TaxTMI 
TaxTMI 
2021 (8) TMI 954
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.... income of Rs. 18,95,23,990/- and subsequently revised the same on 30/3/2007 declaring a total income of Rs. 1,17,48,138/-. In the original return of income the assessee had shown business income of Rs. 2,58,17,15,909/- and claimed deduction under section 10A of the Act to the tune of Rs. 5,57,24,87,070/- considering 13 mother licenses as the undertakings eligible for such deduction whereas in the revised return of income the assessee showed business income of Rs. 2,58,77,95,991/- and claimed deduction under section 10A of the Act at Rs. 2,75,57,24,990/- and a loss from business or profession to the tune of Rs. 16,79,29,000/- considering 31 undertakings registered with STPI under 13 mother licenses as independent undertakings eligible for deduction under section 10A of the Act. Draft assessment order was passed at a total income of Rs. 2,16,07,60,309/- on 26/12/2008, without allowing the additional claim of deduction raised by the assessee in the revised return of income under section 10A of the Act on the ground that no scrutiny was done in initial assessment years regarding the claim of extensions as a separate units, such claim cannot be allowed in succeeding Assessment Year and....
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....the quantum of exemption, when even enquiry into the past was not possible. According to the Ld. CIT(A) this lapse of the assessee amounts to deemed concealment under explanation 1 to section 271(1)(c) of the Act. Ld. CIT(A), therefore, did not accept the explanation of the assessee and refused to believe that the lapse of the assessee is a bona fide one and on that ground confirmed the levy of penalty. Ld. CIT(A) however noticed that, though in the penalty order the learned Assessing Officer mentioned that the additions which were confirmed by the ITAT alone were considered for the purpose of penalty under section 271(1)(c) of the Act, as a matter of fact the learned Assessing Officer based the imposition of penalty on the disallowance that was deleted by the ITAT and therefore, instead of taking Rs. 18,32,37,920/-, learned Assessing Officer took the amount of Rs. 36,31,53,638/- as the concealed income. Ld. CIT(A) therefore directed that the total quantum of penalty levied must be with reference to the deemed concealed income but not with reference to the disallowance that was deleted by the ITAT. It, therefore, results in reducing the total quantum of penalty. Assessee is aggriev....
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....stablish that the applications before the STPI authorities were for setting up of new undertakings and in these circumstances, after a long lapse of time, the assessee is changing the stand to claim the exemption in respect of 31 undertakings or 13 undertakings, as the case may be, certainly amounts to furnishing of inaccurate particulars with a design to conceal the real facts. She based this argument on the fact that the applications submitted by the assessee before the STPI authorities, whether or not for setting up of new undertakings, goes unverifiable. 10. We have gone through the record in the light of submissions made on either side. Facts involved in this appeal, in their simplest form, are that in the original return, the deduction u/s. 10A of the Act was claimed in respect of 13 mother licenses, as the undertakings eligible for said deduction whereas the assessee revised the return claiming deduction u/s. 10A considering 31 undertakings registered with STPI authority under 13 mother licenses as independent undertakings eligible u/s. 10A of the Act. While doing so, admittedly, the assessee filed the prescribed form No. 56F duly signed by the Chartered Accountant in res....
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....nt of facts. 12. Admittedly, in this case, Hon'ble High Court admitted the substantial question of law relating to the claim of assessee to avail the benefit of section 10A of the Act for the assessment year 2005-06 on the ground that enhancement in claim so made was tenable or not. This very fact shows that the issue involved in this matter is debatable issue. We find force in the argument of the ld. AR that the penalty is not leviable in case where the proposed penalty relates to the debatable issues or where two views are possible. This view is fortified by the decision of Hon'ble jurisdictional High Court in the cases of PCIT vs. Harsh International (P) Ltd. (supra), CIT vs. Nayan Builders & Developers (supra) and CIT vs. Rahul Mehta (supra). 13. Lastly, coming to the decisions reported in CIT vs. Reliance Petro Products Pvt. Ltd. (supra) and Dilip N. Shroff (supra), we deem it just and necessary to extract the relevant paragraphs for the sake of completeness. In Reliance Petro Products Pvt. Ltd. (supra), Hon'ble Supreme Court observed that- "7. As against this, Learned Counsel appearing on behalf of the respondent pointed out that the language of Sec....
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....ssioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This 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." 8. 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 the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. [ 2007(6) SCC 329], this Court explained the terms "concealment o....
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....ia Vs. Dharamendra Textile Processors (cited supra), was that according to this Court the effect and difference between Section 271(1)(c) and Section 276-C of the Act was lost sight of in case of Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra). However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra), where the Court explained the meaning of the terms "conceal" and inaccurate". It was only the ultimate inference in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra) to the effect that mens rea was an essential ingredient for the penalty under Section 271(1)(c) that the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra) was overruled. 8. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined....
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....ot, 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 Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature." 14. In Dilip N. Shroff (supra), relevant observations of Hon'ble Apex Court are to the following effect:- "31. Section 271(1)(c) of the Act is in two parts. Whereas the first part refers to concealment of income, the second part refers to furnishing of inaccurate particulars thereof. In the instant case, the penalty has been levied upon the Appellant under the second part of Section 271(1)(c) of the Act. One of the questions which arises for consideration is as to whether Explanation 1 is applicable in respect of both the parts or in respect of the first part only. ... ... .... 37. The legal history of Section 271(1)(c) of the Act traced from the 1922 Act prima facie shows that explanations were applicable to both the parts. However, each case must be considered on its own facts. The role of explanation having regard to the princ....
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....n exception to the general rule. It raises a legal fiction by reason whereof a presumption is raised against an assessee as a result whereof the burden of proof shifts from the department to the assessee. Legal fiction, however, as is well-known must be given its full effect when the conditions precedent therefor are satisfied and not otherwise. [Ashok Leyland Ltd. v. State of T.N. and Another, (2004) 3 SCC 1] 44. It signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars. 45. The term 'inaccurate particulars' is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the explanations are taken recourse to, a finding has to be arrived at having regard to clause (a) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and ....
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....der the matter afresh as the question has to be considered from a different angle. [See Anantharam Veerasinghaiah & Co. v. C.I.T., Andhra Pradesh, 1980 Supp SCC 13]. ... ... ... 53. Before, thus, a penalty can be imposed, the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had furnished inaccurate particulars thereof. ... ... ... 55. It is now a well-settled principle of law that more stringent the 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. [See P.N. Krishna Lal and Others v. Govt. of Kerala and Another, 1995 Supp (2) SCC 187] ... ... ... 61. It may be true that the legislature has attempted to shift the burden from revenue to the assessee. It may further be correct that different views have been expressed as regard construction of statutes in the light of the changing legislative scenario, but the tenor of a penal proceeding remains the same. ... ... ....