TaxTMI 
TaxTMI 
2012 (4) TMI 323
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....ached to the statement of total income filed along with return of income stating the reasons that revised return for the original return was filed on the basis of tentative/provisional accounts of the Corporation and revised return is based on audited final accounts. The revised return was assessed u/s. 143(3) thereby reducing the loss on account of disallowance of reconditioning expenditure of old buses, guest house expenditure and depreciation claimed. The assessee filed appeal before the CIT (A). The CIT (A) deleted the disallowance made by the AO and restricted the loss as per revised return filed by the assessee. Subsequently the case was reopened by issuing notice u/s. 148 on 28-12-2008 on the ground that the assessee collected employees' contribution of PF to the tune of Rs. 54,46,39,114/-against which the assessee paid only Rs. 20,91,23,887/- to the Government account leaving balance of Rs. 33,55,15,227/- as unpaid. The AO was of the view that provisions of section 2(24)(x) r.w.s 36(i)(va) of the Act and it had violated the provisions of section43B of the Act. In compliance to the notice u/s. 148 the assessee filed return on 2-7-2008 reducing the loss of Rs. 35,55,15,227/-.....
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....ssee has failed to explain the bonafideness, whereas while deleting the penalty on Rs. 33,55,15,227/- accepted the assessee's contention that the claim of the assessee was a bona fide claim. The Ld. DR in support of the contention relied upon the various decisions. In support of the contention that section 43B is not applicable in case employees contribution the Ld. DR relied upon CIT v. Alom Extrusion Ltd. [2009] 319 ITR 306/185 Taxman 416 (SC) and CIT v. P.M. Electronics Ltd. [2009] 313 ITR 161/177 Taxman 1 (Delhi), the Ld. DR in support of his contention that in case of loss penalty is leviable relied upon a judgment of Supreme Court in the case of CIT v. Gold Coin Health Food (P.) Ltd. [2008] 304 ITR 308/172 Taxman 386. The Ld. DR relied upon following decisions to support his contention that after considering the judgment of the apex court in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 where penalty u/s. 271(1)(c ) has been confirmed. (1) Gujarat State Financial Services Ltd. v. Asstt. CIT [2010] 39 SOT 570 (Ahd.). (2) Survidhi Financial Services Ltd. v. Asstt. CIT [2010] 40 SOT 454 (Delhi). (3) Pramod Mittal....
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.... No. 2667/Ahd/2008 dt. 7-11-2008. (12) Reliance Petroproducts (P) Ltd. (supra) 6. We have heard the learned representatives of the parties, record perused and gone through decisions cited. The proceedings under section 271(1)(c) can be initiated only if the A.O or the first Appellate authority is satisfied in the course of any proceedings under the Act that any person has concealed the particulars of his income or has furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty the sum mentioned in sub-clause (iii) of clause (c). The expression used in clause (c) is 'has concealed the particulars of his income' or 'furnished inaccurate particulars of such income'. Therefore, both in cases of concealment and inaccuracy the phrase 'particulars of income' are used. It will be noted that as regards concealment, the expression in clause (c) is 'has concealed the particulars of his income' and not 'has concealed his income'. The expressions "has concealed the particulars of income" and "has furnished inaccurate particulars of income" have not been defined either in section 271(1)(c) or elsewhere in the Act. One thing is certain that th....
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....to that extent. In the same way where specific and definite particulars of income are detected as inaccurate, then such figure will also make the total income inaccurate in particulars to the extent it does not include such income. In other, words the AO cannot invoke provision of section 271(1)(c) on the basis of routine and general presumptions. Whether it be a case of only concealment or of only inaccuracy or both, the particulars of income so vitiated would be specific and definite and be known in the assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a position to initiate the penalty proceedings on one or both of the grounds of default as may have been specifically and directly detected. 6.3 In addition to main provisions of concealment "has concealed the particulars of his income" or "has furnished inaccurate particulars of such income" there are deemed to represent the income in respect of which particulars have been concealed .The deemed concealment is provided in explanations often a question arose whether in cases where additions or disallowances made by the AO the penal provisions of sec....
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....charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation; it should not be a fantastic or fanciful one. As indicated above, the consequence follows as a matter of law. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed the income or furnished inaccurate particulars thereof is available to be drawn. 6.5 Part A of the Explanation 1 to section 271(1)(c) provides that if assessee fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, this explanation can therefore, be applied only where the assessee has either not offered any explanation or where he has offered any explanation, the same found to be false by the AO. in other words, where the assessee offers some explanation, it is only the proving by the Assessee Officer of the explanation to be false, that part A of the explanation may be attracted. Mere non acceptance of explanation offered by the assessee cannot form a basis for the satisfaction of AO to the effect that the assessee has concealed part....
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....with the decision of Rajasthan Spg. & Wvg. Mills' case (supra). In the case of Reliance Petroproducts (P.) Ltd. (supra) the Supreme Court further explained the matter and finally settled the controversy created in Dharamendra Textile Processors' case (supra). The Supreme Court in this case has analysed the facts in Dilip N. Shroff's case (supra) and found from the facts, that the explanation given by the assessee was bona fide therefore the assessee did not furnish any inaccurate particulars. However it was observed that the element of mens rea was essential. The Supreme Court in Dharamendra Textile Processors' case (supra) had pointed out only to this aspect of the decision in that, there was no necessity to prove mens rea on a plain reading of the provisions of section 271(1)(c) in the context of a penalty being a compensation for loss of revenue likely to have been occasioned by the acceptance of the return. It was further pointed out by the Supreme Court, that the reasoning in the conclusion on the merits in Dilip N. Shroff's case (supra) had not been questioned. It was only the inference that mens rea was an essential ingredient for penalty, that was overruled. Applying this u....
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....allowable claim, moreover the issue was debatable. 6.9 In view of the development of law at the stage of the Supreme Court in Reliance Petroproducts' case (supra), one need not take the trouble of distinguishing Dilip N. Shroff's case, since it has not been overruled except for its mention of mens rea therein. Notwithstanding the ripple created by Dharamendra Textile Processors' case (supra), the High Courts have followed the long-established law, that a bona fide omission cannot justify penalty in a number of decisions. For example where an addition to an income was adjusted against the value of closing stock and explanation therefore was also found to be bona fide, penalty was found to have been rightly deleted as in the case of CIT v. Hindustan Computers Ltd. [2010] 322 ITR 88 (All.). Cancellation of penalty for a wrong claim of deduction in computation of non-agricultural income bona fide made and for a wrong claim of relief under section 80P were found to be decisions on the facts on which no question of law would arise as held in CIT v. Shahabad Co-op. Sugar Mills Ltd. [2010] 322 ITR 73 (Punj. & Har.). In the case of CIT v. Sidhartha Enterprises [2010] 322 ITR 80/[2009] 18....