ITO 3(1)(3), MUMBAI V. CYRUS ENGINEERS P.LTD, MUMBAI

ITA 4552/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3484 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 1997-1998
• Appeal Filed On: 02-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN
• Assessee Lawyers: BIHANLAL
• Keywords: Bonafide belief; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSA IN, JM ./ I.T.A. NO. 4552/MUM/2014 ( / ASSESSMENT YEAR: 1997-98) I.T.O.-3(1)(3), AAYAKAR BHAVAN, ROOM NO.666, M.K. ROAD, MUMBAI-400 020. / VS. M/S CYRUS ENGINEERS PVT. LTD. SHAPOORJI PALLONJI CENTRE, 41/44, MINOO DESAI MARG, COLABA, MUMBAI-400 005. ./ ./PAN/GIR NO. AAACC 4608B ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI MOHAMMED RIZWAN / RESPONDENT BY : SHRI BIHANLAL / DATE OF HEARING : 04/02/2016 !'# / DATE OF PRONOUNCEMENT : 26/08/2016 $% / O R D E R PER SANDEEP GOSAIN, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 6, DATED 22. 04.2014 ON THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW. 2 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(1) (C) OF THE IT ACT BY HOLDING THAT THE SUBMISSIONS OF THE ASSESSEE WERE BONAFIDE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE I TS CLAIM DURING ASSESSMENT PROCEEDINGS, THEREFORE, MAKING SUCH CLAIM AMOUNTS T O FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH FALLS WITHIN THE AMBIT OF EXPLANATION 1(B) TO SECTION 271(1)(C) OF THE IT ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ORDER U/S 1 43(3) OF THE ACT WAS PASSED ON 29.02.2000 FOR A.Y. 1997-98. DURING THE ASSESSMENT PROCEEDING, IT WAS NOTICED THAT THE ASSESSEE COMPANY HAD SOLD AGRICULTURAL LAN D SITUATED IN VILLAGE BIJWASAN, DELHI. THE LTCG OF RS.88,19,474/- ARISEN ON SALE OF LAND AND THE SAME WAS CLAIMED AS EXEMPT. HOWEVER IN THE ASSESSMENT ORDER THE LTCG THUS ARISE ON SALE OF AGRICULTURAL LAND WAS TO BE TAXABLE IN VIEW OF S ECTION 2(14)(III) OF THE ACT. THE QUANTUM APPEAL WAS ALSO DISMISSED BY CIT(A) VIDE OR DER DATED 08.12.2011 THEREOF PENALTY PROCEEDING WERE INITIATED AND AFTER CONSIDE RING THE CASE OF BOTH THE PARTIES, AO PASSED ORDERS THEREBY LEVYING PENALTY OF RS.88,1 9,474/- U/S 271(1)(C) OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED THE APPEAL BEFORE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE CASE OF THE AS SESSEE ALLOWED THE APPEAL OF THE ASSESSEE THEREBY DIRECTING THE AO TO DELETE THE PEN ALTY. 3 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE F ILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. GROUND NO.1:- 5. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES ON THIS GROUND AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS O F THE CASE IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY CIT(A) WHILE DEALING WITH THIS ISSUE AND THE OPERATIVE PARA IS REPRODUCED BELOW: 9. FROM THE ABOVE, IT IS EVIDENT THAT THE CASE OF THE APPELLANT WOULD FALL IN CLAUSE (A) ONLY IF THE APPELLANT HAD FAILED TO OFFER AN EX PLANATION OR HAD OFFERED AN EXPLANATION WHICH HAS BEEN FOUND TO BE FALSE BY THE AO. EVIDENTLY, SINCE THE APPELLANT DID OFFER AN EXPLANATION AND ALSO THE SAI D EXPLANATION WAS NOT FOUND TO BE FALSE BY THE AO, CLAUSE (A) OF THE ABOVE EXPLANA TION IS NOT APPLICABLE. AS DISCUSSED ABOVE, FROM THE SIDE OF THE APPELLANT, TH E SAID EXPLANATION WAS BONA FIDE, BECAUSE THE CONCERNED LAND WAS SHOWN AS AGRIC ULTURAL LAND IN THE RETURNS IN THE CURRENT YEAR AND IN EARLIER-YEARS. 10. ALTERNATELY, THE CASE OF THE APPELLANT WOULD FA LL IN CLAUSE (8), IF THE APPELLANT HAD OFFERED AN EXPLANATION, WHICH IT WAS NOT ABLE T O SUBSTANTIATE AND HAD FAILED TO PROVE THAT SUCH EXPLANATION WAS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL I NCOME HAD BEEN DISCLOSED BY THE APPELLANT. THIS CLAUSE ALSO DOES NOT APPLY TO T HE APPELLANT BECAUSE THE APPELLANT HAD OFFERED AN EXPLANATION AND HAD ALSO S UBSTANTIATED THE SAME IN TERMS OF ITS RETURN OF INCOME AND THE BOOKS OF ACCO UNT OF THE APPELLANT TILL THE DATE OF SALE. THUS IT IS EVIDENT THAT THE EXPLANATI ON GIVEN BY THE APPELLANT WAS BONA FIDE. ALTHOUGH THE CAPITAL GAIN WAS CLAIMED EX EMPT UNDER A BONA FIDE BELIEF, THE SAME WAS HOWEVER NOT ALLOWED IN VIEW OF THE PRO VISIONS OF SECTION 2(14)(III)(A) & (B) OF THE ACT. IN EARLIER ASSESSME NT YEARS, THE RETURN OF INCOME OF THE APPELLANT HAS BEEN ACCEPTED WITHOUT ANY DOUBT E XPRESSED REGARDING THE 'APPELLANT HAVING HELD THE AGRICULTURE LAND. IT IS PERTINENT TO NOTE THAT EXPLANATION-1 TO SECTION 271 (1 )(C) IS RESTRICTED TO A CASE WHERE THE ASSESSEE IS UNABLE TO OFFER AN EXPLANATION OR IS UNABLE TO SUBS TANTIATE THE EXPLANATION OFFERED BY HIM IN RESPECT OF FACTUAL DETAILS OF HIS INCOME. THEREFORE, THE EXPLANATION-1 DOES NOT APPLY TO A CASE WHERE ADDITION/DISALLOWANC E HAS BEEN MADE BY MERE REJECTION OF A LEGAL CLAIM MADE BY THE ASSESSEE. 4 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. 11. THUS, ON PROPER INTERPRETATION OF THE ABOVE SEC TION, IT WOULD BE EVIDENT THAT ALL THE PARTICULARS AND FACTS RELEVANT FOR THE PURP OSE OF COMPUTATION OF TOTAL INCOME OF THE APPELLANT WERE ON RECORD AND HENCE IT CANNOT BE SAID THAT SUCH PARTICULARS OF INCOME HAVE BEEN CONCEALED BY THE AP PELLANT. FURTHERMORE, THE APPELLANT HAD NOT DECLARED ANY WRONG FIGURES IN ITS ACCOUNTS WHICH COULD HAVE MEANT THAT THE APPELLANT HAD DECLARED INACCURATE PA RTICULARS OF ITS INCOME. 12. IN THIS REGARD, THE APPELLANT HAS RELIED UPON T HE JUDGMENT OF DELHI HIGH IN THE CASE OF HINDUSTAN RESOURCES LTD. 335 ITR 77 (DELHI) WHERE THE HON'BLE COURT HELD THAT THE INTENTION TO USE A PARTICULAR PIECE O F LAND FOR NON AGRICULTURAL PURPOSE CANNOT BY ITSELF ALTER THE CHARACTER OF LAN D. THIS DECISION IS NOT AT ALL RELEVANT TO THE FACTS OF THE CASE OF THE APPELLANT, AS IN THAT CASE, THE CHARACTER OF THE LAND ON THE DATE, THE SAME WAS PURCHASED BY THE ASSESSEE WAS AGRICULTURE LAND AND IT REMAINED SO WHEN IT WAS ACQUIRED BY THE DISTRICT COLLECTOR (LAND ACQUISITION), GREATER NOIDA, BULANDSHAR. 13. HOWEVER, IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD (SUPRA) CITED BY THE APPELLANT HON'BLE SUPREME COURT HAS HELD AS UNDER: '7. AS AGAINST THIS, LEARNED COUNSEL. APPEARING ON BEHALF OF THE RESPONDENT POINTED OUT THAT THE LANGUAGE OF S. 271(1)(C) HAD T O BE STRICTLY CONSTRUED, THIS BEING A TAXING STATUTE AND MORE PARTICULARLY THE ON E PROVIDING FOR PENALTY. IT WAS POINTED OUT THAT UNLESS THE WORDING DIRECTLY COVERE D THE ASSESSEE AND THE FACT SITUATION HEREIN, THERE COULD NOT BE ANY PENALTY UN DER THE ACT. IT WAS POINTED OUT THAT THERE WAS NO CONCEALMENT OR ANY INACCURATE PAR TICULARS REGARDING THE INCOME WERE SUBMITTED IN THE RETURN. SEC. 271 (1)(C ) IS AS UNDER: '271(1) IF THE AO OR THE CIT(A) OR THE CIT IN THE C OURSE 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 OR DER 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 (IN PLURAL SENS E); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD ' PARTICULARS' USED IN THE S. 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 INFOR MATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS I F ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT . HENCE, AT LEAST, PRIMA FACIE, 5 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. THE ASSESSEE CANNOT BE HELD GUILTY OF, FURNISHING I NACCURATE PARTICULARS. THE LEARNED COUNSEL ARGUED THAT 'SUBMITTING AN INCORREC T CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INAC CURATE PARTICULARS OF SUCH INCOME'. WE DO NOT THINK THAT SUCH CAN BE THE INTER PRETATION 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 IMAGINATION, M AKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PART ICULARS. IN CIT VS. ATUL MOHAN BINDAL (2009) 225 CTR (SC) 248 : (2009) 28 DT R (SC) 1 : (2009) 9 SCC 589, WHERE THIS COURT WAS CONSIDERING THE SAME PROV ISION, THE COURT OBSERVED THAT THE AO HAS TO BE SATISFIED THAT A PERSON HAS C ONCEALED 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 (2007) 212 CTR (SC) 432: (2008) 13 SCC 3 69, AS ALSO, THE DECISION IN UNION OF INDIA US. RAJASTHAN SPINNING & WEAVING MIL LS (2009) 224 CTR (SC) 1 : (2009) 23 DTR (SC) 158 : (2009) 13 SCC 448 AND REIT ERATED IN PARA 13 THAT: 13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY O F S. 271 (1)(C), CONDITIONS STATED THEREIN MUST EXIST. ' 8. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN T HAT THE CONDITIONS UNDER S. 271(1)(C) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAU SE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF H IS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. IN DILIP N. SHROFF US. JT. CIT & ANR. (2007) 210 CTR (SC) 228: (2007) 6 SCC 329, THIS COURT EXPLAINED THE TERMS 'CONCEALMENT OF INCOME' AND 'FU RNISHING INACCURATE PARTICULARS'. THE COURT WENT ON TO HOLD THEREIN THA T IN ORDER TO ATTRACT THE PENALTY UNDER S. 271 (1)(C), MENS REA WAS NECESSARY, AS ACC ORDING TO THE COURT, THE WORD 'INACCURATE' SIGNIFIED A DELIBERATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE. IT WENT ON TO HOLD THAT CL. (III) OF S. 271 (1) PROVID ED FOR A DISCRETIONARY JURISDICTION UPON THE ASSESSING AUTHORITY, IN AS MUCH AS THE AMO UNT OF PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICULARS OF INCOME, BUT IT MAY NOT EXCEED THREE TIMES THEREOF IT WAS POINTED OUT THAT THE TERM 'INACCURATE PARTICULARS' WAS NOT DEFI NED ANYWPERE IN THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN ASSESS MENT OF THE VALUE OF THE PROPERTY MAY NOT BY ITSELF BE FURNISHING INACCURATE PARTICUL ARS. IT WAS FURTHER HELD THAT THE ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION. OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN H ELD THAT THE EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANN 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 US. JT. CIT & ANR. (SUPRA:)' WAS UPSET. IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUP RA), AFTER QUOTING FROM S. 271 EXTENSIVELY AND ALSO CONSIDERING S. 271(1}(C}, THE COURT CAME TO THE CONCLUSION 6 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. THAT SINCE S. 271(1}(C} INDICATED THE ELEMENT OF ST RICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURATE PARTICULAR S WHILE FILING RETURN, THERE WAS NO NECESSITY OF MENS REA. THE COURT WENT ON TO HOLD THAT THE OBJECTIVE BEHIND ENACTMENT OF S. 271(1}(C} R/W EXPLANATIONS INDICATE D WITH THE SAID SECTION WAS FOR PROVIDING REMEDY FOR LOSS OF REVENUE AND SUCH A PEN ALTY WAS A CIVIL LIABILITY AND, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS THE CASE IN THE MATTER OF PROSECUT ION UNDER S. 276C OF THE ACT. THE BASIC REASON WHY DECISION IN DILIP N. SHROFF US. JT . CIT & ANR. (CITED SUPRA) WAS OVERRULED BY THIS COURT IN UNION OF INDIA VS. DHARA MENDRA TEXTILE PROCESSORS (CITED SUPRA), WAS THAT ACCORDING TO THIS COURT THE EFFECT AND DIFFERENCE BETWEEN S. 271(1}(C) AND S. 276C OF THE ACT WAS LOST SIGHT OF IN CASE OF DILIP N. SHROFF US. JT. CIT & ANR. (CITED SUPRA). HOWEVER, IT MUST BE POINT ED OUT THAT IN - UNION OF INDIA US. DHARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), N O FAULT WAS' FOUND WITH THE REASONING IN THE DECISION/IN DILIP N. SHROFF VS. JT . CIT & ANR. (CITED SUPRA), WHERE THE COURT EXPLAINED THE MEANING OF THE TERMS 'CONCEAL' AND 'INACCURATE'. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHRO FF VS. JT. CIT & ANR. (CITED SUPRA) TO THE EFFECT THAT MENS REA WAS AN ESSENTIAL INGREDIENT FOR THE PENALTY UNDER S. 271 (1 }(C) THAT THE DECISION IN DILIP N. SHROFF VS. JT. CIT & ANR. (CITED SUPRA) WAS OVERRULED. 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH TH E MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONARY, TH E WORD 'INACCURATE' HAS BEEN DEFINED AS: 'NOT ACCURATE, NOT EXACT OR CORRECT; NO T ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. ' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, TH EY 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 T HAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE I N 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 S. 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSE LF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICUL ARS. ' 14. THUS, THE HON'BLE SUPREME COURT HAS HELD THAT P ENALTY CANNOT BE LEVIED MERELY BECAUSE THE ASSESSING OFFICER AND THE ASSESS EE HOLD A DIVERGENT VIEW ON ALLOWABILITY OF A CLAIM FOR DEDUCTION. FURTHER, IN THE CASE OF DILIP N. SHROFF, 291 ITR 519 (SC) [THIS CASE HAS BEEN, THOUGH APPROVED B Y THE HON'BLE SUPREME COURT IN PRINCIPLE, IT HAS BEEN OVER- RULED ONLY ON THE P OINT OF MENS-REA IN DHARAMENDRA TEXTILE PROCESSORS, 306 ITR 277 (SC)], HON'BLE SUPREME COURT HELD AS UNDER: 7 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. '31. SEC. 271(1)(C) OF THE ACT IS IN TWO PARTS. WHE REAS THE FIRST PART REFERS TO CONCEALMENT OF INCOME, THE SECOND PART REFERS TO FU RNISHING OF INACCURATE PARTICULARS THEREOF IN THE INSTANT CASE, THE PENALT Y HAS BEEN LEVIED UPON THE APPELLANT UNDER THE SECOND PART OF S. 271 (1)(C) OF THE ACT. ONE OF THE QUESTIONS WHICH ARISES FOR CONSIDERATION IS AS TO WHETHER EXP LN. 1 IS APPLICABLE IN RESPECT OF BOTH THE PARTS OR IN RESPECT OF THE FIRST PART ONLY . 32. LET US ALSO ASSUME THAT LATER PART OF CL. (C) O F S. 271(1) DID NOT INVITE ANY INVESTIGATION INTO WHETHER IT WAS DONE DELIBERATELY OR WILFULLY OR NOT; BUT LET US LEAVE FINAL CONSIDERATION OF THIS NICETY OF APPLICA TION THEREOF IN A MORE APPROPRIATE CASE AND APPLY THE ELEMENT OF DELIBERAT ION IN THE FACT OF THE 33. HOWEVER, ACCORDING TO THE ASSESSEE THE OMISSION TO ANNEX THE SHEET AS MENTIONED AGAINST COLUMN NO. 38 AS ALSO TO ENCLOSE A COPY OF THE 'ACCOMMODATION TIMES' WAS A CLERICAL ERROR AND NO S IGNIFICANCE COULD HAVE BEEN ATTACHED THERETO INASMUCH NO SALE INSTANCE WAS RELIED UPON BY THE VALUER AND, THUS, BY REASON THEREOF NO INACCURATE PARTICUL ARS THEREOF CAN BE SAID TO HAVE BEEN FURNISHED. IT IS NOT A CASE WHERE THE APPELLAN T IS ALLEGED TO HAVE CONCEALED THE INCOME AS THE AUTHORITIES PROCEEDED ON THE BASI S THAT THE PENALTY WAS TO BE LEVIED UPON THE APPELLANT ONLY ON THE GROUND OF FUR NISHING INACCURATE PARTICULARS. 43. THE EXPRESSION CONCEAL' IS OF GREAT IMPORTANCE. ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS CON +CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF; TO WITHHOLD/ KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT IS, THUS, A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES. ' IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFI NED AS: 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. ' 44. IT SIGNIFIES A DELIBERATE ACT OR OMISSION ON TH E PART OF THE ASSESSEE. SUCH DELIBERATE ACT MUST BE EITHER FOR THE PURPOSE OF CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. 45. THE TERM 'INACCURATE PARTICULARS' IS NOT DEFINE D. FURNISHING OF AN VALUE OF THE PROPERTY MAY NOT BY ITSELF BE FURNISHING OF INACCUR ATE PARTICULARS. EVEN IF THE EXPLANATIONS ARE N{{]J/K:ELFL! 7!ERTR!JJLLITRS2 TO, A FINDING HAS TO BE ARRIVED AT HAVING REGARD TO CL. (A) OF EXPLN. 1 THAT THE AO 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 AN D MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. THUS, APART FROM HIS EXPLANAT ION BEING NOT BONA FIDE, IT 8 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. SHOULD HAVE BEEN FOUND AS OF FACT THAT HE HAS NOT D ISCLOSED 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 TH AT FOR THE SAID PURPOSE THE ITG MUST ARRIVE AT A SATISFACTION IN THIS BEHALF. SEE C IT VS. RAM COMMERCIAL ENTERPRISES LTD. (2001) 167 CTR (DEL) 321 : (2000) 246 ITR 568 (DEL) AND DIWAN ENTERPRISES VS. CIT (2001) 167 CTR (DEL) 324 : (2000) 246 ITR 571 (DEL). 47. IT IS FURTHERMORE OF SOME SIGNIFICANCE THAT THE CIT(A} IN HIS ORDER DATED 30TH NOV., 2000 MADE A TERSE COMMENT THAT THE ASSESSEE C ANNOT SHIFT THE BURDEN OF CONCEALMENT TO ANY OTHER PERSON, MEANING THEREBY, T HE REGISTERED VALUER. HE, FURTHERMORE, MADE A COMMENT THAT THE REGISTERED VAL UER HAD ADOPTED A STRANGE WAY OF VALUING ALTHOUGH NO REASON, FAR LESS THAN SU FFICIENT OR COGENT REASON, HAS BEEN ASSIGNED IN SUPPORT THEREOF THE SAID COMMENTS WERE UNWARRANTED. 48. PRIMARY BURDEN OF PROOF, THEREFORE, IS ON THE R EVENUE. THE STATUTE REQUIRES SATISFACTION ON THE PART OF THE AG. 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 PARTIC ULARS AND THIS ONUS IS TO BE DISCHARGED BY THE DEPARTMENT. SEE D.M. MANASVI VS. CIT 1972 CTR (SC) 437: (1973) 3 SCC 207. 49. WHILE CONSIDERING AS TO WHETHER THE ASSESSEE HA S BEEN ABLE TO DISCHARGE HIS BURDEN, THE AO SHOULD NOT BEGIN WITH THE PRESUMPTIO N 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 PROCE EDING UNDER S. 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 PARTICULAR S OF INCOME. SEE ANWAR ALI (SUPRA) AND KHODAY ESWARSA (SUPRA). 51. THE ORDER IMPOSING PENALTY IS QUASI-CRIMINAL IN NATURE AND, THUS, BURDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HA D CONCEALED HIS INCOME. SINCE BURDEN OF PROOF IN PENALTY PROCEEDINGS VARIES FROM THAT IN THE ASSESSMENT PROCEEDING, A FINDING IN AN ASSESSMENT PROCEEDING T HAT A PARTICULAR RECEIPT IS INCOME CANNOT AUTOMATICALLY BE ADOPTED, THOUGH A FI NDING IN THE ASSESSMENT PROCEEDING CONSTITUTES GOOD EVIDENCE IN THE PENALTY PROCEEDING. IN THE PENALTY PROCEEDINGS, THUS, THE AUTHORITIES MUST CONSIDER TH E MATTER AFRESH AS THE QUESTION HAS TO' BE CONSIDERED FROM A DIFFERENT ANGLE. [SEE ANANTHARAM VEERASINGHAIAH & CO. VS. CIT (1980) 16 CTR (SC) 189 : (1980) SUPP SCC 13}. 9 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. 52. THE APPELLANT HEREIN IN THE PENALTY PROCEEDINGS HAD PRODUCED RELEVANT PARTICULARS TO SHOW THAT THEY WERE MATERIALS IN SUP PORT OF THE REPORT, ALTHOUGH A PART OF WHICH WAS NOT ANNEXED WITH THE REPORT. 53. BEFORE, THUS, A PENALTY CAN BE IMPOSED, THE ENT IRETY OF THE CIRCUMSTANCES MUST REASONABLY POINT TO THE CONCLUSION THAT THE DISPUTE D AMOUNT REPRESENTED INCOME AND THAT THE ASSESSEE HAD CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS THEREOF 85. WE HAVE, HOWEVER, NOTICED HEREINBEFORE THAT THE ITO HAD MERELY HELD THAT THE ASSESSEE IS GUILTY OF FURNISHING OF INACCURATE PART ICULARS AND NOT OF CONCEALMENT OF INCOME; WHICH FINDING WAS ARRIVED AT ALSO BY THE CIT(A) AND THE TRIBUNAL. 86. IN K. C. BUILDERS & ANR. VS. ASSTT. ERR (2004) 186 CTR (SC) 721 : (2004) 2 SCC 731, THIS COURT FORMULATED THE FOLLOWING QUESTI ONS FOR CONSIDERATION: '8. ON THE ABOVE PLEADINGS AND FACTS AND CIRCUMSTAN CES OF THE CASE, THE FOLLOWING QUESTIONS OF LAW ARISE FOR CONSIDERATION BY THIS CO URT: (A) WHETHER A PENALTY IMPOSED UNDER S. 271 (1)(C) O F THE IT ACT AND PROSECUTION UNDER S. 276C OF THE TI' ACT ARE SIMULTANEOUS? (B) WHETHER THE CRIMINAL PROSECUTION GETS QUASHED A UTOMATICALLY WHEN THE TRIBUNAL WHICH IS THE FINAL COURT ON THE FACTS COME S TO THE CONCLUSION THAT THERE IS NO CONCEALMENT OF INCOME, SINCE NO OFFENCE SURVIVES UNDER THE IT ACT THEREAFTER? (C) WHETHER THE HIGH COURT WAS JUSTIFIED IN DISMISS ING THE CRIMINAL REVISION PETITION VIDE ITS IMPUGNED ORDER IGNORING THE SETTL ED LAW AS LAID DOWN BY THIS COURT THAT THE FINDING OF THE TRIBUNAL WAS CONCLUSI VE AND THE PROSECUTION CANNOT BE SUSTAINED SINCE THE PENALTY AFTER HAVING BEEN CA NCELLED BY THE COMPLAINANT FOLLOWING THE TRIBUNAL'S ORDER NO OFFENCE SURVIVES UNDER THE TL' ACT AND THUS THE QUASHING OF THE PROSECUTION IS AUTOMATIC? (D) WHETHER THE FINDING OF THE TRIBUNAL IS BINDING UPON THE CRIMINAL COURT IN VIEW OF THE FACT THAT THE CHIEF CIT AND THE AO WHO INITI ATED THE PROSECUTION UNDER S. 276C(1) HAD NO RIGHT TO OVERRULE THE ORDER OF THE T RIBUNAL? MORE SO WHEN THE ITO GIVING THE EFFECT TO THE ORDER CANCELLED THE PE NALTY LEVIED UNDER S.271(L)(C)? (E) WHETHER THE HIGH COURT'S ORDER IS LIABLE TO BE SET ASIDE IN VIEW OF THE ERRORS APPARENT ON RECORD?' IN K.C. BUILDERS (SUPRA), THIS COURT NOTICED THE DI CTIONARY MEANING OF THE EXPLANATION (SIC-CONCEALMENT) AND HELD: 10 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. '4. THE RESPONDENT ASSESSING AUTHORITY TREATED THE DIFFERENCE BETWEEN THE INCOME AS PER ORIGINAL RETURN AND REVISED INCOME AS CONCEA LED INCOME. THE ASSTT. CIT LEVIED PENALTIES UNDER S. 271 (L)(C) OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') FOR ALL THE AFORESAID FOUR ASSESSMENT YE ARS. ACCORDINGLY, PENALTY PROCEEDINGS WERE INITIATED. THE FIRST .APPEAL AGAIN ST THE ORDER OF PENALTIES LEVIED FOR CONCEALMENT OF INCOME AGAINST THE APPELLANTS WE RE CONFIRMED BY THE CIT(A). AS PER THE DIRECTIONS OF THE CHIEF CIT, FOUR COMPLA INTS WERE FILED IN THE COURT OF THE ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, EGMOR E, CHENNAIFOR OFFENCES UNDER SS. 276C(2), 277 AND 278B OF THE ACT AND SS. 120B, 34, 193, 196 AND 420 OF THE IPC. ' 87. THE LEARNED ADDITIONAL SOLICITOR GENERAL, HOWEV ER, SUBMITTED THAT ALTHOUGH ON THE FACTS OF THE CASE THE DECISION RENDERED IS C ORRECT BUT THE VIEW OF THE COURT THAT UNLESS THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUMSTANCES FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTR IBUTABLE ON THE PART OF THE ASSESSEE TO CONCEAL HIS INCOME SO AS TO EVADE INCOM E-TAX THEREON MAY NOT BE CORRECT. AS AT PRESENT ADVISED, WE DO NOT INTEND TO GO INTO THE SAID QUESTION; AS IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE ARE ENOUGH MATERIAL TO SHOW THAT THE ACTION ON THE PART OF THE APPELLANT MAY NOT BE SAID TO BE SUCH WHICH WOULD ATTRACT THE PENAL PROVISION UNDER S. 271(1)(C) OF T HE ACT. 88. FOR THE REASONS AFOREMENTIONED, THE IMPUGNED JU DGMENT CANNOT BE SUSTAINED. IT IS SET ASIDE ACCORDINGLY. THE APPEAL IS ALLOWED. HOWEVER, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, THERE SHALL BE NO ORDER AS TO COSTS. 15. TO SUM UP, IT HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE ABOVE CASE THAT THE MEANING OF THE WORDS 'CONCEAL' AND 'INACCURATE' INVOLVES 'HIDING' OR 'KEEPING A SECRET' OR 'WITHDRAW FROM OBSERVATION' OR 'COVER UP ' OR 'KEEP AWAY FROM SIGHT' OR 'PREVENT THE DISCOVERY OF OR 'TO WITHHOLD KNOWLEDGE OF. THE OFFENCE OF CONCEALMENT IS, THUS, A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES. FURTHER, I T HAS BEEN HELD THAT THE PRIMARY BURDEN OF PROOF IN THIS REGARD IS ON THE RE VENUE. OTHER DECISIONS CITED BY THE AO ALSO SUPPORT THIS VIEW. 16. COMING BACK TO THE FACTS OF THE CASE OF THE APP ELLANT, IT MAY BE NOTED THAT THE APPELLANT, DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, HAD CLAIMED THE LONG- TERM CAPITAL GAIN AS EXEMPT, CONTENDING THAT THE SA ME HAD ARISEN DUE TO TRANSFER OF AGRICULTURAL LAND. THE AO DISALLOWED THE SAME IN VIEW OF THE PROVISIONS OF SECTION 2(14)(III)(A) & (B) AND LD. CIT(A) ALSO CON FIRMED THE ACTION OF THE AO. HOWEVER THE CLAIM OF THE APPELLANT WAS ON THE BASIS OF A BONA FIDE BELIEF THAT THE LAND PURCHASED WAS AN AGRICULTURE LAND, AS IT WAS B EING SHOWN AS AGRICULTURE LAND IN THE BOOKS OF THE APPELLANT AS WELL AS IN TH E RETURNS OF INCOME TILL THE DATE OF SALE AND SUCH RETURNS FOR EARLIER YEARS HAD BEEN ACCEPTED BY THE DEPARTMENT. IT IS A WELL SETTLED LAW THAT BOTH THE ASSESSMENT AND THE PENALTY PROCEEDINGS ARE INDEPENDENT OF EACH OTHER, AND IN THE PENALTY PROCE EDINGS, THE ASSESSEE HAS LIBERTY TO SHOW AND ESTABLISH THAT IT'S STAND WAS B ONA FIDE AND ALL THE FACTS 11 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. MATERIAL TO THE COMPUTATION OF INCOME WERE FULLY AN D TRULY \ DISCLOSED [AS SO PROVIDED IN EXPLANATION 1 TO S. 271 (1 )(C) OF THE ACT] AND IF THE ASSESSEE SUCCEEDS IN DISCHARGING THE SAID BURDEN, THEN NO PENALTY COU LD BE LEVIED. 6. AFTER TAKING INTO CONSIDERATION THE ARGUMENTS OF BOTH THE PARTIES AND FROM THE PERUSAL OF THE AFORE MENTIONED ORDERS WE FIND T HAT THE LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE AND WHILE TAKING INTO CONSIDERATION THE JUDGMENT PASSED BY HONBLE SUPREME COURT IN THE CASE OF RE LIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAD CAME TO THE CONCLUSION THAT NO PE NALTY COULD BE LEVIED IN THE PRESENT CASE. THE LD. CIT(A) HAS ELABORATELY DISCUS SED THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING, HAD CLAIMED LTCG A S EXEMPT THEREBY CONTENDING THAT THE SAME HAD ARISE DUE TO TRANSFER OF AGRICULTURAL LAND. LD. CIT(A) HAS CATEGORICALLY HELD THAT CLAIM OF ASSESSEE WAS O N THE BASIS OF BONAFIDE BELIEF THAT THE LAND PURCHASED WAS AN AGRICULTURE LAND, AS IT WAS BEING SHOWN AS AGRICULTURE LAND IN THE BOOKS OF THE ASSESSEE AS WE LL AS IN THE RETURN OF INCOME TILL THE DATE OF SALE AND SUCH RETURN FOR EARLIER YEARS HAD BEEN ACCEPTED BY THE DEPARTMENT. AFTER GOING THROUGH THE FACTS OF THE PR ESENT CASE WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE HAD BEEN ACCEPTING THE RETURNS OF EARLIER YEARS. LD. CIT(A) HAS RIGHTLY APPLIED THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. IT HAS BEEN CATEGORICALLY HELD THAT IN THE SAID JUDGEMENT THE MEANING OF THE WORDS CONCEAL AND INACCURATE INVOLVES HIDING OR KEEPING A SECRE T OR WITHDRAW FROM 12 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. OBSERVATION OR COVER UP OR KEEP AWAY FROM SIGHT OR PREVENT THE DISCOVERY OF OR TO WITHHOLD KNOWLEDGE OF. THEREFORE AS PER PRI NCIPLES LAID DOWN IN THE AFORE MENTIONED CASE THE OFFENCE OF CONCEALMENT IS THUS, A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE O F THE INCOME-TAX AUTHORITIES. ALTHOUGH THE PRIMARY BURDEN OF PROOF IN THIS REGARD IS ON THE REVENUE, WHICH IN THIS CASE HAS NOT BEEN DISCHARGED. 7. AFTER ANALYZING THE AFORE MENTIONED ORDER WE FOU ND THAT THE CIT(A) HAS DEALT WITH ALL THE ISSUES AND HAS PASSED JUDICIOUS AND WELL REASONED ORDER AND NO NEW CIRCUMSTANCES OR JUDGEMENTS HAVE BEEN BROUGHT B EFORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE CI T(A). THEREFORE, WE SEE NO REASONS TO DEVIATE OR INTERFERE INTO THE WELL REASO NED FINDINGS RECORDED BY THE CIT(A) AND HENCE, WE REJECT THIS GROUNDS RAISED BY THE REVENUE AND UPHOLD THE ORDER OF THE CIT(A). 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2016 SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED :26.08.2016 PS. ASHWINI 13 ITA NO. 4552/MUM/2014(A.Y. 1997-98) ITO VS. M/S. CYRUS ENGINEERS PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI