TaxTMI 
TaxTMI 
2024 (5) TMI 1259
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....nd should not the Tribunal have considered the case on merits? 2. (a) Whether on the facts and in the absence of any prejudice and violation of natural justice being alleged or caused, the Tribunal is right in law in declaring the penalty order? (b) Whether the Tribunal is justified in entertaining the belated Ground raised for the first time? 3. Whether the assessee having well understood the purport and import of the notice and having acted upon the same, is justified in challenging the same for the reason alleged? 4. Are not the 271(1)(c) penalty proceedings and penalty order legal and with jurisdiction and should not the Tribunal have upheld the same? 5. Whether, on the facts and in the circumstances of the case should not the Tribunal have held that the appellant had concealed long term capital gain on transfer of equity shares by furnishing inaccurate and false particulars and therefore liable to penalty under Section 271(1)(c) of the Act? 2. The brief facts necessary for disposal of this appeal are as follows: The respondent/assessee had filed a return dated 30.07.2011 for the assessment year 2011-12 declaring a total income....
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....y of Rs.1,39,81,676/- was thereafter paid by the assessee along with the return filed pursuant to the notice under Section 148 of the I.T. Act. In total, the respondent/assessee paid an amount of Rs.5,00,85,159/- towards tax and interest liability for the assessment year 2011-12. 4. The Revenue proceeded to complete the assessment for the assessment year 2011-12 under Section 143(3) read with Section 147 of the I.T. Act by Annexure 'E' order dated 31.01.2015. It is significant to note that in the assessment order so passed, there was no addition to the income of the assessee save to the extent already admitted by him through Annexure 'C' letter dated 23.06.2014. 5. The issue that arises for consideration in this appeal is not with regard to the assessment completed against the respondent/assessee but with regard to the penalty that was imposed on him under Section 271(1)(c) of the I.T. Act immediately thereafter. It would appear that while by Annexure 'F' notice dated 30.01.2015, the Revenue proposed the imposition of a penalty on the respondent/assessee on the ground that the "assessee had concealed particulars of his income or furnished inaccurate pa....
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....pondent/assessee. 8. On a consideration of the facts and circumstances of the case and the submissions made across the bar, we find that it is not in dispute that in the original return filed by the respondent/assessee, only a lesser figure was returned both in respect of the total income as also capital gains earned by the respondent/assessee. It is also not in dispute that but for the investigation initiated by the Revenue, the differential income might have escaped assessment to tax. What is significant however is that it was during the course of the investigation initiated by the Revenue, but well before any conclusion could be arrived at by the Revenue as regards suppression/concealment of income, that the assessee in the instant case came forward and admitted before the Revenue authorities that he was convinced of the mistake occassioned at the time of filing the original return, and that he was ready and willing to pay the differential amount of tax computed by him based on a revised computation of the capital gains earned by him. We further find from the records that the differential tax, together with interest thereon, was subsequently paid by the respondent/assessee wh....
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....pect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the or the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Principal Commissioner or Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." It will be seen from a perusal of Section 271 of the I.T. Act that it is a specific provision providing for imposition of penalties, and is a complete code in itself, regulating the procedure for the imposition of penalties prescribed. The proceedings are therefore to be conducted in accordance therewith, subject always to ....
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....estopped from contending that he was satisfied at that point in time, of the assessee having concealed the particulars of his income or furnished inaccurate particulars of such income. Section 271(1)(c) no doubt authorises the imposition of a penalty irrespective of whether the assessee had any mens rea to occasion the default specified therein. The liability in that sense is a strict one as was the case under Section 11AC of the Central Excise Act, the scope of which was considered by the Supreme Court in Union of India v. Dharmendra Textiles Processors - [(2008) 306 ITR 277]. It is therefore all the more necessary to strictly construe the provisions of Section 271(1)(c) to ensure that only the clear and unambiguous cases of defaults specified therein would attract a penalty. On the facts of this case, we fail to see how an assessee who disclosed his liability to tax, well before the Assessing Authority himself could determine it, can be seen as having concealed or incorrectly stated the facts leading to his liability. To invoke the penal provisions of the Act against an assessee in such a situation would throw to the winds the elements of fairness in tax administration and discou....