Appeal details
Counselvise Citation
81222714 RSA 2014
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-10-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
18-06-2015
Assessment Year
2010-2011
Appeal Filed On
26-12-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO.812/IND/2014 A.Y. : 2010-11 STEEL EXPERT INDUSTRIES (INDORE) LIMITED, VS ACIT, 4(1), INDORE. INDORE APPELLANT RESPONDENT PAN NO. :AAJCS1908H APPELLANT BY SHRI PANKAJ SHAH, C. A. RESPONDENT BY SHRI R. A. VERMA, DR DATE OF HEARING : 16 .09.2015 DATE OF PRONOUNCEMENT : 12 .10.2015 M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 2 2 O R D E R PER GARASIA, J.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 28.08.2014 FOR THE ASSE SSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE W AS REFLECTING A NUMBER OF CREDITORS AGAINST WHOM HUGE CREDIT BALANCES WERE BEING REFLECTED FOR MANY YEARS. THE A O HAD REQUIRED ASSESSEE TO FURNISH COMPLETE DETAILS ADDRE SSES, PAN ETC. THE DETAILS OF THE CREDITORS ARE AS UNDER :- A. NIRMAL STEELS BHOPAL RS. 1,60,801/- B. R.S.INTERNATIONAL GOVINDGARH RS.6,17,764/- C. UNIQUE ISPAT GOVINDGARH RS. 4,76,359/- 3. THE AO MADE ENQUIRIES AND THE SUMMONS WERE ISSUED U/S 132(1). DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSEE ACCEPTED THE LIABILITY OF RS. 16,29,716/-. THEREFORE, HE MADE A SURRENDER OF THIS AMOUNT FOR TAXATION PUR POSES AS M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 3 3 CESSATION OF LIABILITY U/S 41(1)(A) OF THE INCOME-T AX ACT, 1961. THEREFORE, THE PENALTY U/S 271(1)(C) WAS INITIATED. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) CONFIRMED THE PENALTY. 5. THE LD. AUTHORIZED REPRESENTATIVE HAS FILED THE WRI TTEN SUBMISSION, WHICH READS AS UNDER :- THE APPELLANT IS ENGAGED IN THE TRADING AND MANUFACTURING OF MS CASTING AND FORGING ACTIVITIES LIKE CR SHEETS, HR SHEETS, CHANNELS, CRF SECTIONS ETC. RETURN OF INCOME WAS FILED ON 28.09.2010 DECLARING A TOTAL INCOME OF RS.22, 07,310/- WHICH WAS INITIALLY PROCESSED U/S 143(1). ASSESSMENT WAS COMPLETED U/S 143(3) AND TOTAL INCOME WAS ASSESSED AT RS. 44, 79,420/-- VIDE ORDER DATED 26.03.2013 MAKING CERTAIN ADDITIONS ON WHICH PENALTY HAS BEEN LEVIED: PARTICULARS AMOUNT IN RS. ADDITION U/S 41(1) ON ACCOUNT OF ALLEGED CESSATION OF TRADING LIABILITY 16,29,716/- ADDITION ON ACCOUNT OF ERRONEOUS DOUBLE ENTRY OF PURCHASE BILL IN CASE OF CREDITOR I.E. TURAKHIA METALS PVT.LTD. 5,48,710/- THE A.O. IMPOSED PENALTY U/S 271(1)(C) OF RS. 15,00,000. M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 4 4 THE APPELLANT HAS A TURNOVER OF RS. 37.52 CRORES DURING THE YEAR. IN THE ASSESSMENT PROCEEDINGS THE LEARNED AO ISSUED SUMMONS TO ALL CREDITORS FOR CONFIRMATION OF THEIR BALANCES. ALL THE CREDITORS CONFIRMED THE BALANCES EXCEPT FOLLOWING 4 OLD CREDITORS WHO WERE EITHER NOT AVAILABLE OR DID NOT CO-OPERATE WITH THE APPELLANT. THE APPELLANT STATING THAT THOUGH THE LIABILITY SUBSISTS OFFERED THE BALANCES AS DEEMED INCOME UNDER SECTION 41(1) ON THE INSISTENCE OF AO. M/S. NIRMAL STEEL, BHOPAL M/S. R.S. INTERNATIONAL, GOBINDGARH M/S. SUNSHINE STEEL, GOBINDGARH M/S. UNIQUE ISPAT, GOBINDGARH IT IS EVIDENT FROM PAGE 7 OF THE ASSESSMENT ORDER THAT THE GENUINENESS AND AUTHENTICITY IS NEITHER DOUBTED BY THE LEARNED AO NOR THE ADDITION IS MADE UNDER SECTION 68 WHICH IS UNEXPLAINED CASH CREDIT BUT AS DEEMED INCOME U/S 41 (1)( A). MOREOVER IT MAY BE APPRECIATED THAT THE APPELLANT HAD NOT WRITTEN THEM BACK IN THE BALANCE SHEET AND THEY WERE SHOWN AS PAYABLE. AT THE OUTSET IT IS SUBMITTED THAT SINCE THE APPELL ANT HAD SHOWN SUCH AMOUNTS AS PAYABLE IN THE BOOKS OF ACCOUNTS, IT CANNOT BE SAID THAT THE LIABILITY CEAS ED TO M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 5 5 EXIST. YOUR HONOURS MAY APPRECIATE THAT THE LEGAL POSITION IS SETTLED ON THIS ISSUE AS UNDER: IN THE CASE OF CIT VS. SITA DEVI JUNEJA (187 TAXMAN 96) IT IS HELD BY HON'BLE PUNJAB AND HARYANA HIGH COURT THAT NO ADDITION ON ACCOUNT OF SUNDRY CREDITORS CAN BE MADE UNLESS THE TRADE LIABILITY HAD CEASED TO EXIST, EVEN IF NO CONFIRMATIONS ARE FILED. HON'BLE GUJARAT HIGH COUT IN CASE OF CIT V. BHOGILAL RAMJIBHAI ATARA [2014] 222 TAXMAN 313 HELD THAT IN SECTION 41(1), UNCLAIMED LIABILITIES (OF EARLIER YEARS), WHICH ARE SHOWN AS PAYABLE IN THE ACCOUNTS, ARE NOT TAXABLE AS INCOME EVEN IF CREDITORS ARE UNTRACEABLE & LIABILITIES ARE NON-GENUINE. IN THIS CASE OF CIT V. MIRA PROCESSORS (208 TAXMAN 93 (GUJARAT)(MAG. IT IS HELD THAT WHERE AMOUNT OF CREDIT HAD BEEN CONTINUOUSLY SHOWN BY ASSESSEE IN ITS BALANCE SHEET YEAR AFTER YEAR IT IS NOT POSSIBLE TO CONCLUDE THAT DEBT IS BARRED AND HAS BECOME UNENFORCEABLE SO AS TO MAKE ADDITION TO ASSESSEE'S INCOME . M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 6 6 HOWEVER A CONTRARY VIEW IS TAKEN IN CHIPSOFT TECHNOLOGY 210 TAXMAN 173 (DEL) HOLDING THAT THAT IF THE ALLEGED CREDITORS ARE UNIDENTIFIABLE, THE LIABILITIES MUST BE DEEMED TO HAVE CEASED AND THE AMOUNT IS ASSESSABLE U/S 41(1). IN VIEW OF ABOVE IT IS CLEAR THAT THE ISSUE IS HIGH LY DEBATABLE AND THERE ARE DIVERGENT VIEWS TAKEN BY DIFFERENT COURTS. IT IS A TRITE LAW THAT NO PENALTY CAN BE LEVIED ON DEBATABLE ISSUES. SEE: CIT VS. LATE G.D. NAIDU AND OTHERS (165 ITR 63) (MAD.), CIT VS. CALCUTTA CREDIT CORPORATION (166 ITR 29) (CAL.) , CIT VS. AMARNATH (143 CTR 148) (AIL.), CIT VS. SIVANANDA STEELS (256 ITR 683) (MAD.), DURGA KAMAL RICE MILLS VS. CIT (265 ITR 25) THE APPELLANT SUBMITS THAT ADDITION U/S 41(1) IS A TECHNICAL DISALLOWANCE WHERE THE REMISSION OR CESSATION DEPENDS ON THE INTENTION SHOWN IN BALANCE SHEET AND VARIOUS FACTORS AND THERE IS NO QUESTION OF CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. RELIANCE IS PLACED ON FOLLOWING DECISIONS M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 7 7 WHICH SQUARELY COVERS THE CASE OF APPELLANT: CIT V. VIP INDUSTRIES LTD. [2009] 122 TTJ 289 (MUMBAI) CIT V. SAT PARKASH [1989] 178 ITR 393 (PUNJAB & HARYANA) CHAUDHRY COTTON GINNING V. ITO [1986] 25 TAX MAN 172 (CHD.) (MAG.) CIT V. M.S. BINDRA [2011] 336 ITR 125 (DELHI) SUNIL DUTT V. ACIT 2010-TIOL-288-ITAT-DEL SHAILESH MITAL (ITA 25561DE1/2012) NIRMALA DYECHEM ITA NO.941/AHD/2010 SHIVA PIGMENTS P. LTD V. ITO (ITA NO. 3091/MUM/2011) ATTENTION IS INVITED TO THE ASSESSMENT ORDER WHERE IN LAST PARA THE PENALTY IS INITIATED ON THE CHARGE OF 'FURNISHING INACCURATE PARTICULARS OF INCOME'. HOWEVER PENALTY IS LEVIED ON THE CHARGE OF 'CONCEALED THE PARTICULARS OF INCOME BEING THE WRON G M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 8 8 CLAIM MADE BY ASSESSEE' IT IS HELD IN FOLLOWING PRECEDENTS THAT INITIATION AND LEVY OF PENALTY CAN BE ONLY ON SAME GROUND ON WHICH IT IS INITIATED IN ASSESSMENT ORDER: A.M. SHAH & CO. 238 ITR 415 (GUJARAT) CIT V. LAKHDHIR LALJI (85 ITR 77)(GUJ.) CIT V. MANJUNATHA COTTON & GINNING FACTORY (359 ITR 565 (KAR) PARA 60 ADDL. CIT V. NIHALCHAND BADRILAL (135 ITR 519 (MP RAMCHANDRA G. HALWAI (ITA NO. 253/PNJ/2013) T. ASHOK PAI 210 CTR 259 (SC) - 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INACCURATE PARTICULARS' CARRY DIFFERENT CONNOTATIONS DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTED THAT IN CASE OF A CREDITOR M/S TURAKHIA METALS PRIVATE LIMITED THERE WAS DIFFERENCE BETWEEN BALANCE AS PER BOOKS AND BALANCE CONFIRMED BY THE CREDITOR. ON M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 9 9 RECONCILIATION IT WAS NOTICED THAT THIS DIFFERENCE WAS DUE TO ACCOUNTANT'S ERROR OF ENTERING THE SAME PURCHASE BILL TWICE. ON IDENTIFICATION OF SUCH ERRO R THE DIFFERENCE AMOUNT WAS VOLUNTARILY OFFERED TO TAX IN THE ASSESSMENT ITSELF BY THE APPELLANT. THIS BEING A GENUINE MISTAKE I INADVERTENT ERROR DOES NOT CALL FOR LEVY OF PENALTY. IN THIS REGARDS THE APPELLANT SUBMITS AS UNDER: IT HAS BEEN HELD BY THE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. PITAMBARDAS DULICHAND REPORTED AT 273 ITR 271 THAT WERE THE MISTAKE WAS MADE BY THE MUNIM AND THERE WAS NO IOTA OF EVIDENCE TO SUGGEST THAT IT WAS DONE WITH THE CONSENT OR KNOWLEDGE OF THE PARTNER, THERE WAS NO REASON TO SUSTAIN THE PENALTY FOR CONCEALMENT. WHEN MISTAKE IS NOTICED IN ASSESSMENT PROCEEDING AND ASSESSEE AGREES AND WITHDRAWS ITS CLAIM, NO PENALTY CAN BE LEVIED M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 10 10 CIT V. LAKSHMI VILAS BANK (303 ITR 428) CIT V SRI SHARDHA TEXTILE PROCESSORS (P.) LTD. [2006] 286 ITR 499 NO PENALTY ON INADVERTENT MISTAKE PRICE WATERHOUSE COOPERS P. LTD. (348 ITR 306 (SC CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158) IN VIEW OF THE ABOVE THE APPELLANT HUMBLY SUBMITS THAT THE PENALTY U/S 271(1)(C) BE DELETED . 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. 7. ON THE ABOVE FACTS WHETHER THE PENALTY U/S 271(1)(C) CAN BE IMPOSED OR NOT, THE SIMILAR ISSUE HAD COME BEFORE HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS. CHENNUPATI TYRES & RUBBER PRODUCTS, 90 CCH 181 (APHC) WHEREIN THE HON'BLE HIGH COURT HAS HELD AS U NDER: M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 11 11 PENALTY U/S 271(1)(C) - CONCEALMENT OF INCOME ASSESSEE FILED A RETURN, SHOWING LOSS FOR AY 1994-9 5 INTIMATION WAS GIVEN U/S 143(1)(A) BY ASSESSING OFFICER REDUCING LOSS ASSESSEE FILED AN APPLICATI ON FOR RECTIFICATION THEREOF AND SAID REQUEST WAS ACCEPTED BY ASSESSING OFFICER THEREAFTER AN EXERC ISE U/S 143(2) WAS UNDERTAKEN AND SCRUTINY OF EACH AND EVERY ITEM WAS MADE IN RESPECT OF TWO ITEMS OF SUNDRY CREDITS, EXPLANATION OFFERED BY ASSESSEE WAS NOT FOUND SATISFACTORY ASSESSEE AGREED FOR TREATI NG THOSE TWO ITEMS AS INCOME AND IT PAID TAX ASSESSI NG OFFICER IMPOSED PENALTY U/S 271(1)(C) IN RESPECT OF TWO SUNDRY CREDITORS, REJECTING ASSESSEES EXPLANAT ION THAT HE DID NOT HAVE ANY INTENTION TO CONCEAL AMOUNTS, AND TWO AMOUNTS WERE CARRIED FORWARD FROM PREVIOUS AY CIT(A) DELETED PENALTY IMPOSED B Y ASSESSING OFFICER HOLDING THAT THERE WAS NO INTENTI ON ON PART OF ASSESSEE TO HIDE INCOME TRIBUNAL M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 12 12 AFFIRMED ORDER PASSED BY CIT(A) HELD, BEFORE LEVY ING PENALTY U/S 271(1)(C) REVENUE HAS TO DISCHARGE ITS BURDEN TO PROVE THAT THERE WAS SOME INTENTION TO CONCEAL OR FURNISH INACCURATE PARTICULARS ON PART O F ASSESSEE CONCEALMENT CAN OCCUR, ONLY WHEN PERSON IS IN FULL KNOWLEDGE OF STATE OF AFFAIRS AND EVEN W HILE BEING UNDER OBLIGATION TO MAKE IT KNOWN TO OTHERS, AND IN PARTICULAR AUTHORITIES UNDER THE ACT FAILS O R REFUSES TO DO SO IT IS THEN, AND ONLY THEN, THAT HE CAN BE SAID TO HAVE CONCEALED AND ONCE FACTUM OF CONCEALMENT IS PROVED, HIS ATTEMPT TO VOLUNTARILY DISCLOSE IT DOES NOT SAVE HIM HOWEVER, AN INADVERTENT MISTAKE, OR A BONA FIDE BELIEF, AS TO CLASSIFICATION, OR CHARACTER OF AN AMOUNT, CANNOT P ER SE PROVIDE A GROUND FOR LEVY OF PENALTY IN INSTANT CASE ASSESSEE AGREED TO TREAT TWO SUNDRY CREDITORS AS INCOME AS A MEASURE OF PURCHASING PEACE LACK OF ANY MALA FIDE INTENTION ON PART OF ASSESSEE CLEAR F ROM M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 13 13 THE FACT THAT THOSE TWO ITEMS WERE CARRIED FORWARD FROM PREVIOUS YEAR AND WERE NOT NEW ADDITIONS AT AL L THERE WAS NO INGREDIENTS TO CONCEALMENT. 8. WE FIND THAT IN THE SAME JUDGMENT, THE HON'BLE HIGH COURT ALSO DISTINGUISHED THE MAK DATA (SUPRA) BY OBSERVING AS UNDER: LEARNED COUNSEL FOR THE APPELLANT PLACED RELIANCE UPON THE JUDGMENT OF THE SUPREME COURT IN MAK DATA P. LTD. VS. CIT, 358 ITR 593. THEIR LORDSHIPS HELD THAT ONCE AN ITEM OF INCOME WAS FOUND TO HAVE BEEN CONCEALED, THE MERE FACT THAT THE ASSESSEE HAS VOLUNTARILY DISCLOSED IT THEREAFTER, DOES NOT ABSOL VE HIM FROM BEING PROCEEDED UNDER SECTION 271(1)(C) OF THE ACT. WE RESPECTFULLY FOLLOW THAT. HOWEVER, IT I S IMPORTANT TO UNDERSTAND THE PURPORT OF VERY WORD CONCEALMENT. THAT CAN OCCUR, ONLY WHEN THE PERSON IS IN FULL KNOWLEDGE OF THE STATE OF AFFAIRS AND EV EN WHILE BEING UNDER OBLIGATION TO MAKE IT KNOW TO M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 14 14 OTHERS, AND IN PARTICULARS THE AUTHORITIES UNDER TH E ACT FAILS OR REFUSES TO DO SO. IT IS THEN, AND ONLY THEN, THAT HE CAN BE SAID TO HAVE CONCEALED AND ONCE THE FACTUM OF CONCEALMENT IS PROVED, HIS ATTEMPT TO VOLUNTARILY DISCLOSE IT DOES NOT SAVE HIM. IN THE INSTANT CASE, WE DO NOT FIND ANY INGREDIENTS OF CONCEALMENT. 9. WE ALSO FIND SUPPORT FROM THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. AGRAWAL ROLLIN G MILLS, 88 CCH (0036) (ISCC) WHEREIN IT IS HELD THAT WHEN ASSESSEE HAS FILED THE RETURN AND DURING THE SCRUTI NY OF THE ACCOUNT OF SHARE APPLICATION MONEY RECEIVED, TH E ASSESSEE COULD NOT FURNISH THE DOCUMENTS RELATING T O SOME OF APPLICANTS AND SURRENDERED THE AMOUNT PERTAINING TO THEM. ASSESSING OFFICER MADE ADDITION U/S 68 IN RES PECT OF SURRENDERED AMOUNT, NO PENALTY CAN BE LEVIED U/S 27 1(1) OF THE ACT. M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 15 15 10. WE ALSO GET SUPPORT FROM THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEMICAL S 322 ITR 158 (SC) WHEREIN HON'BLE SUPREME COURT HAS HELD THAT MERE RAISING A CLAIM, EVEN IF NOT SUSTAINABLE IN LAW, IS NOT BY ITSELF, SUFFICIENT TO HELD THAT IT DENOTES F URNISHING OF INACCURATE PARTICULARS WITH AN INTENT AS WOULD INVI TE A PENALTY. 11. THE POSITION OF LAW REGARDING LEVY OF PENALTY U/S 271(1)(C) HAS UNDERGONE A SUBSTANTIAL CHANGE AFTER INSERTION OF EXPLANATION I TO SECTION 271(1)(C) WITH EFFECT FROM 01.04.1976. EXPLANATION 1 TO SECTION 271(1)(C) RAISES A PRESUMP TION THAT AS AND WHEN ANY AMOUNT IS ADDED OR DISALLOWED IN CO MPUTING THE TOTAL INCOME, THE SAME SHALL BE DEEMED OR REPRE SENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEE N CONCEALED. FURTHER WITH EFFECT FROM 10.9.1986 AMEND MENT HAS BEEN MADE TO EXPLANATION 1(B) TO SECTION 271(1)(C), AFTER THIS AMENDMENT FURTHER ONUS HAS BEEN PLACED ON THE ASSES SEE TO PROVE THAT EXPLANATION FURNISHED BY HIM WAS BONA FI DE. THE POSITION NOW IS THAT UNLESS AND UNTIL THE ASSESSEE M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 16 16 SUBSTANTIATES THE EXPLANATION AND PROVES THAT THE E XPLANATION WAS BONA FIDE, THE ADDITION MADE TO HIS INCOME SHAL L BE DEEMED TO REPRESENT THE CONCEALED INCOME. ON ANALYS IS OF PROVISIONS OF SECTION 271(1)(C), IT IS OBSERVED THA T EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THE SITUATION, WHER E NO EXPLANATION FOR THE FAILURE IS OFFERED BY THE ASSES SEE OR WHERE THE EXPLANATION THAT HAS BEEN OFFERED IS FOUND TO B E FALSE OR WHERE THE ASSESSEE IS NOT ABOUT TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM. IN ALL THE CASES, THE A MOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON SHALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEALED. AS PER PROVISO TO THIS EXPLANATION, THE ONUS TO ESTABLISH THAT EXPLANATION OFFERED WAS BONA FIDE AND FACTS RELATING TO SAME AND MATERIAL T O THE COMPUTATION OF HIS INCOME EVEN DISCLOSED BY HIM WIL L BE ON THE PERSONS CHARGED FOR CONCEALMENT. 12. AS PER THE PROVISIONS 2 TO EXPLANATION 1(B) NOW TH E ENTIRE ONUS IS ON THE ASSESSEE TO NOT ONLY OFFER AN EXPLANATION BUT ALSO TO SUBSTANTIATE IT AND TO PROVE THAT THE P RESUMPTION M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 17 17 WAS BONA FIDE. AT THE SAME TIME THE PRESUMPTION SO RAISED BY THE EXPLANATION 1 IS REBUTTABLE. THE EFFECT IS THAT UNLESS AND UNTIL REBUTS THE PRESUMPTION, HE WOULD BE LIABLE TO PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. IT IS NO W ESTABLISHED LAW THAT PRESUMPTION WOULD NOT STAND RE BUTTED MERELY BY FURNISHING ANY GENERAL OR FANTASTIC OR FA NCIFUL OR UNREASONABLE EXPLANATION BY THE ASSESSEE, THE EXPLA NATION SHOULD BE BASED ON COGENT AND RELEVANT MATERIAL AND SHOULD BE ACCEPTED TO THE AUTHORITIES. 13. THE EXPRESSION FURNISHING THE INACCURATE PARTICUL ARS OF INCOME HAS BEEN NOT DEFINED IN THE ACT. THE EXP RESSION INACCURATE REFERS TO NOT ONLY IN CONFORMITY WITH THE FACT OR TRUTH AND THAT IS AMENDMENT, WHICH IS RELEVANT IN T HE CONTEXT OF FURNISHING INACCURATE PARTICULARS. THE MEANING B Y FURNISHING INACCURATE PARTICULARS OF INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT THE INCOME WHICH AR E NOT IN CONFORMITY WITH THE FACT OR TRUTH. THE DETAILS OR I NFORMATION ABOUT INCOME DEALS WHICH ARE FACTUAL DETAIL OF INCO ME AND THIS CANNOT BE EXTENDED TO THE AREA, WHICH ARE SUBJECTIV E SUCH AS M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 18 18 STATUS OF TAXABILITY OF INCOME, ADMISSIBILITY OF DE DUCTION AND INTERPRETATION OF LAW. FURNISHING OF INACCURATE INF ORMATION, THUS, RELATES TO FURNISHING THE FACTUAL INCORRECT D ETAILS AND INFORMATION ABOUT THE INCOME. THE ADMISSION OR REJE CTION OF A CLAIM SUBJECT TO EXERCISE AND WHETHER THE CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACC URATE PARTICULARS OF INCOME. RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT, IN THIS CASE, THE ASSESSEE HAS MADE A BONA FIDE LEGAL CLAIM, WHICH WAS NOT ACCEPTED BY THE TAX AUTHORITY OR JUDI CIAL AUTHORITY. WE FIND THAT THE ASSESSEES CLAIM WAS NO T ACCEPTED BY THE AUTHORITY, IT DOES NOT MEAN THAT THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE HON 'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. RAJASTHAN SPINNING AND WEAVING MILLS REPORTED IN (2009) 13 SCC 448, CONSIDERED THE EARLIER DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND ORS VS. DHARMENDRA TEXTILES PROCESSORS & ORS., REPORTED M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 19 19 IN (2008) 306 ITR 277 (SC) AND HELD THAT IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(L)(C) OF THE ACT, CONDITION STATED THEREIN MUST EXIST. THE ABOVE SAID DECISION CAME UP FOR CONSIDERATION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT., LTD., REPORTED IN (2010) 322 ITR 158 (SC). ON READING OF SECTION 271(1)(C) , THE HON'BLE SUPREME COURT POINTED OUT THAT IN ORDER TO BRING THE CASE UNDER SECTION 271(1)(C), TH ERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. IN ORDER TO E XPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION COULD NOT BE INVOK ED. THUS, THE HON'BLE SUPREME COURT POINTED OUT THAT A MERE M AKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSEL F, WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE. THE READING OF THE DECISION OF THE HON'BLE SUPREME COURT REFERRED TO ABOVE, THUS POINT S OUT THAT FOR SUSTAINING PENALTY, THE BONA FIDE EXPLANAT ION OF THE M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 20 20 ASSESSEE MUST BE LOOKED AT, SO THAT THE CONTUMACIOU S CONDUCT OF THE ASSESSEE FOR THE PURPOSE OF SUSTAINI NG THE PENALTY WOULD BE TAKEN AS CONDITION THAT IS THE MAI N REQUIREMENT UNDER SECTION 271(L)(C) OF THE ACT. REFERRING TO THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS, (SUPRA), THE HON'BLE SUPREME COURT POINTED OUT THAT IN THE BACKGROUND OF SECTION 271(L )(C) OF THE ACT, THERE IS NO NECESSITY OF MENS REA BEING SHOWN BY THE REVENUE, HOWEVER REFERRING TO THE EXPLANATION T O SECTION 271(L)(C) PENALTY BEING A MULTIPLE LIABILIT Y, THE BONA FIDE OF THE CONDUCT OF THE ASSESSEE NECESSARILY ASS UMES SIGNIFICANT EVEN THOUGH WILLFULNESS OF THE ASSESSEE MAY NOT BE A CRITERIA, THE CONDUCT IS TO BE CONSIDERED. THU S, A MERE FACT THAT THE ADDITION IN THIS CASE HAS BEEN SUSTAI NED BY THIS COURT BY ITSELF WOULD NOT LEAD TO THE AUTOMATIC APP LICATION TO SECTION 271(L). 14. WE, RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, DE LETE THE PENALTY. M/S.STEEL EXPERT INDUSTRIES (INDORE) LIMITED VS. AC IT, 4(1), I.T.A.NO. 812/IND/2014 A.Y. 2010-11 21 21 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 12 TH OCTOBER, 2015. CPU* 612
