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2009 (8) TMI 44

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..... a JJ. CIVIL APPEAL NO. 5769 OF 2009 (Arising out of SLP(C) No. 31192/2008) JUDGEMENT R. M. Lodha, J. - Delay condoned. 2. Leave granted. 3. The revenue has come up in appeal by special leave aggrieved by the judgement of the High Court of Delhi whereby the High Court dismissed their appeal under Section 260A of the Income Tax act, 1961 (for short, the Act ) on January 25, 2008 and upheld the order dated December 22, 2006 passed by the Income Tax Appellate Tribunal, Delhi Bench H , New Delhi. 4. Atul Mohan Bindal - assessee filed return of his income for Assessment Year 2002-03 on August 8, 2002 declaring his total income Rs.1,98,50,021/-. In the assessment proceedings u/s 143, a notice alongwith questionnaire was issued to him by the Assessing Officer on November 29, 2002. Pursuant thereto, assessee attended the assessment proceedings and furnished the requisite details. During the assessment proceedings, it transpired that assessee worked with M/s DHL International(S) PTE Ltd., Singapore during the previous year and was paid salary in Singapore amounting to US$ 36,680.79 equivalent to Rs.17,81,952/-. The assessee explained that an amount of US $ 8199.87 (Rs.3,98,350/-) was deducte .....

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..... 52/- offered by the appellant in the course of assessment proceedings and thirdly the interest income of Rs. 22,812/- also offered for tax in the revised return filed during the course of assessment proceedings. As regards the former, the AO appears to be completely satisfied as regard the genuineness of the reasons that necessitated the revision. As regard the second, the issue involved difference of opinion even between two different benches of the Apex Court, and thirdly, the A.O. again seems to be satisfied about the appellant s reply in this connection. In any case, the additions were made on the basis of the particulars furnished by the appellant and not discovered independently by the A.O. 5.1 That the appellant had a bona fide belief of the non-taxability of the salary income earned in Singapore where tax- withholding had taken place and India had DTAA with Singapore, so he did not include this receipt in his salary income cannot be rejected out of hand. During assessment proceedings however, assessee offered this salary receipt for taxation as per IT Act, 1961. Therefore, an amount of Rs. 17,81,952/- was included in the total income of the assessee. In such setting of fact .....

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..... ndustrial Dispute act, 1947 to reject the assessee s claim. Here also, it is a case of a difference of opinion as regards the interpretation of the work workman for which no penalty is imposable. At best, it can only be said that the assessee did not take pains to study the Industrial Disputes act and to find out how the work workman is defined therein. Lastly, with regard to the claim of interest banks, since the bank certificates were initially not available to the assessee, it was not included in the return. The omission thus seems to be due to reasons beyond the assessee s control. Moverover, in respect of all the three items, the CIT (Appeals) has recorded a finding in paragraph 6 of his order that all the facts were disclosed by the assessee in the annexure to the return and the information leading to the additions was taken by the Assessing Officer only from the return filed by the assessee and that such information was not found to be false. Thus, there has been no failure on the part of the assessee to declare all the facts before the Assessing Officer. We are, therefore, in agreement with the view taken by the CIT (Appeals) that this is not a case where the assessee can b .....

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..... im), then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub- section, be deemed to represent the income in respect of which particulars have been concealed. ............................................ 11. A close look at Section 271(1) (c) and Explanation (1) appended thereto would show that in the course of any proceedings under the Act, inter alia, if the Assessing Officer is satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income, such person may be directed to pay penalty. The quantum of penalty is prescribed in Clause (iii). Explanation 1, appended to section 271(1) provides that if that person fails to offer an explanation or the explanation offered by such person is found to be false or the explanation offered by him is not substantiated and he fails to prove that such explanation is bona fide and that all the facts relating the same and material to the computation of his total income has been disclosed by him, for the purposes of Section 271(1)(c), the amount added or disallowed in computing the total income is deem .....

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..... ench doubting the correctness of the view expressed in Dilip N. Shroff vs. Joint Commissioner of Income Tax, Mumbai and Another [(2007) 8 SCALE 304]. The question which arises for determination in all these appeals is whether Section 11AC of the Central Excise Act, 1944 (in short the Act ) inserted by Finance Act 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. Before the Division Bench, stand of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined. The assess on the other hand referred to Section 271(1)(c) of the Income Tax Act, 1961 (in short the IT Act ) taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the .....

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..... for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue to establish that the extended period of limitation is applicable. Once that hurdle is crossed by the revenue, the assessee is exposed to penalty and the quantum of penalty is fixed. It is pointed out that even if in some statues mens rea is specifically provided for, so is the limit or imposition of penalty, that is the maximum fixed or ;the quantum has to be between two limits fixed. In the cases at hand, there is no variable and, therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated which he knows or has reason to believe . The said clause referred to willful action. According to learned counsel which was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the outer limit of penalty is fixed and the statute provides that it should not exceed a particular limit, that itself indicates scope for di .....

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