C. I. T. vs. ATUL MOHAN BINDAL

CIVIL APPEAL No. 5769/2009Supreme Court[2009] 13 S.C.R. 46424 August 2009Bench: 2 JudgesAuthor: TARUN CHATTERJEE, RAJENDRA MAL LODHA15 pages
AI SummaryRemanded

What were the facts?

The assessee, Atul Mohan Bindal, filed his income tax return for Assessment Year 2002-03. During assessment proceedings, the Assessing Officer (AO) added salary income earned in Singapore (Rs. 17,81,952), an amount received from an erstwhile employer (Rs. 5,00,000) claimed as exempt retrenchment compensation, and interest income (Rs. 22,812) not initially declared. The AO imposed a penalty of Rs. 7,75,211 under Section 271(1)(c) of the Income Tax Act, 1961. The assessee accepted the assessment order but challenged the penalty. The CIT (Appeals) and the Income Tax Appellate Tribunal (ITAT) deleted the penalty, holding it was an unintentional omission. The Revenue appealed to the High Court, which upheld the ITAT's decision. The Revenue then filed the present appeal.

What did the Supreme Court hold?

The Supreme Court held that the penalty under Section 271(1)(c) of the Income Tax Act, 1961, is a civil liability, albeit a strict liability, and therefore, mens rea is not essential for its applicability. The Court noted that the High Court had relied on its earlier decision, which was approved in Dilip N. Shroff. However, Dilip N. Shroff was subsequently held not to lay down good law in Dharmendra Textiles, which was further explained in Rajasthan Spinning and Weaving Mills. Consequently, the Supreme Court found that the matter needed reconsideration by the High Court in light of the decisions in Dharmendra Textiles and Rajasthan Spinning and Weaving Mills. The appeal was allowed, and the High Court's judgment was set aside, with the matter remitted back for fresh consideration.

What were the issues?

1. Whether the penalty under Section 271(1)(c) of the Income Tax Act, 1961, is a civil liability, and if so, whether mens rea is essential for its imposition? (Question of law) Assessee's Contention (Implied from CIT(A) and ITAT's findings): The assessee argued that the omissions were unintentional and inadvertent, not amounting to concealment or furnishing inaccurate particulars of income. The CIT(A) found the additions were based on particulars furnished by the appellant and not discovered independently by the AO, and that the assessee had a bona fide belief regarding the non-taxability of salary income. The CIT(A) and ITAT concluded it was not a fit case for penalty. Revenue's Contention: The Revenue contended that the penalty under Section 271(1)(c) is a strict liability and mens rea is not essential. They relied on the Supreme Court's decisions in Union of India v. Dharmendra Textile Processors and Union of India v. Mis Rajasthan Spinning & Weaving Mills, arguing that these overruled the principle laid down in Dilip N. Shroff v. Joint Commissioner of Income Tax, which the High Court had relied upon.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 10(10B),Section 11AC,Section 11A,Section 260A

AI-generated summary — verify with the full judgment below

[2009] 13 (ADDL.) S.C.R. 464 A G.l.T., DELHI ....... v. ATUL MOHAN BINDAL (Civil Appeal No. 5769 of 2009) B AUGUST 24, 2009 [TARUN CHATTERJEE AND R.M. LODHA, JJ.] Income Tax Act, 1961 - s.271(1)(c) - Applicability of - -\ ,, Concealed income - Penalty in terms of s.271(1)(c) - Held: c Is neither criminal nor quasi criminal but a civil liability; albeit a strict liability - Such liability being civil in nature, mens rea is not essential.

The assessee-respondent filed return of his income. c D The Assessing Officer added various amounts to the income declared .by assessee in the return viz. salary ~ income earned by assessee in Singapore, amount received by him from erstwhile employer and interest income earned by him from bank, and imposed penalty E u/s.271(1)(c) of the Income Tax Act, 1961. The assessee accepted the order of assessment but challenged the order of penalty. The CIT (Appeals) allowed the appeal holding that it was a case of ... v unintentional and inadvertent omission and therefore, it ~ F was not a fit case for levy of penalty uls.271(1)(c) as the .assessee had not concealed the particulars of his income nor did he furnish any inaccu

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 271(1)(c)

All 24,918 judgments and leading authorities on Section 271(1)(c) →

Latest GST High Court judgments

Search GST case law →