TMI Blog2021 (8) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... to delete the same. - Decided in favour of assessee. - ITA No. 3702/Del/2017 - - - Dated:- 16-8-2021 - N.K. Billaiya, Member (A) And K. Narasimha Chary, Member (J) For the Appellant : Ajay Vohra, Sr. Advocate, Niraj Jain and Aditya Vohra, Advocates For the Respondents : Sunita Singh, CIT/DR ORDER Per K. Narasimha Chary, JM Aggrieved by the order dated 6/4/2017 in appeal No. 101/16-17/CIT(A)-22, New Delhi ( Ld. CIT(A) ) in the case of M/s. HCL Technologies Ltd. ( the assessee ) confirming the penalty levied by the learned Assessing Officer in the order dated 30/03/2015, however, at a reduced amount, this appeal is preferred by the assessee. 2. Brief facts of the case, relevant for the disposal of this appeal are that the assessee had several export-oriented units which were also registered with STPI authority and in respect of such units, the assessee has been claiming deduction under section 10A of the Income Tax Act, 1961 (for short the Act ). For the assessment year 2005-06, assessee filed the return of income on 31/10/2005 declaring an income of ₹ 18,95,23,990/- and subsequently revised the same on 30/3/2007 declaring a total income of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , holding that the assessee is guilty of furnishing of inaccurate particulars of income and also concealment of income. 6. Aggrieved by the levy of penalty, assessee preferred an appeal before the Ld. CIT(A) and argued that no satisfaction for the concealment/furnishing of inaccurate particulars of income in respect of additions/disallowances made in the assessment order on which penalty was levied was recorded by the learned Assessing Officer in the assessment order; that no penalty could be levied in respect of disallowance of deduction claimed under section 10A of the Act; and that the levy of penalty is bad inasmuch as the claim made in the revised return of income was not accepted and was not the basis for computing the income of the assessee in the assessment order. 7. Ld. CIT(A) recorded a finding that the assessee preferred the new claim after longtime changing its earlier stand and in view of the orders of the Tribunal such change of stand is not an inadvertent mistake or omission but it is a deliberate one, with the sole purpose of extending the period of exemption under section 10A and the quantum of exemption, when even enquiry into the past was not possible. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ld. PCIT vs. Harsh International (P) Ltd. 431 ITR 118 (Del), CIT vs. Nayan Builders and Developers 368 ITR 722 (Del) and CIT vs. Rahul Mehta in ITA No. 523/2011. Lastly he contends that where the addition is made in respect of a bona fide claim, even if such claim is untenable according to the learned Assessing Officer, still no penalty could be levied under section 271(1)(c) of the Act. For this proposition he cited the decisions of the Hon'ble Apex Court in the cases of CIT vs. Reliance Petro Products Private Limited 322 ITR 158 (SC) and Dilip N. Shroff 291 ITR 519 (SC). 9. Per contra while placing reliance on the orders of the authorities below, learned DR submitted that it was pointed out by the Tribunal in the quantum appeal that the lapses committed by the assessee in this matter are not inadvertent mistakes, but a design with the sole purpose of extending the period of exemption u/s. 10 of the Act and the quantum of exemption. In such circumstance, where enquiry into the past was not possible, she submitted that the assessee did not produce any evidence, whatsoever, before the Tribunal also to establish that the applications before the STPI authorities were for sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in DCIT vs. Genesys International Corporation Ltd. (2013) 32 taxmann.com 372 (Mumbai-Trib), it was held that where the assessee made adequate disclosure while claiming the exemption, penalty u/s. 271(1)(c) is not sustainable. In Zoom Communication (P) Ltd. (supra), Hon'ble High Court held that so long as the assessee has not concealed any material fact or the factual information given by him has not been found to be incorrect, he will not be liable to imposition of penalty under section 271(1)(c) of the Act, even if the claim made by him is unsustainable in law provided that he either substantiates the explanation offered by him or the explanation, even if not substantiated, is found to be bona fide. In this matter, the claim of the assessee is accompanied by the certificate of the Chartered Accountant in prescribed form 56F in respect of all the 31 independent undertakings. Whether or not such claim is sustainable at the end of the Revenue is a different matter and it does not affect the bona fide belief of the assessee to prefer such a claim. It is not a blatantly false claim accompanied by any concealment of facts. 12. Admittedly, in this case, Hon'ble High Court adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word particulars used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or in accurate. 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 in accurate particulars. The Learned Counsel argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income . We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. was upset. In Union of India Vs. Dharamendra Textile Processors (cited supra), after quoting from Section 271 extensively and also considering Section 271(1)(c), the Court came to the conclusion that since Section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving in accurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under Section 276-C of the Act. The basic reason why decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai Anr. (cited supra) was overruled by this Court in Union of India Vs. Dharamendra Textile Processors (cited supra), was that according to this Court the effect and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently;(ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, but it may not exceed three times thereof. The factors which are material for the purpose of computation of total income as is sought to be emphasized in Explanation-1, refer to computation of income on the part of the assessee which is directly relatable to : (a) failure to offer an explanation and/or offering an explanation which is false; and (b) which he is not able to substantiate and fails to prove that such explanation is bona fide. 39. Only in the event the factors enumerated in clauses (A) and (B) of Explanation-1 are satisfied and a finding in this behalf is arrived at by the Assessing Officer, the legal fiction created thereunder would be attracted. 40. For the purpose of invoking Clause (iii) of sub-section (1) of Section 271, the expression amount of tax sought to be evaded is set out in Explanation 4. This sub-clause would be attracted when a finding is arrived at that some amount of tax was sought to be evaded by the assessee as envisaged by Clause (a) thereof. Explanation appended to Section 271 (1)(c) is an exception to the general rule. It raises a legal fiction by reason whereof a presumption is raised against an assessee as a result whereof the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en of proof is discharged, the secondary burden of proof would shift on the assessee because the proceeding under Section 271(1)(c) is of penal nature in the sense that its consequences are intended to be an effective deterrent which will put a stop to practices which the Parliament considers to be against the public interest and, therefore, it was for the department to establish that the assessee shall be guilty of the particulars of income. [See Anwar Ali (supra) and M/s. Khoday Eswarsa (supra)]. 51. The order imposing penalty is quasi-criminal in nature and, thus, burden lies on the department to establish that the assessee had concealed his income. Since burden of proof in penalty proceedings varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted, though a finding in the assessment proceeding constitute good evidence in the penalty proceeding. In the penalty proceedings, thus, the authorities must consider the matter afresh as the question has to be considered from a different angle. [See Anantharam Veerasinghaiah Co. v. C.I.T., Andhra Pradesh, 1980 Supp SCC 13]. ... .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurate particulars would overlap each other, the same would not mean that they do not represent different concepts. Had they not been so, the Parliament would not have used the different terminologies. 69. We have noticed hereinbefore that even the Wanchoo Committee laid emphasis on the fact that explanation appended to Sub-section (1) of Section 271 should be inserted to clarify that where a tax payer's explanation in respect of any receipt, deposit, outgoing or investment is found to be false, the amount represented by such receipt, etc. shall be deemed to be income in respect of which particulars have been concealed or inaccurate particulars have been furnished. What was, therefore, necessary to be found out in respect whereof the assessing officer was required to arrive at a satisfaction was 'falsity' in furnishing of explanation by the assessee. Explanation 1, therefore, categorically states that such explanation must either be false or not otherwise substantiated. Even in explanation 4, the expression evaded finds place. ... ... ... 81. There can be a genuine difference of opinion between two experts... 15. Viewing from any angle, levy of pena ..... 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