TMI Blog2004 (10) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... upon them by the Explanation, has been discharged - the word "concealment" inherently carries with it the element of mens rea which, in the present case, was to be established by the Revenue, which the Revenue has failed to establish – hence, Tribunal was justified in upholding the deletion of penalty. - - - - - Dated:- 12-10-2004 - Judge(s) : R. K. AGARWAL., K. N. OJHA. JUDGMENT The judgment of the court was delivered by R.K. Agarwal J. - The Income-tax Appellate Tribunal, New Delhi, has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that by the Finance Act, 1973, agricultural income was to be disclosed in the return of income, which was to be taken into consideration for rate purposes and, therefore, non-disclosure of agricultural income by the respondents amounted to concealment of income for which penalty under section 271(1)(c) of the Act was attracted. According to him, the Explanation to section 271(1)(c) of the Act was applicable as in the present case the returned income was less than 80 per cent, of the total income assessed. In support of his aforesaid submissions, he has relied upon the following decisions: (i) CIT v. Smt. P.K. Kochammu Amma [1980] 125 ITR 624 (SC); and (ii) CIT v. Jaora Oil Mill [1981] 129 ITR 423 (MP). Sri Ritik Upadhaya, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10(1) of the Act it has been specifically provided that agricultural income shall not be included in the total income. According to him, under entry 82 of List I of the Seventh Schedule to the Constitution of India, Parliament has no competence to levy tax on agricultural income and, therefore, if agricultural income has not been disclosed in the return, there cannot be any concealment of income and no penalty under section 271(1)(c) of the Act can be imposed. In the alternative, he submitted that even if the Explanation to section 271(1)(c) of the Act was attracted, there was no gross or wilful neglect on the part of the respondents nor there was any fraud in the failure to return the correct income and, therefore, the penalty has ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." The aforesaid Explanation is applicable in the present case as the returned income was less than 80 per cent, of the total income assessed. The deletion of the word "deliberately" in section 271(1)(c) of the Act does not rule out mens rea in all cases as still the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 64(1)(i) and (iii) of the Act. The words "his income" in section 139(1) must include every item of income which goes to make up his total income assessable under the Act and in failing to do so, the assessee was guilty of concealment of this item of income which plainly attracted the applicability of section 271(1)(c) of the Act. In the case of Jaora Oil Mill [1981] 129 ITR 423, the Madhya Pradesh High Court has held that the definition of "income" in section 2(24) is an inclusive definition and even covers such items which are not income in the natural sense of word. Even in its broadest connotation, "income" refers to monetary return "coming in" and is conceptually contradictory to "loss". In the case of K.C. Builders [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsciously made the concealment or furnished inaccurate particulars of his income. Where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment and, therefore, in such a case no such penalty can survive and the same is liable to be cancelled as in the instant case. Ordinarily, penalty cannot stand if the assessment itself is set aside. Where an order of assessment or reassessment on the basis of which penalty has been levied on the assessee has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and the same is liable to be cancelled as in the instant case or ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
