TaxTMI 
TaxTMI 
2016 (10) TMI 405
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....appellant/assessee was returning from Chennai and the authorities found that he was in possession of Rs. 12,65,900/-, out of the said amount, an amount of Rs. 12,00,000/- was seized. Thereafter, proceedings under Section 147 of the Act were initiated for the assessment year 2002-2003 and issued notice under Section 148 of the Act. In response to the notice under Section 148 of the Act, the appellant/assessee filed return of income declaring total income under Section 148 of the Act. During the course of post enquiry, on the basis of statements obtained from various banks, in which the assessee held accounts, the financial statements were reconstructed. Taking the same as basis, as admitted in his statement under Section 132 (4) of the Act, the appellant/assessee declared further income of Rs. 9,16,321/-. After verifying the facts, the Assessing Officer accepted the income declared by the appellant/assessee at Rs. 12,15,580/-, initiated penalty proceedings under Section 271 (1) (c) of the Act for the assessment year 2002- 2003 and levied penalty of Rs. 2,80,394/- vide order dated 15.06.2010. Aggrieved by the order of the Assessing Officer passed under Section 271 (1) (c) of the Act....
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....nsideration is: Whether the finding recorded by the Assessing Officer, confirmed by the Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal is a finding of fact, if not, whether this Court while exercising power under Section 260-A of the Income Tax Act interfere with the order passed by the Assessing Authority, Commissioner of Income Tax (Appeals), confirmed by Income Tax Appellate Tribunal? POINT: It is the case of the petitioner that he did not disclose the income from various sources bonafidely, therefore, at best it would attract the provisions of Explanation:1 to Section 271 (1) (c) of the Act and thereby penalty cannot be levied for such non-disclosure of income. Section 271 (1) (c) of the Act permits the Assessing Officer or Commissioner of Appeals or Commissioner in course of any proceedings under the Act, if satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars and when such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner of Appeals or Commissioner to be false, or such person offers an explanation which he is not able to subs....
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....deposition under Section 132 (4) of the Act, he admitted that the deposits were out of the unaccounted sources of income. On the basis of the extracts of the said bank accounts, the assessee was asked to furnish cash flow statements. Accordingly, he filed necessary cash flow statements and the excess application of funds over the explainable sources came to an extent of Rs. 90.47 lakhs as on 31.03.2008. For the assessment year 2002-2003, the unexplained cash balance came to an amount of Rs. 9,16,321/-. Since the assessee's income is escaped assessment, proceedings under Section 147 of the Act were initiated and notice under Section 148 of the Act was issued on 30.03.2009. Thereupon, the appellant/assessee filed return of income on 15.05.2009, but the Assessing Officer again issued another letter on 25.08.2009 calling for return. The appellant/assessee by his letter dated 02.09.2009 replied that he has already filed return of income admitting additional income of Rs. 9,16,321/-. Thereupon, the Assessing Officer completed the assessment proceedings determining the total income at Rs. 12,15,580/- as admitted in the return in response to notice under Section 148 of the Act while quanti....
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....in the sense that no reasonable person could have taken such a view, but this Court cannot go into the question of fact to reverse the finding of the Income Tax Appellate Tribunal. In "T.Ashok Pai v. Commissioner of Income Tax, Bangalore (2007) 7 SCC 162 " the Apex Court held that existence of mens rea is essentially a question of fact, the Tribunal alone, as the highest authority empowered to determine the question of fact, would be entitled to go thereinto and the High Court has no jurisdiction and it should not ordinarily disturb the finding of fact arrived at by the Tribunal. The burden of proof in a proceeding under Section 271 (1) (c) of the Act is always on the Revenue and when the Revenue discharges its burden, it is for the assessee to prove that there are bonafides in his failure to disclose the income from different sources. In "Century Flour Mills Limited v. Commissioner of Income-Tax (2001) 247 ITR (SC) ", the Apex Court held that if an explanation given by the assessee with regard to the mistake committed by him has been treated to be bona fide and it has been found as of fact that he had acted on the basis of wrong legal advice, the question of his failure to disch....
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.... (arising out of SLP (C) No.26831/2004)." In view of the judgment of the Apex Court, the explanation having regard to the decision of this Court must be preceded by a finding as to how and as to in what manner he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the Income Tax Officer must arrive at its satisfaction in this behalf. It is now a well-settled principle of law that the more is the stringent law, more strict construction thereof would be necessary. Even when the burden is required to be discharged by an assessee, it would not be as heavy as the prosecution vide "P.N. Krishna Lal and Ors. v. Govt. of Kerala and Anr 1995 Supp (2) SCC 187 ". In view of law declared in perceptive pronouncements, consistently, by the Apex Court the initial onus is on revenue if explanation is offered by assessee. Once the onus is discharged, it would shift to assessee to prove bonafides, but the appellant/assessee failed to establish his bonafides in non-disclosure or concealment of the income. The Income Tax Act was amended in 1976. Even after the amendment of 1976, the penalty proceedings, it is evident, continue to be penal proceedings....
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.... inaccurate particulars relying on the decision rendered in "CIT v. Ram Commercial Enterprises Ltd., (2000) 246 ITR 568 (Del) ", which was approved by the Supreme Court in "Dilip N.Shroff Case v. CIT (2007) 6 SCC 329". In "Union of India and others v. Dharamendra Textile Processors and others (2008) 13 SCC 369", it is held that Dilip N.Shroff's case did not lay down correct law as the difference between Section 271 (1) (c) and Section 276 (c) of the Act was lost sight of, while holding that the explanations appended to Section 271 (1) (c) of the Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The judgment in Dilip N.Sharoff's case (referred supra) has not considered the effect and relevance of Section 276-C of the Act. Object behind enactment of Section 271 (1) (c) read with explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276-C of the Act.....
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....a Mittal" and the same was confirmed by the Apex Court (reference 1st supra). In the said case, proceedings under Section 271 (1) (c) of the Act were initiated for concealment of income and the assessee filed revised returns under Section 148 of the Act showing higher income, thereafter, assessment order was passed and revised returns regularised under Section 148 of the Act without any objection from the Revenue. In penalty proceedings, the assessee pleaded that he had submitted the revised returns to buy peace and to come out of vexed litigation. Thereupon, the High Court accepted that the explanation of the assessee was bonafide and upheld the order passed by the Commissioner of Income Tax and set aside the penalty order. The matter carried to the Supreme Court and the Supreme Court also confirmed the order of the High Court of Madhya Pradesh. The principle laid down in the above judgment has no application to the present facts of the case for the reason that in the said case the assessee pleaded that he accepted the assessment to buy peace and to come out of vexed litigation and gave an explanation that he bobafidely believed that he need not disclose the income and proved bon....