TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 552
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....ection 10 of the Act dated 26th December, 1996 was issued and a return of chargeable interest of Rs. 3,92,51,082/- was filed on 30th January, 1997. By order dated 16th March, 1998, the Assessing Officer added the following amounts to the chargeable interest:- "1. Interest on special deposits - Chargeable to tax, as it is intt. on deposit and it with RBI (Rs. 10,08,64,111/-) is from RBI which is not a credit institution. 2. Interest on deposits with RBI (22,50,000) - Not interest on "Loans & Advances - but on "deposits' and hence chargeable to tax. 3. Interest on loans to HUDCO (Rs.2,04,00,004/-) - Not chargeable to tax, as it is a credit institution. 4. Interest on loans to GIC Housing finance (Rs.34,50,000/-) - A credit institution. Not chargeable to tax. 5. Interest from Banks- call money (Rs.2,13,17,614/-) - Interest is not on "Loans & Advances' hence chargeable to tax. 6. Interest from Banks - certificate deposit (Rs.31,18,884/-) - 7. Interest from Banks-Bills rediscounting scheme (Rs.8,74,28,57) " 3. The aforesaid additions were made subject matter of challenge before the appellate authorities, including the Tribunal. The Tribunal by order dated 21st February, 2006 sub....
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....n the interest for the purpose of tax payable under the Act. However, when the appeal had come up for hearing yesterday, learned counsel for the respondent-assessee, had submitted that the present case does not include interest earned on discounting of promissory notes or bills of exchange. He had referred to item No. 7 in the assessment order dated 16th March, 1998 wherein the term used was "interest from banks-bills re-discounting scheme". At the request of the counsel for the appellant-Revenue, the appeal was adjourned to enable her to ascertain the details and know the correct position. Learned Senior Standing Counsel has filed before us copy of returns filed under the Act on 31st December, 1992 and 30th January, 1997. She states that copy of the scheme was probably not filed by the assessee during the course of the assessment proceedings and is not available on the record. It is submitted that earlier similar contention was not raised. 8. It is apparent from the assessment orders dated 16th March, 1998 and 14th December, 2006 that the respondent-assessee had relied on Section 2(5A)(1) to contest that interest under the Banks Bills Rediscounting Scheme amounting to Rs. 8,74,28....
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..... In fact, even the learned Assessing Officer, vide his assessment order dated 16.03.1998 specifically mentioned, inter alia, that the interest on the above mentioned two items are not on "Loans & Advances", which concurs with our contention. Without prejudice to the above contention that the interest on call money with banks and interest on Bills Rediscounting Scheme are outside the scope of chargeability to interest tax, the addition of Rs. 10,87,46,190.00 made on these two items by the learned Assessing Officer is specifically exempt from the scope of chargeable interest under section 5 read with sub-section 5A of section 2 of the Interest Tax Act, 1974, which clearly excludes interest received from other credit institutions from the scope of "Chargeable Interest". The exemption has not been allowed on these interest received from other credit institutions, holding that the exemption under Section 5 is available only on interest not being in the nature of loans & advances and the exemption is denied. Section 2(7) defines "interest" to be interest on loans and advances. Under the provisions of Section 5, if the scope of chargeable interest is interpreted to include interest on c....
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....n the case of Section 271(1)(c) of the Income Tax Act, 1961. To this extent the two provisions are not para materia. The net effect is that in the absence of "Explanation" the onus will not shift to the assessee. The purport and purpose behind Explanation to Section 271(1)(c) as explained in several decisions, is to shift the onus and impose an obligation on the assessee to prove and establish the reason/cause, and in case of failure to bonafidely elucidate and satisfy their conduct, penalty can be imposed under Section 271(1)(c) of the Income Tax Act. The Explanation raises a presumption which has to be rebutted by the assessee. In the absence of Explanation, the presumption or the shifting of onus does not take place but this does not mean that penalty cannot be imposed where an assessee has furnished inaccurate particulars or concealed particulars of chargeable interest. The word "conceal' means to hide or to keep secret. As held in Law Lexicon, the said word is derived from the latin word "concelare' which implies "con' & "celare' to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent discovery of; to withhold knowledge of. However, the ....
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....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 inaccurate 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 CIT v. Atul Mohan Bindal [2009] 9 SCC 589, where this court was considering the same provision, the court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This court referred to another decision of this court in Union of India v. Dharamendra Textile Processors [2008] 13 SCC 369 as also, the decision in Union of India v. Rajasthan Spg. ....
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....ulars while filing return, there was no necessity of mens rea. The court went on to hold that the objective behind the 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, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff v. Joint CIT was overruled by this court in Union of India v. Dharamendra Textile Processors, was that according to this court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in the case of Dilip N. Shroff v. Joint CIT. However, it must be pointed out that in Union of India v. Dharamendra Textile Processors, no fault was found with the reasoning in the decision in Dilip N. Shroff v. Joint CIT, where the court explained the meaning of the terms "conceal" and "inaccurate". It was only the ultimate inference in Dilip N. Shroff v. Joint CIT to the effect that mens rea was an essential ingredient for the penalty under section 271(1)(c....