of a document or wrong application of a principle of law in construing a document, it gives rise to a question of law. (ii) The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a question, answer to which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the department cannot be a reason for levy of penalty. 24. Mr.T.Ravi Kumar, learned Standing Counsel appearing on behalf of the department cited the following judgments in support of his contention that the appeal should be entertained: (i) K.P.Madhusudhanan v. Commissioner of Income Tax, (2001) 251 ITR 0099 (SC); (ii) M.A.K.Data P. Ltd. v. Commissioner of Income Tax, (2013) 358 ITR 0593 (SC); (iii) N.Ranjit v. Commissioner of Income Tax-V, Chennai, (2013) 262 CTR 411 (Madras); (iv) CRN Investments (P) Ltd. v. Commissioner of Income Tax, (2008) 300 ITR 0342 (Madras); (v) Union of India v. Dharamendra Textile Processors, (2008) 13 SCC 369; and (vi) Commissioner of Income Tax, Delhi v. Atul Mohan Bindal, (2000) 9 SCC 589. 25. In K.P.Madhusudhanan (supra), the Supreme Court held: 5. ..... The Explanation to Section 271(1)(c) is a part of Section 271. When the Income-tax Officer or the Appellate Assistant Commissioner issues to an Assessee a notice under Section 271, he makes the Assessee aware that the provisions thereof are to be used against him. These provisions include the Explanation. By reason of the Explanation, where the total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was not deliberate. 27. The Explanation to Section 271 makes it clear that, if in cases of concealment of particulars of income or furnishing of inaccurate particulars of income, the Assessee fails to offer an explanation or offers an explanation which is found by the ITO or the AAC to be false or offers an explanation which he is not able to substantiate, the amount added or disallowed in computing the total income of such person shall for the purpose of clause (c) i.e., for the purpose of concealment, be deemed to represent the income in respect of which particulars have been concealed. Proviso to Explanation makes it clear that the Explanation is not to apply to a case in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bonafide and all the facts relating to the same and material to the computation of his total income have been disclosed by him. 28. After the insertion of the Explanation, it cannot be said that the onus lies on the Revenue to establish mens rea for concealment of income before imposition of penalty. If there was failure to return the correct income, there would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturns originally filed, not disclosing the transaction in shares, the proceedings subsequent to the statement filed certainly indicates the conduct of the Assessee. 34. This was also a case of concealment. Transaction in shares had not been disclosed in the original returns. There can be no dispute with the proposition that the conduct of concealment is indicative of the conduct of the Assessee. 35. However, we are in full agreement with the Division Bench that application of penal proceedings are not automatic and the levy depends upon the facts and circumstances of each case. In the case on hand, having regard to the particular facts and circumstances of this case, the learned Tribunal has allowed the appeal and deleted the penalty. 36. In CRN Investments (P) Ltd. (supra), a Division Bench of this Court found that there was claim for supply of steel rolls, when in fact there was never any supply. Bills had been raised to facilitate finance from credit institutions and the alleged lease transaction was found to be false and a make believe one. The Assessee resisted the claim of the department contending that they were not aware of forged documents and contended that they ..... X X X X Extracts X X X X X X X X Extracts X X X X
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