TaxTMI 
TaxTMI 
2018 (1) TMI 737
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....ontending that the word "payable" only referred to amounts which were payable at the end of the year and did not refer to amount which had been paid in the course of the year. We decided that question in favour of the Revenue and against the assessee on the basis of the Supreme Court decision in Palam Gas Service v. CIT [2017] 394 ITR 300 (SC) ; AIR 2017 SC 2502. In that decision, the Supreme Court settled the controversy which has been raised in several High Courts with regard to the interpretation to be placed on the word "payable". The Supreme Court clearly held that the expression "payable" as appearing in section 40(a)(ia) of the said Act included the amounts already paid. 3. We may also point out at this juncture, as it would be relevant for the purposes of deciding the present appeal in which the question of penalty under section 271(1)(c) of the said Act is in issue, that in the quantum proceedings, before the Commissioner of Income-tax (Appeals), the respondent/assessee had conceded that the payments made towards bleaching, dyeing, embroidery, finishing and printing charges fell within section 194C of the said Act. The quantum proceedings thereafter were decided on the ba....
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....o only the payments which were payable without including payments which had already been made during the course of the year. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), who decided the same on September 17, 2014 by enhancing the penalty amount to Rs. 2,05,43,868 representing 100 per cent. of the tax allegedly sought to be evaded by the assessee. The Commissioner of Income-tax (Appeals) proceeded on the basis that the expression "payable" appearing in section 40(a)(ia) included not only the amount payable at the end of the year, but also the amount which had been paid in the course of the year and that therefore TDS ought to have been deducted on the entire amount of Rs. 6,04,40,918. Since such TDS was not deducted, the entire amount was disallowed in the quantum appeal and consequently 100 per cent. on that amount was imposed as penalty, i.e., to the extent of Rs. 2,05,43,868. 6. Being further aggrieved by the decision of the Commissioner of Income- tax (Appeals) the respondent-assessee preferred an appeal before the Tribunal being I. T. A. No. 716(Asr)/2014 which was decided by the impugned order dated May 20, 2016 whereby th....
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....vy of penalty under section 271(1)(c) of the said Act. The second being whether the penalty could be levied when the issue itself was debatable. His contention was that in respect of a debatable issue when the assessee takes one point of view in the debate and the same is not accepted by the Assessing Officer, it would not automatically mean that the assessee has been guilty of concealing the particulars of his income or furnishing inaccurate particulars of such income. 9. The learned counsel relied upon the decision of the Supreme Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC) ; [2010] 11 SCC 762. He also placed reliance on the Delhi High Court decision in the case of Shervani Hospitalities Ltd. v. CIT [2013] 261 CTR (Delhi) 449. 10. After considering the arguments advanced by the parties, we are of the view that the case before us can be examined in two parts. The first part, which is the easier one, relates to the issue of interpretation of the word "payable" appearing in section 40(a)(ia) of the said Act to the extent that there has been disallowance by interpreting the word "payable" to include payments made during the year. There can be....
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....essee and that claim has been rejected. 12. The decision of the Supreme Court in Reliance Petroproducts (supra), which had been relied upon by the learned counsel for the respondent- assessee, has clearly examined the meaning of the expressions "concealment of particulars of income" and "furnishing inaccurate particulars of income". The said decision also examined the earlier decision of the Supreme Court in Dharamendra Textile Processors (supra) and how that decision does not completely overrule Dilip N. Shroff's case, but only to the extent that for sustaining a penalty under section 271(1)(c) mens rea was no longer an essential element. Since the said decision is apposite in the facts and circumstances of the present case, we extract the following passages therefrom (page 163 of 322 ITR) : "Section 271(1)(c) is as under : '271. Failure to furnish returns, comply with notices, concealment of income, etc.-(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 furnished inaccurate particulars of such income.&#....
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....ssment of the value of the property may not by itself be furnishing inaccurate par ticulars. It was further held that the Assessing Officer must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The court ultimately 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 v. Joint CIT was upset. In Union of India v. Dhara mendra Textile Processors 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 the enactment of section 271(1)(c) read with Explanations indicated with the said section was for providin....
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.... them selves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature." 13. It is thus obvious that the respondent-assessee having furnished all the details of its expenditure as well as income in its return, it was up to the authorities to accept his claim or to reject it. But merely because the respondent-assessee had claimed an expenditure which was not accepted by the Revenue, that by itself would not attract the penalty of section 271(1)(c). 14. We may also refer to the decision of the Delhi High Court in the case of Shervani Hospitalities Ltd. (supra) and in particular paragraph No. 19 thereof reads as ....