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Commissioner of Income-Tax Versus N. Jayaprakash

2018 (1) TMI 603 - KERALA HIGH COURT

Penalty u/s 271(1)(c) - proof of concealment or furnishing of inaccurate particulars of income - Held that:- The sum total of the reasoning of the Tribunal is that since the details were available on the material filed by the assessee before the Assessing Officer, the assessee cannot be said to have furnished inaccurate particulars of his income or concealed any part of his income. If the concealment or furnishing of inaccurate particulars of income is an act committed by the assessee at the tim .....

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reasoning of the Tribunal is patently illegal. - Therefore, we set aside the orders passed by the Tribunal and restore the order passed by the Assessing Officer. - Decided against assessee - I. T. A. No. 119 of 2012. - Dated:- 6-10-2017 - Antony Dominic And Dama Seshadri Naidu JJ. For the Appellant : P. K. R. Menon, Senior Counsel, Government of India (Taxes) and Jose Joseph, Standing Counsel, for the Income-tax, For the Respondent : S. Arun Raj, Advocate, JUDGMENT Antony Dominic J.- 1. The .....

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ed credits from others totalling ₹ 5,15,000. In appeals that were filed before the Commissioner of Income-tax (Appeals) and the Tribunal, the order was modified. However, in ITA Nos. 140 and 149 of 2001, the original assessment was upheld by this court in all respects. 3. The order passed by this court is annexure-A. Subsequently penalty proceedings under section 271(1)(c) were initiated and by annexure-B order, penalty of ₹ 10.51 lakhs was imposed. However, by annexure-C order, the .....

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of penalty. The Revenue challenged the order of the Tribunal in ITA No. 185 of 2010. By annexure-G order, this court allowed the appeal and set aside the order of the Tribunal. The Tribunal was directed to decide the matter afresh 4. Accordingly, the matter was heard afresh, and the Tribunal deleted the penalty levied on the additions of ₹ 16,60,854 and ₹ 1,88,000 and at the same time, sustained the penalty on unexplained credit of ₹ 5,15,743. It is this order, which is challe .....

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presumption in Explanation 1 to section 271(1)(c) the addition be deemed to represent the income in which particulars have been concealed and the same being not rebutted by the assessee the Tribunal is right in law in deleting the penalty levied on additions of ₹ 16,60,854 and ₹ 1,88,000 confirmed by the hon'ble High Court ? 3. Whether on the facts and in the circumstances of the case and additions having been confirmed by the High Court and the presumption of concealment of par .....

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finding and similar finding elsewhere in the order of the Tribunal perverse and against the decision of the Supreme Court in Madhusoodhanan Dharmendra Textiles etc., and various Kerala High Court and other High Court decisions ?" 5. We heard the counsel for the Revenue and the learned counsel for the assessee and have considered the submissions made. 6. A reading of the order passed by the Tribunal show that in so far as the penalty levied on the addition of ₹ 16,60,854 towards unacc .....

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sed were fabricated at the end of each month. It is not the case of the Revenue that the assessee has purchased any tin sheets outside the books of account. If the tin sheets were purchased outside the books of account, then the assessee could have produced more than 1,69,318 tins. The sales as found by the Assessing Officer is 1,36,659. The difference would be only 32,659. These details are available on the material filed by the assessee before the Assessing Officer which was admittedly impound .....

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r, at the final stage by adopting the figure determined by the sales tax authorities, determined the closing stock at 45,786 as against 32,659 computed by him. Therefore, in our opinion, these facts cannot be considered that the assessee has furnished inaccurate particulars of income or concealed any part of income. When the assessee has produced all the material before the Assessing Officer, the Assessing Officer computed the closing stock in a different manner and arrived at a different closin .....

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7. Similarly, the justification offered by the Tribunal to delete the penalty on the addition of ₹ 1,88,000 contained in paragraph 10 of the order is as under : "10. Now coming to the addition on account of cash transferred from Trichur Branch to Head Office, the assessee admittedly made entries in the books of the Trichur Branch for the transfer of ₹ 1,88,000. The extract as found at page 8 of the assessment order shows that the total cash balances as available on April 13, 19 .....

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77; 18,297. However, the balance was shown as ₹ 2,06,297. This may be an arithmetical error. However, in the quantum appeal, this Tribunal found that on March 18, 1992, the cash balance came down to as low as ₹ 9,329. Therefore, it may not be correct to say that there was no cash balance available for transfer of Rs. l,88,000 as on April 13, 1991. The total receipt as on April 13, 1991 in Trichur Branch was ₹ 3,50,200 and opening balance was ₹ 41,045. Therefore, the total .....

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n the following days, the cash balance was low. Therefore, there may be justification for making addition of ₹ 1,88,000 in the assessment proceedings. In view of the extract of the book which was extracted at page 8 of the assessment order, this Tribunal is of the opinion that the assessee cannot be said to have furnished inaccurate particulars or there was any concealment of any part of income. In the absence of any other material other than what was extracted by the Assessing Officer at .....

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particulars of income or concealed any part of income rendering him liable to be penalised under section 271(1)(c) of the Act. It is the correctness of this reasoning, which arise for consideration in this appeal. 9. Section 271 occurring in Chapter XXI of the Income-tax Act provides for consequence on the failure of the assessees to furnish returns, comply with notices, concealment of income, etc. Section 271(1)(c) together with Explanation (1) alone, being relevant, is extracted below for refe .....

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) or clause (d), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or of .....

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all, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 10. A reading of this provision would show that in the course of any proceedings under the Act if the Assessing Officer is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, the Assessing Officer may direct that such person shall pay by way of penalty in addition to tax, if any .....

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iate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income shall be deemed to represent the income in respect of which particulars have been concealed. These provisions have come up for interpretation before various courts and it has been held that the burden of proving that his case would come under any one .....

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come, he may direct that such person shall pay by way of penalty, the amount that are indicated in clauses II or III, as the case may be. While appreciating the scope of clause (c), one has to take into account the provisions of Explanation 1 which is in two parts. This Explanation clarifies that where in respect of any facts material to the computation of the total income of any person, (A) such person fails to offer an explanation or offers an explanation and the officer concerned has found it .....

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ncome in respect of which particulars have been concealed." 12. This court has also taken note of the judgment of the Rajasthan High Court in CIT v. Raj Trading Co. [1996] 217 ITR 208 (Raj), where it was held that furnishing of incorrect particulars and concealing the particulars of income are different things and that the words "furnishing inaccurate particulars and income" refer to the particulars of his income which have been furnished by the assessee and the requirement of &qu .....

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mmed [1981] 132 ITR 623 (Ker). That was a case where in the original return filed by the assessee he had concealed certain income. When the Income-tax Officer confronted the assessee with the income concealed by him, the assessee immediately filed a revised return. Despite that, proceedings were initiated under section 271(1)(c) and in the judgment, this court held that the fact that revised return was filed did not absolve the assessee from the liability for penalty. These principles are stated .....

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Executive Engineer, Calicut. In the order imposing penalty on the assessee the Income-tax Officer had duly considered the explanation put forward by the assessee and he came to the conclusion that the non-inclusion by the assessee of the amount received by him in respect of the contract work entered into with the Executive Engineer, Irrigation Division, Calicut, constituted a deliberate concealment of income so as to attract the levy of penalty under section 271(1)(c) of the Act. He found that t .....

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er imposed on the assessee penalty of ₹ 15,000 finding the assessee guilty of concealment under section 271(1). . . . The fact that the assessee purported to file a 'revised return' after his coming to know that the Income-tax Officer had already information in his possession regarding receipt by the assessee of the sum of ₹ 1,17,633 from the Executive Engineer, Irrigation Division, Calicut, which had not been shown in the original return will not absolve the assessee from cu .....

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