AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 749
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....s of the case and in law, the Ld. CIT(A) erred in deleting the penalty of Rs. 1,79,05,055/- imposed u/s 271(1)(c) of the Income Tax Act, 1961." 4. Brief facts of the case:- The assessee e-filed its return of income for AY 16-17 on 13.10.2016, declaring a total loss of Rs. 3,95,34,835/-. The case was selected for scrutiny under CASS and a notice u/s 143(2), dated 08.08.2017 and 15.09.2017 was issued online to the assessee by the ACIT, Circle- 15(2), Delhi. The assessee was intimated that the return of income for AY 16-17 was selected for "limited scrutiny", inter-alia with the following issues identified for examination: 1. Whether sundry creditors are genuine. 2. Whether disallowance on account of non-deduction, short deduction or non-payment of TDS has been correctly shown in the return of income. 4.1. The AO on perusal of the ITR of the assessee for AY 16-17 noted that the assessee had reported sundry creditors of Rs. 35,03,72,435/- as on 31st March 2016, and despite multiple reminders, the assessee furnished details of only Rs. 30,25,83,893/- owed to M/s UKC Electronics Pvt. Ltd in this regard. The AO further noted that no details were furnished in respec....
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....y proceedings held that the assessee had no explanation/submission to offer at the time of assessment proceedings as well as in the penalty proceedings and he therefore proceeded to complete the penalty proceedings on the basis of material available on record. Further, the AO noted that "explanation appended to section 271(1)(c) of the Income Tax Act, 1961 indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The object behind the enactment of section 271(1)(c) of the Income Tax Act, 1961, read with explanations indicates that the section has been enacted to provide for a remedy for loss of revenue. The penalty under those provisions is civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276C." 4.7. Thereafter, the AO relied upon various case laws in support of the proposition that penalty u/s 271(1)(c) is civil liability and for attracting such civil liability, willful concealment is not an essential ingredient as is case in the matter of prosecution u/s 276C of the Act. The AO also observed tha....
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.... the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to the disadvantage of the assessee The court cannot overlook the fact that only a small percentage of the income tax returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it would be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a license to unscrupulous assesses to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assesse....
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.... materials. If such a fact-finding body, bearing the aforesaid principles in mind, comes to the conclusion that the assessee has discharged the onus, it becomes a conclusion of fact, and no question of law arises. As observed earlier, the initial burden is on the assessee. Once the initial burden is discharged, the assessee would be out of mischief unless further evidence is adduced. It is plain on principle that it is not the law that the moment any fantastic or unacceptable explanation is offered, the burden placed would be discharged and the presumption rebutted 5. In view of the reasons mentioned in preceding paras and judicial pronouncements, I am, therefore, satisfied that this act of assessee was a deliberate act to furnish inaccurate particulars of the income. 5. Aggrieved with the said order, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) in para 5 observed that the assessee did not respond to the hearing notices nor filed any written submissions and therefore he was left with no alternative but to decide this appeal on the basis of grounds of appeal raised along with statement of facts in the Form No.35. The ld. CIT(A) considering the a....
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....tions made in the assessment order and therefore the assessee was not liable for levy of penalty u/s 271(1)(c) of the Act. Accordingly, the ld. CIT(A) deleted the penalty of Rs. 1,79,05,055/-. 6. Aggrieved with the said order of the ld. CIT(A), the Revenue is in appeal before us. 7. The ld. DR submitted that the assessee failed to submit the complete details of sundry creditors of Rs. 4,77,88,542/- and therefore the ld. CIT(A) erred in deleting penalty because when the assessee could submit the details of the sundry creditors of Rs. 30,25,83,893/- and therefore the assessee deliberately did not submit the complete details of the balance sundry creditors of Rs. 4,77,88,542/- despite multiple notices issued by the AO in this regard, which amounts to furnishing of inaccurate particulars of income. 7.1. The Ld. DR further submitted that similarly, the conduct of the assessee in not disallowing a sum of Rs. 63,65,815/- u/s 40(a)(ia) of the Act in the return of income despite disallowing the same in its computation of income cannot be termed as bona-fide error but a deliberate attempt to suppress its taxable income by furnishing inaccurate particulars of income. 7.2. Therefor....