TMI Blog2016 (7) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... cealment of income and furnishing of inaccurate particulars thereof. The AO was not satisfied with the explanation of the assessee and ultimately levied the penalty under S. 271(1)(c) which was confirmed by the CIT(A). 2. I have heard the rival submissions, carefully considered the same along with the orders of the tax authorities below. Before deciding whether this is a this case for levy of penalty under S. 271(1)(c) of the Act, it is necessary to look into the provisions of S. 271(1)(c) of the Act, which reads as under: 271(1) If the AO or the CIT(A) or the CIT in the course of any proceedings under this Act, is satisfied that any person-- (a)..... (b) ..... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d)..... he may direct that such person shall pay by way of penalty,-- 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 offers an explanation which is found by the AO or the CIT(A) or the CIT to be false, or (B) such person offers an explanation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of inaccurate particulars of income. Both the charges are entirely different. If the proceedings are initiated on charge of concealment, then penalty cannot be levied on the charge of furnishing of inaccurate particulars of income and vice versa. Thus, there must be a clear finding about the charge for which penalty is imposed or initiated. It is incumbent upon the AO to state whether penalty was being levied for concealment of income or for furnishing of inaccurate particulars of income. In the absence of such findings, the order would be bad in law in the case of New Sorathia Engineering Co. Ltd. v. CIT: (2006) 202 CTR (Guj) 188 : (2006) 282 ITR 642 (Guj), Hon'ble Gujarat High Court has held as under: It is incumbent upon the AO to state whether the penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. Held, that the penalty order and the order of the CIT(A) showed that no clear-cut finding had been reached. The Tribunal had failed to appreciate this legal issue. The ratio in CIT v. Manu Engineering Works (1979) 8 CTR (Guj) 141 : (1980) 122 ITR 306 (Guj) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f particulars of income. On the other hand, where particulars are disclosed but such disclosure is not correct, true or accurate, it would amount to furnishing of inaccurate particulars of income. For example, in case of businessman, if a particular transaction of sale is not shown in the books, it would amount to concealment of particulars of income while sale is shown but at a lesser value, it would amount to furnishing of inaccurate particulars of income. 6. The trust of the legislature is upon the particulars of income which are either concealed or furnished inaccurately by the assessee. Therefore, we must understand the meaning of the words particulars of income . The Tribunal had to consider the meaning of the expression furnishing of inaccurate particulars of income appearing in S. 271(1)(c) in the case of Kanbay Software India (P) Ltd. v. Dy. CIT (2009) 122 TTJ (Pune) 721 : (2009) 22 DTR (Pune) 481. It was held that the expression 'particulars' refers to facts, details, specifics or the information about someone or something. Thus, the details or information about the income would deal with factual details of income and cannot be extended to areas which are su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This deeming provision is not absolute one but is rebuttable one. It only shifts the onus on the assessee. Explanation 1 refers to the two situations in which presumption of the concealment of the particulars of income is deemed. It is not applicable where the charge against the assessee is furnishing inaccurate particulars of the income. The first situation is where the assessee in respect of any fact material to the computation of his total income fails to offer an explanation or offers an explanation, which is found by the AO or the CIT to be false. The second situation is where the assessee in respect of any facts material to the computation of his total income offers an explanation, which the assessee is not able to substantiate and also fails to prove that such explanation was bona fide one and that all the facts relating to the computation of total income have been disclosed by him. The presumption available under Explanation to S. 271(1)(c), cannot be drawn unless the case of the assessee falls under either of the Cls. (a) or (b). 9. In this case, the AO has not brought out any specific charge for which the penalty has been imposed on the assessee under S. 271(1)(c) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that cl. (iii) of S. 271(1)(c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term inaccurate particulars was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the AO must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff v. Jt. CIT was upset. In Union of India v. Dharamendra Textile Processors (2007) 212 CTR (SC) 432 alter quoting from S. 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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