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TMI Blog2023 (3) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... 143 (3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") and the other Tax Case namely TCA No.32 of 2013 wherein the challenge is to the confirmation of levy of penalty by the Tribunal under Section 271 (1)(c) of the Act. 2. At the outset, it may be necessary to clarify that the learned counsel for the appellant had submitted that though TCA No. 311 of 2013 has been filed challenging the orders of the Tribunal, he does not intend to pursue or raise any issue with regard to the above tax case and intends to confine his arguments only with reference to confirmation of levy of penalty under Section 271(1)(c) of the Act by the Tribunal. 3. The following questions of law has been raised and admitted for consideration: a. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ". The above expenditure was claimed to have been incurred in connection with Research and Development activity in the area of stem cell and tissue therapy. The Assessing Officer disallowed the claim of deduction of the above expenditure after finding that during the relevant period/ assessment year, the appellant had not carried on any business operation and all fixed assets were sold by the assessee during the preceding accounting year to its sister concern. Importantly, the assessing officer found that the claim of deduction has to be rejected as no evidence whatsoever was furnished by the appellant in support of its claim of the expenditure being made to carry out research and development. On the other hand, the fact that there was no b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving been incurred would not by itself warrant penalty under Section 271(1)(c) of the Act. b. The expression "concealment of particulars" employed in Section 271(1)(c) of the Act would indicate that in the absence of a wilful intent levy of penalty may not be warranted. c. That the appellant had only been reporting loss, in the absence of any income, levy of penalty under Section 271(1)(c) of the Act, would not get attracted. 9. We are not persuaded by the submissions of the learned counsel for the appellant as we find that all the above reasons put across by the appellant lack merit and contrary to judicial precedence and thus the order of the Tribunal may not warrant interference. 10.1. The 1st submission of the appellant that mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind there is no doubt that the claim of deduction towards expenditure on Research and Development constitutes furnishing inaccurate particulars in the sense it does not reflect the true state of facts/ affairs inasmuch as the appellant was not carrying on any business operation and has also sold the fixed assets during the relevant years in question. 10.4. The claim of the appellant that there is no mensrea as the appellants are reporting loss is again a submission which proceeds on a misconception as to the scope of Section 271(1)(c) of the Act. The above submission appears to suggest that mental element, mens rea or motive is a condition/ requirement for invoking the penalty under Section 271(1)(c) of the Act. We find that the above su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. (emphasis supplied) 11.1. Finally, the submission of the appellant that only losses have been reported and thus penalty under Section 271(1)(c) of the Act is not warranted is an argument which has been rejected by the Hon'ble Supreme Court. As a matter of fact an amendment has also been introduced to Section 271(1)(c) of the Act vide Explanation 4 to the said Section that income would also include losses and merely because an assessee had reported losses, it cannot be submitted that Section 271(1)(c) of the Act would not get attracted. 11.2. It thus appears that whether an assessee reports only loss or otherwise may have no bearing with regard to levy of penalty under Section 271(1)(c) of the Act. In this regard, it may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure the penalty would be imposable because in such a case "the tax sought to be evaded" will be tax chargeable on concealed income as if it is "total income". 16. The law is well settled that the applicable provision would be the law as it existed on the date of the filing of the return. It is of relevance to note that when any loss is returned in any return it need not necessarily be the loss of the previous year concerned. It may also include carried-forward loss which is required to be set up against future income under Section 72 of the Act. Therefore, the applicable law on the date of filing of the return cannot be confined o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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