Case Law Details

Case Name : ITO Vs Kripashankar Chaturvedi (ITAT Mumbai)
Appeal Number : ITA No. 6918/MUM/2005
Date of Judgement/Order : 24/02/2009
Related Assessment Year : 1997- 1998
Courts : All ITAT (5383) ITAT Mumbai (1672)


7. We have heard both the parties and perused the relevant orders of the revenue authorities, the orders of the Tribunal as in quantum appeals, write-ups and the details relating to the investigations undertaken by the AO during the set aside proceedings referred to in the said orders. Factually, the assessee is a Cable Work Contractor and executed various contracts in the names of various concerns and received labor contract receipts. At the end set aside assessment proceedings, the gross receipts were determined at Rs 1,79,19,860/ – and the profit was determined at Rs 26,87,979/-at @ 15% of the receipts, which is finally worked out to Rs 10,75,191/-, ie 6% on the revised gross receipts as per the order of the JTAT. Further, the assessee filed return of income declaring the total income of only Rs 1,82,010/- against the final assessed income of Rs 10,75,191/- at the end of the appeal proceedings before the TTAT. It is also an admitted position that the assessee admitted to an additional contract receipts of Rs 35,52,620/- and the same was done after the issue of show cause notice.

10. In connection with the facts in the preceding paragraph, we have perused the provisions of section 271(l)(c) and found that in such matters of penalty under the said section, the wilfulness of the assessee is not essential in concealing the income or in furnishing of inaccurate particulars. Relevant provisions of the section and the Explanation 1 are important and they read as under.

“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,


he may direct that such person shall pay oy way of penalty, —

Explanation! . – 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 bv the Assessing Officer or the Commissioner (Appeals) or commissioner to be false, or

(B) such person offers p” °vnfanption which he is not able to substantiate and fails to prove that the 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.

12. On comparison of facts where the assessee suppressed the receipts and admitted them to the AO during the assessment proceedings ie during the post enquiries period, the assessee’s case is found covered by the cases of group (B) above and the onus is on the assessee substantiate the explanation or prove the bona fide and also the responsibility of full disclosure of all the facts relating to the explanation and materials as stated above. Per contra, the AO is not under obligation or prove the willful attempt of the assessee in matter of concealment or the explanation of the assessee in this regard is not bona fide. Thus, it is the assessee’s to prove the wilful attempt of the assessee in matter of concealment or the explanation of the assessee in this regard is not bona fide. Thus, it is the assessee’s responsibility to meet the above requirements. Wilful concealment is not an essential ingredient for attracting civil liability such a penalty u/s 271(l)(c). The above view is fortified by the apex court judgment in the case of Union of India vs Dharamendra Textiles Processors 306 ITR 277 (SO or 174 Taxmann 571(SC). This judgment has disapproved the judgment in the case of Dilip N Shroff (161 Taxmann 218) (SC) too. The gists of the said judgment in the case of Dharamendra Textiles Processors (supra) and relevant paragraphs are as under.

“Absence of specific reference to mens rea in provisions of penalties is not a case of casus omisus. In fact, the provisions with expression Viable to pay penalty’, by no stretch of imagination, be said that the adjudicating authority has even a discretion to levy less than what is legally ad statutorily leviable (para 12).

It is a well-settled principles, in law, that the Court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is a determinative factor of the legislative intent (para 13).

It is significance to note that the conceptual and contextual difference between section 271(1)© and section 276C was lost sight of in Dilip N Shroffs case (para 24)

The explanations appended to section 271(l)(c) entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars of income while filing return. The judgment in Dilip N Shroffs case (supra) had not considered the effect ad relevance of section 276C Object behind enactment of section 271(l)(c), read with the Explanations thereto, indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability, as is the case in the matter of prosecution under section 276C (para 25).”

13. The assessee’s explanation in this regard is neither substantiated nor proved bona fide. His explanation refers to blame games involving the CA and his lack legal knowledge and also estimations. In the situations, where the assessee suppressed the receipts at the back of the revenue and the AO dug them out by their arduous investigations and when the assessee failed to disprove the adverse conclusions, the AO does not have to disprove the explanation or establish the mala fide intentions of the assessee. Consequently, the income relatable to the suppressed receipts, which was added in computing the total income of the assessee is a deemed to represent the income in respect of which the particulars have been concealed within the meaning of the Explanation 1 to section 271(1)(c).

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