AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (6) TMI 332
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....id down by the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (2008) 306 ITR 277 (SC) wherein it was laid down that penalty under section 271(1)(c) was civil wrong & mens rea is not required to be established. (2) On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer. Relief claimed in appeal. The order of the CIT(A) on the issues raised in the aforesaid Grounds be set aside and that of the Assessing Officer be restored." 2. Facts, in brief, as per relevant orders are that a search under section 132 of the Income-tax Act, 1961 [hereinafter referred to as the "Act"] was conducted on 19-1-2006 in the premises of Kumar Meghraj group of cases including Shri Ajay Kumarlal Tehalyani partner in M/s. Asian Food Industries and Indian Food Industries as also in the premises of Smt. Radhaben K Tehalyani wife of Shri Kumar Meghraj. Consequently, a notice dated 19-5-2006 under section 153A(a) of the Act was issued to Shri Ajay Kumarlal Tehalyani, requiring him to furnish return of income for six years including the year under consideration. In response, the assessee filed return under ....
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.... FCNR A/c i.e., Foreign Currency Non-Resident A/c. These remittances were inform affixed deposits. 3. The assessee was earning interest income on such FCNR deposits. Provisions of section 6 determine the residential status of a person. Upon such status, the income either becomes chargeable or exempt from the purview of the Income-tax Act. Section 10(15)(iv)(fa) governs the exemption and it stipulates that, the interest income on FCNR deposits is exempt in case of a person who is either Non-Resident or Resident but Not ordinarily Resident. Provisions of section 6 determines the residential status of a person into three categories namely; (a) Resident & ordinarily resident (b) Resident but Not ordinarily Resident & (c) Non-Resident. The assessee was having accordingly the status of section 6 up to assessment year 2003-04. Accordingly, the FCNR interest income was exempt within the provisions of section 10(15)(iv)(fa) of the Act. It is pertinent to submit that, this aspect is undisputed one. Subsequently, the provisions of section 6 applicable to assessment year 2004-05, were amended and new sub-section 6 was introduced which modified the conditions for determination of the residenti....
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.... became chargeable to tax by virtue of some amendment in the law which was not noticed by the assessee. Due taxes with interest have been paid and the bona fide mistake has been rectified at the first available opportunity on voluntary basis. The Hon'ble Supreme Court in the case of Cement Marketing Co. of India Ltd. v. Asstt. C.S.T. (124 ITR 15) has held that, a return cannot be said to be "false" unless there is an element of deliberateness in it. The Hon'ble Court has hold that, where the assessee does not include a particular item in the taxable income under a bona fide belief that he is not liable so to include it, it would not be right to condemn the return as a false return inviting imposition of penalty. Similarly, the Hon'ble Bombay High Court in the case of D.M. Dahanukar v. CIT (65 ITR 280) and Hon'ble Madras High Court in the case of M. Husain Alt & Sons v. CIT (58 ITR 787) have laid down the principle that, mere omission from return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless there is some evidence to show or some circumstances found from which it can be gathered that, the omission was at....
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....sessing Officer did not accept the plea of ignorance of amendments to provisions of section 6 of the Act, the assessee being a partner in M/s. Asian Food Industries and the return having been filed through authorized representative, a person with good knowledge of provisions of the Act. Since additional income was disclosed only in consequence of search only, the Assessing Officer imposed penalty of Rs. 5,63,200 under section 271(1)(c) of the Act @100 per cent of the tax sought to be evaded on the aforesaid additional income disclosed in consequence of search, the assessee having failed to discharge onus within the meaning of Explanation 1 below section 271(1)(c) of the Act. 4. Likewise in the case of Smt. Radhaben K Tehalyani, a penalty of Rs. 5,78,000 under section 271(1)(c) of the Act @100 per cent of the tax sought to be evaded by her on the aforesaid additional income disclosed in consequence of search, was imposed. 5. On appeal, the learned CIT(A) cancelled the penalty in the case of Shri Ajay Kumarlal Tehalyani in the following terms:- "2. I have carefully considered the contentions of the Learned Counsel as well gone through the records. On perusal of penalty order, it h....
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....cidendi of the judgment is confined to treating the wilful concealment as not vital for imposing penalty under section 271(1)(c). However, it may not be correct to infer that because the liability is civil liability, it ceases to be penal in character. There is no contradiction in a liability being a civil liability and same liability being a penal liability though a civil liability cannot certainly be a criminal liability as well. 2.1 The additional income offered by assessee under section 153A after the search having been accepted in its entirety without detailed discussion of the seized documents. An assessee's statutory obligation under section 139(1) is to give correct and complete information with the return of income complied with, then there is no contravention which can attract penalty, in other words, the assessee concealed the income comes to an end when the corresponding amount was offered for taxation when all the necessary particulars are declared by the assessee in the return of income filed under section 153A. In a case where all the necessary particulars are declared by the assessee in the return of income, it cannot be said that the assessee has concealed his inc....
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....sions in Shreenath Builders v. Dy. CIT [2000] 111 Taxman 142 (Ahd.)(Mag.); Asstt. CIT v. Vinman Finance & Leasing Ltd. [2009] 120 TTJ (Vishakha) (TM) 462/[2008] 115 ITD 115; Sunilchandra Vohra v. Asstt. CIT [2010] 127 TTJ (Mum.) (UO) 100/[2009] 32 SOT 365; ITO v. Chirag Family Trust [1996] 58 ITD 382 (Ahd.)(SMC); Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC) and Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC). 7. We have heard both the parties and gone through the facts of the case as also the decisions relied upon. Indisputably, the assessee Shri Ajay Kumarlal Tehalyani claimed the status of RBNOR in the original return filed under section 139(1) of the Act in the assessment years 2000-01 to 2005-06 while Smt. Radhaben Kumarlal Tehalyani also claimed the same status in the assessment years 2000-01, 2001-02; 2004-05 & 2005-06 and non-resident in the assessment years 2002-03 & 2003-04. Thus, for the year under consideration both these assessees reflected status of RBNOR in their returns filed under section 139 of the Act even after amendment to provisions of section 6(6) of the Act by the Finance Act, 2003 with effect from 1-4-2004 and co....