TMI Blog2018 (1) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... e having furnished all the details of its expenditure as well as income in its return, it was up to the authorities to accept his claim or to reject it. But merely because the respondent-assessee had claimed an expenditure which was not accepted by the Revenue, that by itself would not attract the penalty of section 271(1)(c). See Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT ] - Decided in favour of assessee - I. T. A. No. 4 of 2016. - - - Dated:- 31-7-2017 - BADAR DURREZ AHMED C.J. And ALI MOHAMMAD MAGREY J. For the Appellant : J. A. Kawoosa , Advocate, For the Respondent : Azhar-Ul-Amin , Advocate, JUDGMENT Badar Durrez Ahmed C. J. 1. The present appeal is directed against the order dated May 20, 2016 passed by the Income-tax Appellate Tribunal, Amritsar Bench at Amritsar in I. T. A. No. 716(Asr)/2014 pertaining to the assessment year 2009-10. The present proceedings are penalty proceedings. 2. This court has already rendered its decision on the quantum proceedings on July 27, 2017 in I. T. A. Nos. 6 of 2013 and 3 of 2016. The controversy in the said quantum appeals was with regard to the interpretation sought to be placed on the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 30 to 38 of the Income-tax Act and, therefore, for this reason also, section 40(a)(ia) of the Income-tax Act did not at all come into play. This was the view of the assessee at the time of filing of the return and the arguments/explanation before the Assessing Officer. However, for reasons best known to the assessee, before the Commissioner of Income-tax (Appeals), he conceded that the payments were in the nature of payments falling under the provisions of section 194C of the said Act. 4. Coming now to the question framed in the present appeal, we note that by virtue of an order dated January 27, 2017 the following substantial question of law has been framed : Whether in the facts and circumstances of the case and in law, the hon'ble Income-tax Appellate Tribunal is right in deleting the penalty under section 274 read with section 271(1)(c) of the Income-tax Act, 1961, levied by the Assessing Officer which was not only confirmed but enhanced by the learned Commissioner of Income-tax (Appeals) in appeal ? 5. The penalty proceedings which has now reached us by way of this appeal originated in the Assessing Officer's order dated November 29, 2013 whereby w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 510 (Delhi). In particular, he referred to paragraph Nos. 20 and 21 of that decision. Reliance was also placed on the Supreme Court decision in CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC) ; [2009] 9 SCC 589 wherein it was indicated that the earlier decision of the Supreme Court in the case of Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) ; [2007] 6 SCC 329 did not lay down the correct law inasmuch as the difference between section 271(1)(c) and section 276C of the said Act had been lost sight of. The Supreme Court had noted that in Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC) ; [2008] 13 SCC 369, a three-judges Bench of that court had clearly held that Dilip N. Shroff (supra) did not lay down the correct law and that the Explanation appended to section 271(1)(c) indicated that there was an element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the returns. Based on these decisions, it was submitted by Mr. Kawoosa that the Tribunal had erred in deleting the penalty when, according to him, it was a clear case of concealment of particulars of income and furnishing of inaccurate particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the enhancement of the penalty amount by the Commissioner of Income-tax (Appeals) is clearly not justifiable. 11. This leaves us to consider the second part of the controversy with regard to penalty. An argument had been raised by Mr. Kawoosa that, given the fact that there was a raging debate with regard to the expression paid and payable , at least for the amounts which were payable, the assessee was liable for penalty. But, here we find that the facts of the present case do not support such a contention. The reason being that the relevant point for consideration in so far as the imposition of a penalty under section 271(1)(c) is concerned is the point of filing of the return till the assessment is taken up. At that point of time, the respondent-assessee had not conceded that the payments made for bleaching, dyeing, embroidery, finishing and printing charges were covered under section 194C of the said Act. In fact the contention of the assessee was that section 194C of the said Act was not at all attracted nor was section 40(a)(ia) of the said Act because no deductions were claimed under sections 30 to 38 of the said Act. The expenditure on the above items was to be cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. . . . Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Joint CIT, this court explained the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t CIT to the effect that mens rea was an essential ingredient for the penalty under section 271(1)(c) that the decision in Dilip N. Shroff v. Joint CIT was overruled. We are not concerned in the present case with the mens rea. How ever, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word 'inaccurate' has been defined as : 'not accurate, not exact or correct ; not according 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 incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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