TaxTMI 
TaxTMI 
2024 (8) TMI 627
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....and in the circumstances of the case and in law, the Ld CIT(A) erred in deleting the penalty u/s 271(1)(c) on the ground that the alleged excess claim of deduction u/s. 10B of the Act made by the assessee has had no impact on the tax liability of the appellant company for the year under consideration, whereas the fact is that the penalty u/s 271(1)(c) was initiated in the original assessment order for furnishing inaccurate particulars of income on some issues and also for concealment of income on some other issues. 3. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in deleting the penalty u/s 271(1)(c) on the ground that mere disallowance of claim of deduction cannot be considered as furnishing inaccurate particulars about income. 4. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred that the amount of tax sought to be evaded by the assessee for the year under consideration cannot be determined in the manner provided in Explanation 4 to Section 271(1) of the Act." 3. Present appeal is the result of set aside order passed by the Coordinate Bench of ITAT, Mumbai in assessee's own case in ITA No. 2545/Mum/2022 dated....
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....expenses have been claimed which could not be directly identified with other units and were allocated in certain predetermined ratio by the assessee. Explanations were called for in respect of basis of allocation of expenses which were furnished by the assessee. For justifying higher rate of gross profit in the EOU unit, assessee submitted that there was no excise duty component, raw material was purchased duty free and there was no VAT on export sales nor any octroi duty was payable. However, ld. AO did not accept these submissions of the assessee and apportioned the expenses in proportion to the turnover of the units, thereby restricting the claim of deduction u/s. 10B to Rs. 52,04,147/-. 4.2. Assessee had also contended that in the return filed in response to the notice u/s. 153A, assessee had declared a loss of Rs. 9,59,47,663/-. According to it, though the claim was made in the return, it did not impact the tax liability of the assessee in any way as there was no positive income. It was also submitted that assessee had incurred loss over the years and carried forward losses were available with it for set off. Assessee had consistently made losses till Assessment Year 2016-17 ....
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....s found to have made excess claim of deduction u/s. 10B, it cannot be said that it had sought to evade taxes since penalty cannot be levied on hypothetical figures of income under clause (a) and clause (c) of Explanation 4. He thus, directed to delete the penalty so imposed in respect of excess deduction u/s. 10B disallowed by the ld. AO. 6. Ld. Sr. DR placed reliance on the order of the AO, to claim that penalty has been rightly imposed, since assessee had claimed excess deduction u/s. 10B by allocating more expenses towards units generating taxable income vis-à-vis EOU. She further submitted that assessee had accepted the re-apportionment of the expenses made by the ld. AO, resulting in a restricted claim of deduction u/s. 10B in the quantum appeal which justifies the imposition of penalty. 7. We have heard both the parties and perused the material on record. Admittedly, it is undisputed fact on record that assessee had filed its return with loss having carried forward business losses. We find that in the assessment order, on the issue relating to allocation of expenses and deduction u/s 10B, ld. Assessing Officer noted in para 5.1 that assessee has three manufacturing u....
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....ccurate particulars of income' has also not been defined in the Act. The expression 'inaccurate' refers to 'not in conformity with the fact or truth' and that is the meaning which, in our considered view, is relevant in the context of 'furnishing of inaccurate particulars'. The expression 'particulars' refers to 'facts, details, specifics, or information about someone or something'. Therefore, the plain meaning of the expression 'furnishing of inaccurate particulars of income' implies furnishing of details or information about income which are not in conformity with the facts or truth. The details or information about income deal with the factual details of income and this cannot be extended to areas which are subjective such as the status of taxability of an income, admissibility of a deduction and interpretation of law. The furnishing of inaccurate information thus relates to furnishing of factually correct details and information about income. In the present case, however, what has been treated as furnishing of inaccurate particulars is making of a claim which was not admitted by the Assessing Officer an action not contested by....
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....he income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered....
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....e 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 Vs. Joint Commissioner of Income Tax, Mumbai & Anr. was upset. In Union of India Vs. Dharamendra Textile Processors (cited supra), 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 enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under Section 276-C....
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....expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, 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 beca....