Case Law Details
HCL Technologies Ltd. Vs DCIT (ITAT Delhi)
Levy of penalty in this case is unsustainable because mere preferring a claim which is unacceptable to the Revenue does not ipso facto lead to levy of penalty. Here in this case, Form No. 56F duly signed by the Chartered Accountant justifies the plea of bona fide belief on the part of the assessee. It is not the allegation against the assessee that any material fact relating to the income had to be unearthed with any efforts of the Revenue. It is only on the basis of the material furnished by the assessee, claim of the assessee for benefit u/s. 10A of the Act in respect of 31 units as independent, was rejected. Every disallowance does not lead to penalty, and more particularly such disallowances in relation to the issues whichare debatable, in respect of which, the substantial questions of law are admitted by the Hon’ble High Court, are immune from penalty proceedings. With this view of the matter, we do not find any justification to sustain the penalty and consequently, we direct the Assessing Officer to delete the same.
FULL TEXT OF THE ORDER OF ITAT DELHI
Aggrieved by the order dated 6/4/2017 in appeal No. 101/16-17/CIT(A)-22, New Delhi (“Ld. CIT(A)”) in the case of M/s HCL Technologies Ltd (“the assessee”) confirming the penalty levied by the learned Assessing Officer in the order dated 30/03/2015, however, at a reduced amount, this appeal is preferred by the assessee.
2. Brief facts of the case, relevant for the disposal of this appeal are that the assessee had several export-oriented units which were also registered with STPI authority and in respect of such units, the assessee has been claiming deduction under section 10A of the Income Tax Act, 1961 (for short “the Act”). For the assessment year 2005-06, assessee filed the return of income on 31/10/2005 declaring an income of Rs.18,95,23,990/-and subsequently revised the same on 30/3/2007 declaring a total income of Rs.1,17,48,138/-. In the original return of incomethe assessee had shown business income of Rs.2,58,17,15,909/-and claimed deduction under section 10A of the Act to the tune of Rs.5,57,24,87,070/-considering 13 mother licenses as the undertakings eligible for such deductionwhereas in the revised return of income the assessee showed business income of Rs.2,58,77,95,991/- and claimed deduction under section 10A of the Act at Rs. 2,75,57,24,990/-and a loss from business or profession to the tune of Rs.16,79,29,000/-considering 31 undertakings registered with STPI under 13 mother licenses as independent undertakings eligible for deduction under section 10A of the Act. Draft assessment order was passed at a total income of Rs.2,16,07,60,309/-on 26/12/2008, without allowing the additional claim of deduction raised by the assessee in the revised return of income under section 10A of the Act on the ground that no scrutiny was done in initial assessment years regarding the claim of extensions as a separate units, such claim cannot be allowed in succeeding Assessment Year and extensions were not specifically and independently approved by the STPI authority.
3. Assessee filed objections before the Ld. Dispute Resolution Panel (DRP) and pursuant to the directions dated 30/9/2010 passed by the Ld. DRP, learned Assessing Officer passed the final assessment order on 28/12/2010 by disallowing the additional claim of deduction raised by the assessee in the revised return of income under section 10A of the Act.
4. Such final assessment order pursuant to the directions of the Ld. DRP was challenged by the assessee before the Tribunal and the Tribunal by order dated 30/5/2014 rejected the claim of deduction under section 10A of the Act preferred by way of revised return of income, treating each of the 31 units of separate independent undertakings and such findings of the Tribunal were upheld by the Hon’ble High Court.
5. Learned Assessing Officer initiated penalty proceedings under section 271(1)( c ) of the Act and by order dated 30/3/2015 and levied penalty of Rs. 13,31,04,779/- on the addition relating to the disallowance of deduction claimed under section 10A of the Act and also the disallowance of deduction of expenses incurred towards earning of income under the head “income from other sources” claimed in the revised return, holding that the assessee is guilty of furnishing of inaccurate particulars of income and also concealment of income.
6. Aggrieved by the levy of penalty, assessee preferred an appeal before the Ld. CIT(A) and argued that no satisfaction for the concealment/furnishing of inaccurate particulars of income in respect of additions/ disallowances made in the assessment order on which penalty was levied was recorded by the learned Assessing Officerin the assessment order; that no penalty could be levied in respect of disallowance of deduction claimed under section 10 A of the Act; and that the levy of penalty is bad inasmuch as the claim made in the revised return of income was not accepted and was not the basis for computing the income of the assessee in the assessment order.
7. Ld. CIT(A) recorded a finding that the assessee preferred the new claim after longtime changing its earlier stand and in view of the orders of the Tribunal such change of stand is not an inadvertent mistake or omission but it is a deliberate one, with the sole purpose of extending the period of exemption under section 10 A and the quantum of exemption, when even enquiry into the past was not possible. According to the Ld. CIT(A) this lapse of the assessee amounts to deemed concealment under explanation 1 to section 271(1)( c ) of the Act. Ld. CIT(A), therefore, did not accept the explanation of the assessee and refused to believe that the lapse of the assessee is a bona fide one and on that ground confirmed the levy of penalty. Ld. CIT(A) however noticed that, though in the penalty order the learned Assessing Officer mentioned that the additions which were confirmed by the ITAT alone were considered for the purpose of penalty under section 271(1)( c ) of the Act, as a matter of fact the learned Assessing Officer based the imposition of penalty on the disallowance that was deleted by the ITAT and therefore, instead of taking Rs. 18,32,37,920/-, learned Assessing Officer took the amount of Rs. 36,31,53,638/-as the concealed income. Ld. CIT(A) therefore directed that the total quantum of penalty levied must be with reference to the deemed concealed income but not with reference to the disallowance that was deleted by the ITAT. It, therefore, results in reducing the total quantum of penalty. Assessee is aggrieved by the confirmation of levy of penalty and preferred this appeal.
8. Argument of the Ld. AR is threefold. He firstly submits that the claim of deduction under section 10A supported by form 56F is a bona fide and therefore, according to him so long as the assessee has not concealed any material fact or the factual information given by him has not been found to be incorrect, he will not be liable for levy of penalty under section 271(1)(c) of the Act even if the claim made by the assessee is unsustainable in law. For this proposition he placed reliance on the decision of the Tribunal reported in ACIT vs. DSL Software Ltd., 147 TTJ 67 (Delhi-Trib), DCIT vs. Genesis International Corporation Limited 147 ITD 693 (mum Trib) and the decision of the Hon’ble Delhi High Court in the case of CIT vs. Zoom Communication (P) Ltd 327 ITR 510 (Del). His second limb of argument is that no penalty is leviable in respect of the disallowances which are debatable, and in that perspective when once the quantum appeal is admitted by the Hon’ble High Court or the SLP by the Hon’ble Supreme Court, the issue becomes available and therefore, no levy of penalty arises. Reliance is placed on the decision of the Hon’ble jurisdictional High Court in the case of Ld. PCIT vs. Harsh International (P) Ltd. 431 ITR 118 (Del), CIT vs. NayanBuilders and Developers 368 ITR 722 (Del) and CIT vs. Rahul Mehta in ITA No. 523/2011. Lastly he contends that where theaddition is made in respect of a bona fide claim, even if such claim is untenable according to the learned Assessing Officer, still no penalty could be levied under section 271(1)(c) of the Act. For this proposition he cited the decisions of the Hon’ble Apex Court in the cases of CIT vs. Reliance Petro Products Private Limited 322 ITR 158 (SC) and Dilip N. Shroff 291 ITR 519 (SC).
9. Per contra while placing reliance on the orders of the authorities below, learned DR submitted that it was pointed out by the Tribunal in the quantum appeal that the lapses committed by the assessee in this matter are not inadvertent mistakes, but a design with the sole purpose of extending the period of exemption u/s. 10 of the Act and the quantum of exemption. In such circumstance, where enquiry into the past was not possible, she submitted that the assessee did not produce any evidence, whatsoever, before the Tribunal also to establish that the applications before the STPI authorities were for setting up of new undertakings and in these circumstances, after a long lapse of time, the assessee is changing the stand to claim the exemption in respect of 31 undertakings or 13 undertakings, as the case may be, certainly amounts to furnishing of inaccurate particulars with a design to conceal the real facts. She based this argument on the fact that the applications submitted by the assessee before the STPI authorities, whether or not for setting up of new undertakings, goes unverifiable.
10. We have gone through the record in the light of submissions made on either side. Facts involved in this appeal, in their simplest form, are that in the original return, the deduction u/s. 10A of the Act was claimed in respect of 13 mother licenses, as the undertakings eligible for said deduction whereas the assessee revised the return claiming deduction u/s. 10A considering 31 undertakings registered with STPI authority under 13 mother licenses as independent undertakings eligible u/s. 10A of the Act. While doing so, admittedly, the assessee filed the prescribed form No. 56F duly signed by the Chartered Accountant in respect of all the 31 undertakings claiming them to be independent. Learned Assessing Officer, CIT(A), and the Tribunal rejected the claim of the assessee for deduction u/s. 10A in respect of 31 undertakings. It is also an admitted fact that by order dated 24.03.2015 in ITA No. 46/2015, Hon’ble High Court admitted the question that “if the Tribunal fell into error in the circumstances of the case in continuing the benefit of Section 10A to assessee for Assessment Year 2005-06 on the ground that enhanced claim by way of including 18 units as independently entitled to the benefit so made, was not tenable”, but ultimately rejected the claim of the assessee by order dated 15.04.2015 and refused the review petition. Now the matter is pending before the Hon’ble Supreme Court after the Hon’ble Supreme Court granted special leave.
11. Basing on these admitted facts, Ld. AR submits that the penalty is not leviable in this case. In ACIT vs. DSL Software Ltd.(2012) 20 taxmann.com 408 (Delhi), it was held that where claim for deduction was made under sections 10A of the Act on the basis of certificate of Accountant, was bona fide and where all the material facts relating thereto were furnished, the assessee could not be held liable for penalty. So also in DCIT vs. Genesys International Corporation Ltd. (2013) 32 taxmann.com 372 (Mumbai-Trib), it was held that where the assessee made adequate disclosure while claiming the exemption, penalty u/s. 271(1)(c) is not sustainable. In Zoom Communication (P) Ltd. (supra), Hon’ble High Court held that so long as the assessee has not concealed any material fact or the factual information given by him has not been found to be incorrect, he will not be liable to imposition of penalty under section 271(1)(c) of the Act, even if the claim made by him is unsustainable in law provided that he either substantiates the explanation offered by him or the explanation, even if not substantiated, is found to be bona fide. In this matter, the claim of the assessee is accompanied by the certificate of the Chartered Accountant in prescribed form 56F in respect of all the 31 independent undertakings. Whether or not such claim is sustainable at the end of the Revenue is a different matter and it does not affect the bona fide belief of the assessee to prefer such a claim. It is not a blatantly false claim accompanied by any concealment of facts.
12. Admittedly, in this case, Hon’ble High Court admitted the substantial question of law relating to the claim of assessee to avail the benefit of section 10A of the Act for the assessment year 2005-06 on the ground that enhancement in claim so made was tenable or not. This very fact shows that the issue involved in this matter is debatable issue. We find force in the argument of the ld. AR that the penalty is not leviable in case where the proposed penalty relates to the debatable issues or where two views are possible. This view is fortified by the decision of Hon’ble jurisdictional High Court in the cases of PCIT vs. Harsh International (P) Ltd. (supra), CIT vs. Nayan Builders & Developers (supra) and CIT vs. Rahul Mehta (supra).
13. Lastly, coming to the decisions reported in CIT vs. Reliance Petro Products Pvt. Ltd. (supra) and Dilip N. Shroff (supra), we deem it just and necessary to extract the relevant paragraphs for the sake of completeness. In Reliance Petro Products Pvt. Ltd. (supra), Hon’ble Supreme Court observed that –
“7. As against this, Learned Counsel appearing on behalf of the respondent pointed out that the language of Section 271(1)(c) had to be strictly construed, this being a taxing statute and more particularly the one providing for penalty. It was pointed out that unless the wording directly covered the assessee and the fact situation herein, there could not be any penalty under the Act. It was pointed out that there was no-concealment or any inaccurate particulars regarding the income were submitted in the Return. Section 271(1)(c) is asunder:-
“271(1) If the Assessing Officer or the Commissioner (Appeals)or the Commissioner in the course of any proceedings under this Act, is satisfied that any person-
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income.”
A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the 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 (inplural 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 orinaccurate. 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 oninterest 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 plainand 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 imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal[2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs. Rajasthan Spg. &Wvg. Mills [2009(13) SCC 448]and reiterated in para 13 that:-
“13. It goes without saying that for applicability of Section271(1)(c), conditions stated therein must exist.”
8. Therefore, it is obvious that it must be shown that theconditions under Section 271(1)(c) must exist before thepenalty is imposed. There can be no dispute that everythingwould depend upon the Return filed because that is the onlydocument, where the assessee can furnish the particulars ofhis income. When such particulars are found to beinaccurate, the liability would arise. In Dilip N. Shroff Vs.Joint Commissioner of Income Tax, Mumbai &Anr. [2007(6)SCC 329], this Court explained the terms “concealment ofincome” and “furnishing inaccurate particulars”. The Courtwent on to hold therein that in order to attract the penaltyunder Section 271(1)(c), mens rea was necessary, asaccording to the Court, the word “inaccurate” signified adeliberate act or omission on behalf of the assessee. It wenton to hold that Clause (iii) of Section 271(1) provided for adiscretionary jurisdiction upon the Assessing Authority,inasmuch as the amount of penalty could not be less thanthe amount of tax sought to be evaded by reason of suchconcealment of particulars of income, but it may not exceedthree times thereof. It was pointed out that the term”inaccurate particulars” was not defined anywhere in the Actand, therefore, it was held that furnishing of an assessmentof the value of the property may not by itself be furnishingin accurate particulars. It was further held that the assesseemust be found to have failed to prove that his explanation isnot only not bona fide but all the facts relating to the sameand material to the computation of his income were notdisclosed by him. It was then held that the explanation mustbe preceded by a finding as to how and in what manner, theassessee had furnished the particulars of his income. TheCourt ultimately went on to hold that the element of mens reawas essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff Vs. Joint Commissioner of IncomeTax, Mumbai &Anr. was upset. In Union of India Vs. Dharamendra Textile Processors (cited supra), after quotingfrom Section 271 extensively and also considering Section271(1)(c), the Court came to the conclusion that since Section271(1)(c) indicated the element of strict liability on theassessee for the concealment or for giving inaccurateparticulars 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 fo rproviding remedy for loss of revenue and such a penalty wasa civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was thecase in the matter of prosecution under Section 276-C of theAct. The basic reason why decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai &Anr. (cited supra)was overruled by this Court in Union of India Vs. Dharamendra Textile Processors (cited supra), was that according to this Court the effect and difference between Section 271(1)(c) and Section 276-C of the Act was lost sight of in case of Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai &Anr. (cited supra). However, it must bepointed out that in Union of India Vs. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai &Anr. (cited supra),where the Court explained the meaning of the terms “conceal”and inaccurate”. It was only the ultimate inference in Dilip N.Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr.(cited supra) to the effect that mens rea was an essential ingredient for the penalty under Section 271(1)(c) that the decision in Dilip N. Shroff Vs. Joint Commissioner of IncomeTax, Mumbai & Anr. (cited supra) was overruled.
8. We are not concerned in the present case with the mensrea. However, we have to only see as to whether in this case,as a matter of fact, the assessee has given in accurate particulars. In Webster’s Dictionary, the word “inaccurate”has been defined as:-
“not accurate, not exact or correct; not according to truth;erroneous; as an inaccurate statement, copy or transcript”.
We have already seen the meaning of the word “particulars”in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous.
We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)© of the Act. A mere making ofthe claim, which is not sustainable in law, by itself, will not mount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return an not amount to the inaccurate particulars.
10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the 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 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 Legislature.”
14. In Dilip N. Shroff (supra), relevant observations of Hon’ble Apex Court are to the following effect: –
“31. Section 271(1)(c) of the Act is in two parts. Whereas the first part refers to concealment of income, the second part refers to furnishing of inaccurate particulars thereof. In the instant case, the penalty has been levied upon the Appellant under the second part of Section 271(1)(c) of the Act. One of the questions which arises for consideration is as to whether Explanation 1 is applicable in respect of both the parts or in respect of the first part only.
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37. The legal history of Section 271(1)(c) of the Act traced from the 1922 Act prima facie shows that explanations were applicable to both the parts. However, each case must be considered on its own facts. The role of explanation having regard to the principle of statutory interpretation must be borne in mind before interpreting the aforementioned provisions. Clause (c) of sub-section (1) of Section 271 categorically states that the penalty would be leviable if the assessee conceals the particulars of his income or furnishes inaccurate particulars thereof. By reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Imposition of penalty is not automatic. Levy of penalty not only is discretionary in nature but such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. Some of those factors apart from being inherent in the nature of penalty proceedings as has been noticed in some of the decisions of this Court, inheres on the face of the statutory provisions. Penalty proceedings are not to be initiated, as has been noticed by the Wanchoo Committee, only to harass the assessee. The approach of the assessing officer in this behalf must be fair and objective.
38. Clause (iii) of sub-section (1) of Section 271 again provides for a discretionary jurisdiction upon the assessing authority inasmuch as the amount of penalty may not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of his income, but it may not exceed three times thereof. The factors which are material for the purpose of computation of total income as is sought to be emphasized in Explanation-1, refer to computation of income on the part of the assessee which is directly relatable to : (a) failure to offer an explanation and/ or offering an explanation which is false; and (b) which he is not able to substantiate and fails to prove that such explanation is bona fide.
39. Only in the event the factors enumerated in clauses (A) and (B) of Explanation-1 are satisfied and a finding in this behalf is arrived at by the Assessing Officer, the legal fiction created thereunder would be attracted.
40. For the purpose of invoking Clause (iii) of sub-section (1) of Section 271, the expression amount of tax sought to be evaded is set out in Explanation 4. This sub-clause would be attracted when a finding is arrived at that some amount of tax was sought to be evaded by the assessee as envisaged by Clause (a) thereof. Explanation appended to Section 271 (1)(c) is an exception to the general rule. It raises a legal fiction by reason whereof a presumption is raised against an assessee as a result whereof the burden of proof shifts from the department to the assessee. Legal fiction, however, as is well-known must be given its full effect when the conditions precedent therefor are satisfied and not otherwise. [Ashok Leyland Ltd. v. State of T.N. and Another, (2004) 3 SCC 1]
44. It signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars.
45. The term ‘inaccurate particulars’ is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the explanations are taken recourse to, a finding has to be arrived at having regard to clause (a) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income.
46. The explanation, having regard to the decisions of this Court, must be preceded by a finding as to how and in what manner he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the Income Tax Officer must arrive at a satisfaction in this behalf. [See Commissioner of Income Tax v. Ram Commercial Enterprises Ltd., 246 ITR 568 and Diwan Enterprises v. Commissioner of Income Tax, 246 ITR 571]
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48. Primary burden of proof, therefore, is on the revenue. The statute requires satisfaction on the part of the assessing officer. He is required to arrive at a satisfaction so as to show that there is primary evidence to establish that the assessee had concealed the amount or furnished inaccurate particulars and this onus is to be discharged by the department. [See D.M. Manasvi v. Commissioner of Income Tax, Gujarat,-II [(1973) 3 SCC 207]
49. While considering as to whether the assessee has been able to discharge his burden, the assessing officer should not begin with the presumption that he is guilty.
50. Once the primary burden of proof is discharged, the secondary burden of proof would shift on the assessee because the proceeding under Section 271(1)(c) is of penal nature in the sense that its consequences are intended to be an effective deterrent which will put a stop to practices which the Parliament considers to be against the public interest and, therefore, it was for the department to establish that the assessee shall be guilty of the particulars of income. [See Anwar Ali (supra) and M/s KhodayEswarsa (supra)].
51. The order imposing penalty is quasi-criminal in nature and, thus, burden lies on the department to establish that the assessee had concealed his income. Since burden of proof in penalty proceedings varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted, though a finding in the assessment proceeding constitute good evidence in the penalty proceeding. In the penalty proceedings, thus, the authorities must consider the matter afresh as the question has to be considered from a different angle. [See Anantharam Veera singhaiah & Co. v. C.I.T., Andhra Pradesh, 1980 Supp SCC 13].
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53. Before, thus, a penalty can be imposed, the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had furnished inaccurate particulars thereof.
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55. It is now a well-settled principle of law that more stringent the law, more strict construction thereof would be necessary. Even when the burden is required to be discharged by an assessee, it would not be as heavy as the prosecution. [See P.N. Krishna Lal and Others v. Govt. of Kerala and Another, 1995 Supp (2) SCC 187]
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61. It may be true that the legislature has attempted to shift the burden from revenue to the assessee. It may further be correct that different views have been expressed as regard construction of statutes in the light of the changing legislative scenario, but the tenor of a penal proceeding remains the same.
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65. The omission of the word deliberate, thus, may or may not be of much significance but what is material is its application.
66. Section 271(1)(c) remains a penal statute. Rule of strict construction shall apply thereto. Ingredients of imposing penalty remains the same. The purpose of the legislature that it is meant to be deterrent to tax evasion is evidenced by the increase in the quantum of penalty, from 20% under the 1922 Act to 300% in 1985.
67. ‘Concealment of income’ and ‘furnishing of inaccurate particulars’ are different. Both concealment and furnishing inaccurate particulars refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressioveri or suggestiofalsi. Although it may not be very accurate or apt but suppressioveri would amount to concealment, suggestiofalsi would amount to furnishing of inaccurate particulars.
68. The authorities did not arrive at a finding that the consideration amount fixed for the sale of property was wholly inadequate. The authorities also do not show that what are the inaccurate particulars furnished by the Appellant. They also do not state that what should have been the accepted principles of valuation. We, therefore, do not accept the submissions of the learned Additional Solicitor General that concealment or furnishing of inaccurate particulars would overlap each other, the same would not mean that they do not represent different concepts. Had they not been so, the Parliament would not have used the different terminologies.
69. We have noticed hereinbefore that even the Wanchoo Committee laid emphasis on the fact that explanation appended to Sub-section (1) of Section 271 should be inserted to clarify that where a tax payer’s explanation in respect of any receipt, deposit, outgoing or investment is found to be false, the amount represented by such receipt, etc. shall be deemed to be income in respect of which particulars have been concealed or inaccurate particulars have been furnished. What was, therefore, necessary to be found out in respect whereof the assessing officer was required to arrive at a satisfaction was ‘falsity’ in furnishing of explanation by the assessee. Explanation 1, therefore, categorically states that such explanation must either be false or not otherwise substantiated. Even in explanation 4, the expression evaded finds place.
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81. There can be a genuine difference of opinion between two experts…”
15. Viewing from any angle, levy of penalty in this case is unsustainable because mere preferring a claim which is unacceptable to the Revenue does not ipso facto lead to levy of penalty. Here in this case, Form No. 56F duly signed by the Chartered Accountant justifies the plea of bona fide belief on the part of the assessee. It is not the allegation against the assessee that any material fact relating to the income had to be unearthed with any efforts of the Revenue. It is only on the basis of the material furnished by the assessee, claim of the assessee for benefit u/s. 10A of the Act in respect of 31 units as independent, was rejected. Every disallowance does not lead to penalty, and more particularly such disallowances in relation to the issues whichare debatable, in respect of which, the substantial questions of law are admitted by the Hon’ble High Court, are immune from penalty proceedings. With this view of the matter, we do not find any justification to sustain the penalty and consequently, we direct the Assessing Officer to delete the same.
16. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on this the 16th day of August, 2021.
