2017 (1) TMI 858

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....thout appreciating the fact that the assessee furnished inaccurate particulars of income by making wrong claim of indexed cost of acquisition and wrong claim of exemption under section 54F of the Act. 2.1. During hearing, the ld DR Shri Neil Philiph advanced arguments which is identical to the ground raised by contending that the ld. Assessing Officer was within his right to impose penalty. On the other hand Ms. Varsha Dhameja, ld. counsel for the assessee defended the order of the Ld. Commissioner of Income Tax (Appeals). 3. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee is an individual, having income from house property, capital gains and interest inco....

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....Hon'ble Apex Court in Reliance Petro Products Pvt. Ltd. (supra) observed as under:- "A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars." 2.4. In the light of the above observation, we are reproducing hereunder the relevant portion of section 271(1)(C) of the Act for ready reference and analysis:- Section 271(1)(c) is as under:- "271(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnish....

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....rson has concealed the particulars of his income or furnished inaccurate particulars of such income. Hon'ble Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs.Rajasthan Spg. & Wvg. Mills [2009(13) SCC 448] and reiterated in para 13 that:- "13. It goes without saying that for applicability of Section 271(1)(c), conditions stated therein must exist." Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must 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 ....

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....timately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. was upset. In Union of India Vs. Dharamendra Textile Processors (cited supra), after quoting from Section 271 extensively and also considering Section 271(1)(c), the Court came to the conclusion that since Section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing rem....