TaxTMI 
TaxTMI 
2019 (5) TMI 93
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.... CIT both on facts and in law had erred in passing the penalty order u/s 271(1)(c). 2. It is contended that the Appellant Board had neither concealed nor furnished any inaccurate particular so as to attract provisions of section 271(l)(c) of the IT Act. hence the impugned penalty order is wrong and bad in law. 3. It is contended that the claim of benefit of weighted deduction under section 35 being an incentive and having made to recognized institution under section 35 cannot come under the purview of provisions of section 271(l)(c), since it is neither concealment nor furnishing of any inaccurate particulars. 4. It is contented that merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(l)(c) held in the case of CIT vs. Reliance petro products (P.) Ltd. [Civil Appeal No. 2463 of 2010, dated 17.03.2010 (SC). 5. The expression 'concealment of income' implies that an income is being hidden, camouflaged or covered up so as it cannot be seen, found, observed or discovered. The expression 'furnishing of inaccurate particulars of income....
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....at appellant craves to alter, amend, modify, add or delete any of the grounds of appeal at the time of hearing. 2.1 The Grounds of appeal raised in ITA No. 4663/Del/2014 for assessment year 2006-07 are reproduced as under: 1. That the Ld. CIT both on facts and in law had erred in passing the penalty order u/s 271(l)(c). 2. It is contended that the Appellant Board had neither concealed nor furnished any inaccurate particular so as to attract provisions of section 271(1 )(c) of the IT Act. hence the impugned penalty order is wrong and bad in law. 3. It is contended that the claim of benefit of weighted deduction under section 35 being an incentive and having made to recognized institution under section 35 cannot come under the purview of provisions of section 271(l)(c), since it is neither concealment nor furnishing of any inaccurate particulars. 4. It is contented that merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(l)(c) held in the case of CIT vs. Reliance petro products (P.) Ltd. [Civil Appeal No. 2463 of 2010, dated 17.03.2010 (S....
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....tant is the mind set of Ld. ACIT at the time of completing quantum assessment and if it required a revisit of very reasoning in initiation u/s 271(l)(c) by issue of revised show cause, it should have been done hence a technical lapse. 9. That appellant craves to alter, amend, modify, add or delete any of the grounds of appeal at the time of hearing. 2.2 The Grounds of appeal raised in ITA No. 4664/12/2014 for assessment year 2007-08 are reproduced as under. 1. That the Ld. CIT has erred both on facts and in law in framing order u/s 271(l)(c). 2. It is contended that the Appellant Board had neither concealed nor furnished any inaccurate particular so as to attract provisions of section 271(l)(c) of the IT Act. hence the impugned penalty order is wrong and bad in law. 3. It is contended that the claim of benefit of weighted deduction under section 35 being an incentive and having made to recognized institution under section 35 cannot come under the purview of provisions of section 271 (l)(c), since it is neither concealment nor furnishing of any inaccurate particulars. 4. It is contented that merely because assessee had claimed expendit....
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.... Ld. CIT(A) has erred in upholding penalty u/s 271(l)(c) for disallowance u/s 14A as it was too premature at that stage as even rule 8D etc were notified only on 24.03.2008. 10. That appellant craves to alter, amend ,modify ,add or delete any of the grounds of appeal at the time of hearing. 3. Briefly stated facts of the case are that in the return of income filed for assessment year 2005-06, the assessee claimed deduction under section 36(1)(xii) of the Act, amounting to Rs. 78,14,68,000/- and also claimed deduction under section 35(1) of the Act amounting Rs. 5,23,00,000/-. The Assessing Officer declined both the deduction claimed by the assessee. On further appeal, the Ld. CIT(A) deleted the disallowance of Rs. 78,14,68,000/- on account of deduction under section 36(1)(xii) of the Act but sustained the disallowance of Rs. 5,23,00,000/- under section 35(1) of the Act. In assessment year 2006-07 the Assessing Officer also made disallowance of Rs. 5,50,00,000/-under section 35(1) of the Act. In assessment year 2007-08, the Assessing Officer made disallowance of Rs. 3,74,06,800/- under section 35(1) and disallowance under section 14A of the Act amounting to Rs. 40,69,000....
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.... Act at the rate of 100% of the tax sought to be evaded amounting to Rs. 1,76,04,180/-, Rs. 1,85,13,000/- and Rs. 1,39,60,754/- for assessment years 2005-06, 2006-07 and 2007-08 respectively 3.4 On further appeal, the Ld. CIT(A) upheld the penalty in all the three assessment years by way of common order observing as under: "4.7 I have carefully considered the submissions of the appellant and perused material on the records. The explanations offered by the appellant either during the penalty or appellate proceedings cannot be considered as a bonafide one to escape from the rigours of the penalty provisions. Here, direct evidences to prove the intent of concealment are available in all the three years as the appellant failed to offer any plausible explanation either before the AO or me regarding the disallowance of deduction u/s 35 and disallowance u/s 14A. The facts and circumstance of these cases establish that the appellant has concealed income and furnished inaccurate particulars of its income in all the three years. In the case of Shiv Narain Khanna Vs. CIT 107 ITR 542, the Hon'ble Punjab & Haryana High Court has held as under that no additional material is requi....
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....by the Revenue in every case of civil penalty including income-tax penalty. After amendment, establishing mens rea is not a precondition to levy penalty u/s 271(l)(c). The relevant observations of the Hon'ble Supreme Court in this regard are as under: "It is of significance to note that the conceptual and contextual difference between section 271(l)(c) and section 276C of the Income-tax Act was lost sight of in Dilip N. Shroff's case [2007] 8 Scale 304 (SC). The Explanations appended to section 272(l)(c) of the I.T. Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroff's case [2007] 8 Scale 304 (SC) has not considered the effect and relevance of section 276C of the Income-tax Act. The object behind the enactment of section 271(l)(c) read with the Explanations indicates 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. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of pr....
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.... Hon'ble Supreme Court in the cases of CIT vs. Moser Baer India Ltd. 184 Taxman 8 and CIT vs. RMP Piasto (P) Ltd. 184 Taxman 372 upheld concealment penalty for wrong adjustment of unabsorbed depreciation in the AY 1996-97. In the case of CIT vs. Zoom Communication Pvt. Ltd. (2010)-TIOL-361-HC-DEL-IT, the assessee made a claim which, is purely capital in nature, as revenue and also claimed income tax paid as deduction. The Hon'ble High Court after considering the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Retro Products Pvt. Ltd., (2010) 322 ITR 158 (SC), upheld the levy of penalty by observing that: • The Bench cannot lose sight of the fact that the assessee is a company which must be having professional assistance in computation of its income, and its accounts are compulsory subjected to audit. In absence of any details from the assessee, it is difficult to appreciate how such deductions could have been left out while computing the income of the assessee company and how it could also have escaped the attention of the auditors of the company; • The explanation offered by the assessee company was not accepted either by the....
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....ed that the appellant, in principle, has accepted the disallowance u/s 35 and 14A in all the relevant years and the disallowance u/s 14A in the AY 2007-08. The question is one of applicability of the principles to the facts in a given case. It has been a well-settled view that the ratio of any decision must be understood in the background of that case. What is of essence in a decision is its ratio and not every observation found therein nor what legally follows from the various observations made in it. It is not a profitable task to extract a suitable sentence here and there from a judgement and to build upon it (vide Ambica Quarry Works v. State of Gujarat, AIR 1987 Supreme Court 1073). 4.13 Had the AO not investigated these cases; then the Govt, exchequer would have been devoid of the quantum of tax levied on the income of Rs. 5,23,00,000/-, Rs. 5,50,00,000/- and Rs. 4,14,75,800/- in the AY 2005-06, 2006-07 and 2007-08 respectively. Here in these cases, the appellant's explanations have been rebutted or found unsubstantiated by the AO as evident from the details mentioned above in para 4.1 to 4.3 in respect of ail the AYs and in the impugned penalty orders of the AY ....
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....pplication of income by the Tribunal. The Ld. counsel submitted that the claim made under section 35(1) of the Act was weighted deduction at the rate of 125% in respect of the same grants and since hundred percent deduction was claimed under section 36(1)(xii), balanced 25% was claimed under section 35(1) of the Act, which has been disallowed by the Assessing Officer and the Ld. CIT(A). According to the Ld. counsel, said claim of weighted deduction under section 35(1) of the Act was made under the bonafide belief that the institution to which grants were made i.e. M/s The Petroleum Conservation Research Association, New Delhi, was entitled as approved scientific research Association under section 35(1)(ii) vide Notification No. SO 904EUR (37/2006) dated 28/02/2006. The Ld. counsel submitted that further appeal on this issue was not filed before the Tribunal as the assessee was not granted any approval by the committee of dispute (COD) on this issue. According to the Ld. counsel in making the claim no inaccurate particulars been filed and merely making incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. 6. The Ld. counsel also submitted that there....
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....iation of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Conseguently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961." 5. CIT Vs Escorts....
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....but not allowed in the appeal. The assessee, did not contest these issues in the Tribunal. 11. Thus, we find that the hundred percent claim of the grant to notified institution was allowed under section 36(1)(xii) but the balance 25% claimed under section 35(1) of the Act has not been allowed to the assessee. 12. In our opinion, it is settled position of the law that mere making of a claim, which is not sustainable in the law by itself will not amount to furnishing inaccurate particulars of income. The Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro products Ltd 322 ITR 158 it is held that: "Reading the words "inaccurate" and "particulars" in conjunction, the Apex Court opined that they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee 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 s. 271(l)(c). A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccur....