TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 266
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....thereafter, on 23rd August 2005, the case of the Assessee was selected for scrutiny. Fresh notices were issued to the respondent Assessee under Section 143(2) of the Income Tax Act, pursuant to which, the representative of the respondent assessee appeared before the Assessing Officer to explain the stand of the respondent assessee. Thereafter, an Assessment Order was passed on 29.12.2006. 5. From the order of assessment, it appears that the Assessee had claimed deduction under Section 80IB of Rs. 2,77,65,509/-, which was disallowed on the ground that all the four Units of the respondent assessee were in Puducherry. Only first two Units had made profit, but the other two Units had incurred losses and putting all the four Units together there was loss of Rs. 2,92,51,758/-. The Assessing Officer also disallowed certain claims to depreciation on air and water pollution control equipment. The details of the disallowances are as hereunder: Sl. No. Particulars Amount added/assessed Rs. 1 Under Section 14A 1,40,729.00 2 Depreciation on air and water pollution equipment 1,40,56,407.00 3 Interest free loan 1,10,04,157.00 4 Deduction under Section 80IB 2,77,65,509.00 5 Deduc....
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.... a common order under appeal. 11. The learned Tribunal found that the respondent Assessee had a reasonable basis to stake a claim for deduction under Section 80IB, which had been disallowed upon interpretation of the provision. There was no ground for levy of penalty for furnishing inaccurate particulars of income. The deletion of penalty made by the Appellate Commissioner was thus confirmed. 12. Section 260A of the Income Tax Act, 1961 provides as follows: "Section 260A. Appeal to High Court. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or an Assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the Assessee or the Principal Chief Commissioner or Chief Commissione....
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....pra) and other judgments and summarized the tests to find out whether a given set of questions of law were mere questions of law or substantial questions of law. 16. The relevant paragraphs of the judgment of the Supreme Court in Hero Vinoth (supra) are set out herein below : "21. .... The word substantial, as qualifying question of law , means of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with technical, of no substance or consequence, or academic merely. However, it is clear that the legislature has chosen not to qualify the scope of substantial question of law by suffixing the words of general importance as has been done in many other provisions such as Section 109 of the Code or Article 133(1)(a) of the Constitution. The substantial question of law on which a second appeal shall be heard need not necessarily be a substantial question of law of general importance. In Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] the Constitution Bench expressed agreement with the following view taken by a Full Bench of the Madras High Court in Rimmalapudi Subba Rao v. Noony Veeraju [AIR ....
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....the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case or not, the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis. (See Santosh Hazari v. Purushottam Tiwari [(2001) 3 SCC 179] .) 24.The principles relating to Section 100 CPC relevant for this case may be summarised thus : (i) An inference of fact from the recitals or contents of a document is a question of fact. But the legal effect of the terms of a document is a question of law. Construction of a document involving the application of any principle of law, is also a question of law. Therefore, when there is misconstruction of a document or wrong application of a principle of law in construing a document, it gives rise to a question of law. (ii) The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a que....
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.... to an Assessee a notice under Section 271, he makes the Assessee aware that the provisions thereof are to be used against him. These provisions include the Explanation. By reason of the Explanation, where the total income returned by the Assessee is less than 80 per cent of the total income assessed under Sections 143 or 144 or 147, reduced to the extent therein provided, the Assessee is deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof, unless he proves that the failure to return the correct income did not arise from any fraud or neglect on his part. The Assessee is, therefore, by virtue of the notice under Section 271 put to notice that if he does not prove, in the circumstances stated in the Explanation, that his failure to return his correct income was not due to fraud or neglect, he shall be deemed to h ave conceal the particulars of his income or furnished inaccurate particulars thereof and, consequently, be liable to the penalty provided by that Section. ...... 6. Learned counsel for the Assessee then drew our attention to the judgment of this Court in Sir Shadilal Sugar and General Mills Ltd. & Anr. Vs. Commissioner of Inc....
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....ation, it cannot be said that the onus lies on the Revenue to establish mens rea for concealment of income before imposition of penalty. If there was failure to return the correct income, there would be a presumption of concealment, unless the Assessee was able to prove that his failure to return his correct income was not due to fraud or neglect. 24. In the instant case, as observed above, the learned Tribunal arrived at the finding that disallowance was due to interpretation of the applicable provision of the Income Tax Act. There was no concealment. 25. In M.A.K.Data P. Ltd. v. Commissioner of Income Tax, reported in (2013) 358 ITR 0593 (SC), the Supreme Court held that the Explanation to Section 271(1)(c) of the Act raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the Explanation has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. 26. In the aforesaid case, the contention of the assessee of havi....
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....) 300 ITR 0342 (Madras), a Division Bench of this Court found that there was claim for supply of steel rolls, when in fact there was never any supply. Bills had been raised to facilitate finance from credit institutions and the alleged lease transaction was found to be false and a make believe one. The assessee resisted the claim of the department contending that they were not aware of forged documents and contended that they had not concealed income nor furnished inaccurate particulars. There was no dispute that the documents were forged. 31. In the aforesaid case, the learned Tribunal had upheld the imposition of penalty. The Division Bench found that the conclusion was factual giving rise to no questions of law. Considering the limited scope of Section 260A of the Act, the Division Bench did not find any justification to disturb the order of the learned Tribunal and, accordingly, the appeal was dismissed. 32. In Union of India v. Dharamendra Textile Processors, reported in (2008) 13 SCC 369, the Supreme Court observed as under: "17. It is of significance to note that the conceptual and contextual difference between Section 271(1)(c) and Section 276-C of the IT Act was lost s....