TMI Blog2018 (10) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO while collecting information u/s 133(6). The Parliament: amended the law by omitting the expression “deliberately” in sub-section (c) which was omitted by Finance Act, 1964. After such omission an explanation was also inserted. After this burden has been shifted to the assessee to prove that he has not concealed the particulars of income and if such explanation is found to be bonafide then penalty cannot be levied but if no explanation is given or the explanation is found to be false then penal consequences will follow. The penalty under the provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution u/s 276C of the Income Tax Act. See Union of India & Others Vs. Dharmendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] Hence keeping in view the facts and circumstances of the instant case and the judicial pronouncements, wherein the bonafide has not been proved by the assessee and the revenue could bring about a clear case of concealment of income, we hereby decline to interfere with the order of the Ld. CIT(A). - decided against assessee - ITA No.1409/Chd/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Bank and it was conveyed by the Bank that the TDS is not being deducted as it is not taxable, the reason for which the assessee could not offer this interest to taxation. 5. The Ld. AR relied on the judgment passed by the Hon'ble Supreme Court in the case of Price Waterhouse Coopors (P.) Ltd. v. CIT [2C12](348 ITR -in this case, Hon'ble Supreme Court held that calibre and expertise of assessee have little to do with inadvertent error. In that case the assessee-firm engaged in providing multi-disciplinary management consultancy services filed its return of income along with tax audit report. A provision towards payment of gratuity was claimed as a deduction which was not allowable, thereby leading to underassessment of income. The Assessing Officer imposed penalty under section 271(l)(c). The CIT(A) upheld the levy of penalty; IT AT partially reduced it, taking a view that the assessee had made a mistake which could be described as a silly mistake. 6. The High Court upheld the order of the Tribunal. 7. The Hon'ble Apex Court observed as follows: 19. The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities which has resulted in payment of such tax or such tax liability came to be admitted, and if not, it would have escaped from tax net as opined by the Assessing Officer in the assessment order. Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bona fide, an order imposing penalty can be passed. If the explanation offered, even though not substantiated by the assessee, is found to be bona fide and all facts relating to the same and material for the computation of his total income have been disclosed by him, no penalty can be imposed. [Para 63]. 8.1 He argued that since there is a bonafide belief that the amount of interest is not taxable the assessee has not shown the same to taxation and however when pointed out, the same was offered to tax before the Assessing Officer. 8.2 Against the arguments of the assessee the Ld. DR submitted his arguments in writing as under: 1. The main fact of the case is that during the assessment proceedings, the assessing officer observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. To the specific query of the H'ble Bench that whether HP State Agricultural Bank was required to deduct TDS, it is submitted that as per section 194A, the payer are not required to deduct TDS when the amount of interest is below the specified limit. The limit for non deduction of TDS is ₹ 10,000 when the payer is banking company to which the Banking Regulation Act, 1949 or a cooperative society engaged in carrying on the business of banking. 6. Coming to the merits of the case, it is humbly submitted that the Ld CIT (A) has right upheld the penalty on the assessee. Kind attention is invited to the following facts in this regard: a) During the penalty proceedings, the assessee submitted that understatement of interest income was an 'inadvertent error' on his part. (Para 4 of the assessment order). b) The assessment order reveals that the assessee had not disclosed the interest component received from HP State Agricultural Bank on his own volition. It was due to the independent investigations carried out by the AO u/s 133(6), the fact pertaining to non disclosure of interest came to the knowledge of the AO. When confronted about the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring before this H'ble Bench on 11.07.2018, the Ld counsel for the assessee mentioned that the assessee had received interest from HP State Agricultural and Rural Development Bank. To the specific query whether this bank was required to deduct TDS, it was submitted by the Ld Counsel that this bank being a land development bank, hence it was not under the obligation to deduct TDS as the bank falls under Section 194A(viia). 2. In this regard, it is submitted that section 194A(viia) is applicable for cooperative land development bank. However, in the present case HP State Agricultural and Rural Development Bank is not a development bank. The following information is gathered from the website of this bank: The HP State Cooperative Agriculture Rural Development Bank Ltd; was established in 1961 in the State and registered as 'Cooperative Society' under the provision of Himachal Pradesh Cooperative Societies Act 1956 as Himachal Pradesh Central Land Mortgage Bank. At the initial stages/years the main emphasis and concentration of the Bank has been to advance loans for redemption of land and to save the farmers from the clutches of money-lenders and big land-lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has not disclosed the interest income on these FDRs in his return of income. The contention of the assessee has been that it was a bonafide mistake has been well addressed by the Assessing Officer in para 5 of the penalty order. At the end of para 6 it is clearly mention that the assessee had invested ₹ 40,00,000/- in FDRs and the same was detected by the AO while collecting information u/s 133(6). In the case of K.P. Madhusudhanan V CIT, 25.1 ITR 99 (S.C) the Hon'ble Supreme Court observed at last para as under: Learned counsel for the assessee then drew our attention to the judgement of this court in SirShadilal Sugar and General Mills Ltd. v. CIT[1987] 168 ITR 705. He submitted that the assessee had agreed to the additions to his income referred to hereinabove to buy peace and it did not follow therefrom that the amount that was agreed to be added was concealed income. That it did not follow that the amount agreed to be added was concealed income is undoubtedly what was laid down by this court in the case of Sir Shadilal Sugar and General Mills Ltd. [1987] 168 ITR 705 and that, therefore, the Revenue was required to prove the mensrea of a quasi- crimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se reads as under: Proceedings u/s 28 of the Income-tax Act, 1922 are penal in character. The gist of the offence u/s 2891)(c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and the burden is on the department to establish that the receipt of the amount in dispute constitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constitutes his taxable income. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. 9.3 From this position it becomes clear that because of the expression deliberately the Courts were of the opinion that even if explanation of the assessee was false the burden still lies with the Revenue to prove beyond doubt that the assessee has concealed particulars of income. The Parliament: amended the law by omitting the expression deliberately in sub-section (c) which was omitted by Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the penalty under the section. No express invocation of the Explanation to section 271 in the notice u/s 271 is necessary before the provisions of the 14 Explanation are applied. 9.5 The above clearly shows that after insertion of this explanation the burden has been shifted to the assessee to prove that he has not concealed the particulars of income and if such explanation is found to be bonafide then penalty cannot be levied but if no explanation is given or the explanation is found to be false then penal consequences will follow. It may be noted that whatever doubts were there regarding requirement of mensrea or 'deliberateness' have been removed by the Constitution Bench of Hon'ble Supreme Court In case of Union of India Others Vs. Dharmendra Textile Processors and others (2008) 306 ITR 277 In the said decision the Larger Bench held at page 302 that the object behind the enactment of Section 271(l)(c) read with the Explanations indicates that the said Section has been enacted to provide for a remedy for loss of revenue. The penalty under the provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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