TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1194
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....e case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.03.2019, and assessment was accordingly completed by the ld. AO by making addition of Rs.11,31,000/- u/s 68 of the Act by treating the sales made to SR Trading as bogus sales. The penalty proceedings were initiated for furnishing the inaccurate particulars of income and consequently, penalty was imposed of Rs.3,68,938/- vide order dated 01.02.2022. 4. The ld. CIT (A) confirmed the penalty levied by the ld. AO by upholding the penalty order passed u/s 271(1)(c) of the Act. 5. After hearing the rival contentions and perusing the materials available on record, we find that the penalty was imposed by the ld. AO by treating the sales made by the assessee to SR Trading of Rs.11,31,000/- as bogus. We note that the sales were duly recorded in the books of account by the company and were also shown in the profit and loss account under the head revenue from operation. Consequently, the income was offered to tax in the return of income. The ld. AO during the course of assessment proceedings again added the said amount u/s 68 of the Act, meaning thereby that the same income has been subject ....
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....s so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted. So, it is clear enough that the income in the present case is taxable only under one law. By virtue of clause (k) to Article 371F of the Constitution which starts with a non-obstante clause, it would be clear that only the Sikkim Regulations on Income-tax would be applicable in the present case. Therefore, the income cannot be brought to tax any further by applying the rates of the IT Act. 14. In view of the aforementioned discussions, we are of the considered view that once the assessee has paid the income tax at source in the State of Sikkim as per the law applicable at the relevant time in Sikkim, the same income was not taxable under the IT Act, 1961. Having decided so, the other issue whether the income that is to be allowed deduction under section 80 TT of the IT Act is on 'Net Income' or 'Gross Income', becomes academic." 5.1. Besides, we have perused the explanation 4 to Section 271(1)(c) of the Act and observed that sub clause (c) of explanation 4 specifically provides that for the....
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....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 by the provision, the penalty provision cannot be invoked. By any stretch of imaginatio....
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....er, 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's case (supra) was upset. In Dharamendra Textile Processors' case (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, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff's case (supra) was overruled by this Court in Dharamendra Textile Processors' case (supra), was that according to this Court the ....
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....f 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 because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, 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 ....
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....er. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688, ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon'ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal). Therefore, we are inclined to admit the same for adjudication. 7. The facts in brief are that during the year the assessee had made sales to M/s Jagmata Traders Pvt. Ltd. of Rs.40,04,181/-, M/s Historic Dealtrade Pvt. ltd. of Rs.20,05,118 and M/s Sparkle Vincom Pvt. Ltd. of Rs.3,62,51,955/-. The said sales were fully recorded in the books of account and shown in the profit and loss account as revenue from operation. Thus, fully offered to tax and the same is not in dispute. During the course of assessment proceedings, the ld. AO treated the sales as bogus and held the same as unexplained cash credit u/s 68 of the Act. A search action u/s 132(1) of the Act wa....
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....ayment of PF and ESI of Rs.33,33,704/-, we find that the assessee has fully disclosed the facts qua this item of expenses in the books of account. Therefore, we are of the view that the assessee has not concealed the income as has been decided in the case of CIT vs. Reliance Petroproducts (P.) Ltd. (supra). 9.1.2. Considering the facts in the light judicial pronouncements, we are inclined to set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. A.Y. 2016-17 ITA No. 2587/KOL/2025 10. In this appeal, the assessee has raised additional ground which is extracted below:- "That, the Ed. A.O. erred in levying penalty u/s 271(1)(c) of the Act consequent to disallowance of Rs. 28,30,401/- being PF and ESI contributions paid beyond the stipulated period when such a disallowance does not lead to any concealment of income or furnishing of inaccurate particulars of income to warrant any penalty." 10.1. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the above additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the a....