TaxTMI 
TaxTMI 
2014 (7) TMI 1186
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....t of levy of penalty u/s 271(1)(c). 4. The Learned Commissioner of Income-tax (Appeals) grossly erred in not appreciating that the words used in section 80IA is "derived" and not "from" which is a much wider term and though the benefit is provided to the assessee by State Govt. because of installation of windmill but the sales tax benefit subsidy and its sale to the outside party cannot be said to be derived from generation, distribution or transmission of power from windmill. 5. The Learned Commissioner of Income-tax (Appeals) grossly erred in holding that the assessee has not furnished inaccurate particulars of income and concealed any income when the assessee has willfully claimed wrong deduction u/s.80IA of the I.T.Act, 1961 and has thereby attempted to evade tax by furnishing inaccurate particulars of income and concealing its income. 6. For these and such other grounds as may be urged at the time of hearing, the order of the Learned CIT (Appeals) may be vacated and that of the Assessing Officer be restored. 7. The appellant craves leave to add, alter or amend any or all the grounds of appeal.' 2. The assessee is a firm engaged in the....
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...." and not "from" which is a much wider term and though the benefit is provided to the assessee by State Govt. because of installation of windmill but the sales tax benefit subsidy and its sale to the outside party cannot be said to be derived from generation, distribution or transmission of power from windmill. The CIT(A) also erred in holding that the assessee has not furnished inaccurate particulars of income and concealed any income when the assessee has willfully claimed wrong deduction u/s.80IA of the Act and has thereby attempted to evade tax by furnishing inaccurate particulars of income and concealing its income. Accordingly, the order of CIT(A) be set aside and that of Assessing Officer be restored. On the other hand, the learned Authorized Representative has supported the order of CIT(A) and filed case laws and brief summary of the case to support the order of CIT(A). 4. After going through the rival submissions and material on record, we find that the main stand of the assessee has been that all the facts were already disclosed at the time of filing of return as well as during the course of assessment. The presumption as per explanation I to section 271(1)(c) is rebut....
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....s to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of cl. (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 4.1 A plain reading of the above provision of law makes it clear that the scheme of sec. 271(1)(c) visualizes imposition of penalty when the assessee has concealed income or when the assessee has furnished inaccurate particulars of income. In addition to these two situations, penalty can also be imposed, inter alia, when assessee is deemed to have concealed particulars of income under Explanation 1 to sec. 271(1)(c). A deeming fiction under Explanation 1 to section envisages two situations - (a) where in respect of any facts material to the computation of total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assesses was found to be false by the Assessing Officer or the CIT(A); and, (b....
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....on 1 to section 271(1)(c), for concealment of income. As a corollary to this legal position, unless it is established that there is concealment of income or furnishing of inaccurate particulars or it is established that, on the facts of the case, concealment of income could be deemed in accordance with the provisions of the Explanation, penalty cannot be imposed u/s. 271(1)(c) of the Act. 4.2 Now let us analyse the above legal position vis-a-vis facts of the present case to examine whether the present case is covered under the main part of the provisions or under the deeming provisions of Explanation 1 of section 271(1)(c) or not. The necessary precondition for imposition of penalty under the main provisions of section 271(1)(c) of the Act is that the Assessing Officer should satisfy himself that the assessee concealed its income or furnished inaccurate particulars of income. The expression 'concealment of income' has not been defined in the Act, but the natural meaning of the expression 'concealment' is 'to keep from being seen, found, observed, or discovered. It would, therefore, follow that the expression concealment of income, in its natural sense and gra....
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...., as mentioned earlier in this order, comes into play where in respect of any facts material to the computation of the total income of any person under this Act, (i) when the assessee fails to provide an explanation, (ii) when the assessee provides an explanation which is found to be false, and (iii) when the assessee provides an explanation which he fails to substantiate and he fails to prove that the explanation was bona fide and that all the facts necessary for the same and material for computation of income have been duly disclosed by the assessee. 4.5 In the instant case, condition (i) was not satisfied as the assessee has filed an explanation that he was of the bona fide view that the sales tax entitlement was a trading receipt an admissible deduction under the provisions of the Act. In view of the above, the case of the assessee is not even hit by the mischief of any of the three situations envisaged by the deeming fiction under Explanation 1 to s. 271(1)(c) of the Act. As discussed above, on the facts and in the circumstances of the case, the assessee could not be said to have concealed the particulars of income or furnished inaccurate particulars of income. ....
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....tion 271(1)(c) exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. [Para 8] The word 'particulars' must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In the instant case, there was no finding that any details supplied by the assesses in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c). A mere making of the claim, which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. [Para 9] The revenue contended that since the assesses had claimed excessive deductions knowing that they were incorrect, it amounted to concealment of income. It was argued that the falsehood in accounts can take either of....