Case Law Details
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5.6 There cannot be a straight jacket formula for detection of these defaults of concealment or of furnishing inaccurate particulars of income and indeed concealment of particulars of income and in accurate particulars of income may at times overlap. It depends upon the facts of the each case. In the assessment proceedings the ITO while ascertaining the total income chargeable to tax would be in a position to detect the specific or definite particulars of income concealed or of which false particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it would amount to concealment to that extent. In the same way where specific and definite particulars of income are detected as inaccurate, then such figure will also make the total income inaccurate in particulars to the extent it does not include such income. In other words the AO cannot invoked provision of section 271 (1) (c) on the basis routine and general presumptions. Whether it be a case of only concealment or of only inaccuracy or both, the particulars of income so vitiated would be specific and definite and be known in the assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a position to initiate the penalty proceedings on one or both of the grounds of default as may have been specifically and directly detected.
5.7 In addition to main provisions of concealment “has concealed the particulars of his income” or “has furnished inaccurate particulars of such income” there are deemed to represent the income in respect of which particulars have been concealed .The deemed concealment is provided in explanations .Often a question arose whether in cases where additions or dis allowances made by the ITO the penal provisions of section271 (1) © would attract. Explanation 1 takes care of this situation. The explanation to section 271(1) of the Act reads as under:-
Explanation 1.-Where in respect 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 Commissioner (Appeals) or the 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.
5.8 A conspectus of the Explanation makes it clear that the statute visualised the assessment proceedings and penalty proceedings to be wholly distinct and independent of each other. In essence, the Explanation is a rule of evidence. Presumptions which are rebuttable in nature are available to be drawn. The initial burden of discharging the onus of rebuttal is on the assessee. The rationale behind this view is that the basic facts are within the special knowledge of the assessee. Section 106 of the Indian Evidence Act, 1872, gives statutory recognition to this universally accepted rule of evidence. There is no discretion conferred on the Assessing Officer as to whether he can invoke the Explanation or not. Explanation 1 comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1: the onus to establish that the explanation offered was bona fide and a:’ facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation; it should not be a fantastic or fanciful one. As indicated above, the consequence follows as a matter of law. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed the income or furnished inaccurate particulars thereof is available to be drawn.
5.9 Part A of the Explanation to section 271(1) (c) provides that if assessee fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, This explanation can therefore, be applied only where the assessee has either not offered any Explanation or where he has offered any Explanation, the same found to be false by the (TO etc. in other words , where the assessee offers some explanation, it is only the proving by the assessee officer of the explanation to be false, that part A of the Explanation may be attracted, Mere non acceptance of explanation offered by the assessee cannot form a basis for the satisfaction of ITO to the effect that the assessee has concealed particular of his income. The ITO must have some definite evidence to refuse the assessee’s claim or evidence or explanation.
5.10 The essence of part B of the explanation is that the person must provide an explanation which is bon fide and he should substantiate that explanation by some evidence with ;him. If he fails to do so, his explanation may be treated as untenable. But when the assessee is able to offer reasonable explanation based on some evidence, the ITO cannot invoke Part B of the explanation unless he has given finding based on some contradictory evidence to disapprove that explanation offered by the assessee Which the assessee 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.
5.11 In the light of the above discussion, if we consider the facts of the case, we notice that the assessee has furnished all the particulars of income and the Assessing Officer has calculated the total income on the basis of those particulars filed by the assessee. The assessee has right to claim all deductions which according to him are permissible in law. It is the duty of Assessing Officer to calculate correct income in accordance with law. If the Assessing Officer found otherwise on considering the material filed by the assessee, we do not find that in such cases where the Assessing Officer computed the different total income than the total income declared by the assessee the same would not amount to furnishing of inaccurate particulars of income or concealment of particulars of income. In the case under consideration, the assessee has claimed deduction u/s 80-IA for one more year i.e. for AY 1998-99 whereas he was eligible for deduction u/s 80-IA up to 1997-98. There is a simple calculation of total years of the allow ability which appears to be a prima facie mistake in calculation of the period. Before completion of the assessment, the assessee has pointed out this mistake and filed a revised return though it is filed after stipulated period prescribed u/s 139(5). Still we find that it is not a case of furnishing inaccurate particulars of income or concealment of particulars of income. In the light of the above discussion, we find that it is not a fit case for penalty leviable u/s 271(1Xc).
