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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
PER ANADEE NATH MISSHRA, A.M.: The present appeal has been filed by Revenue, challenging the impugned order dated 04/06/2023 passed by the learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) [“learned CIT(A)”] for the assessment year 2009- 10. In this appeal, the assessee has raised the following grounds:-
1. “1. That Ld. Appellate Authority has erred in Jaw and on facts in deleting the penalty amounting toRs.70,59,100/- imposed u/s 271(1)(c) of the Income Tax Act,1961 without considering the facts & AO’s contention that the furnishing of inaccurate particulars of income by the assessee was established during the penalty proceedings to attract the penal provisions u/s 271(1)(c) of the Income Tax Act, 1961. 02 The Ld. CIT(A) has erred in law in on facts in relying upon the decision of Hon’ble Supreme Court in the case of CIT Ahmedabad Vs Reliance Petroproducts Pvt. Ltd (2010) 189 Taxman 322(SC) without appreciating that the facts in the case of the assessee are different. The said judgment relates to a case in which there was no finding that any details supplied by the assessee in its return were found to be Page 2 of 7 erroneous or incorrect or false whereas in the case of the assessee there is a finding in the assessment order that the assessee has debited incorrect interest expenditure in its Profit & Loss Account on which neither TDS wad deducted by it nor the said interest income were declared by the respective parties as their income. 3 That the order of Ld. Appellate Authority (NFAC) being erroneous in law and on facts needs to be vacated and the order of the Assessing Officer be restored. 4 That the Revenue craves leave to add or amend any one or more of the grounds of the appeal as stated above as and when need for doing so may arise.”
2. In this case, the assessee’s income was assessed at loss of Rs.3,60,28,210/-, vide assessment order dated 28/11/2016 was passed u/s 254/251/143(3) of the Income Tax Act, 1961 (hereinafter “the Act”). Later, vide order dated 03.05.2017 passed u/s 271(1)(c) of the Act, penalty amounting to Rs.70,59,100/- was levied u/s 271(1)(c) of the Act, taking adverse view regarding addition of Rs.2,07,68,167/- made u/s 40(a)(ia) of the Act. The aforesaid amount of Rs.2,07,68,167/- was added by the Assessing Officer (“AO”) under section 40(a)(ia) of the Act on the ground that the assessee did not deduct the TDS on interest (amounting to Rs.2,07,68,167/-) paid on bonds. The assessee accepted the aforesaid quantum addition of Rs.2,07,68,167/- made by the Assessing Officer, and did not file appeal against the aforesaid addition. However, the assessee filed appeal against the aforesaid order dated 03.05.2017 passed u/s 271(1)(c) of the Act whereby penalty amounting to Rs.70,59,100/- was levied. Vide impugned appellate order dated 04.06.2024, the Ld. CIT(A) directed the Assessing Officer to delete the aforesaid penalty of Rs.70,59,100/-. The present appeal has been filed by Revenue against the impugned appellate order dated 04.06.2024.
At the time of hearing before us, Revenue was represented by Shri Sanjeev Krishna Sharma, Addl. CIT Departmental Representative (DR) and Assessee was represented by Shri P.K.
Page 3 of 7 Kapoor, C.A. After hearing the representatives of both sides, we find that it is not in dispute that the information regarding non- deduction of TDS on interest paid on bonds was disclosed by the assessee in audit report file along with the return file by the assessee. It is also not in dispute that using the information provided by the assessee’s, the aforesaid addition of Rs.2,07,68,167/- was made by the Assessing Officer u/s 40(a)(ia) of the Act. It is also not in dispute that the assessee accepted the aforesaid addition amounting to Rs.2,07,68,167/- and did not dispute the addition in appeal. The assessee is a public sector undertaking.
(4.1) We have also perused the impugned appellate order dated 04.06.2024 of the Ld. CIT(A) wherein the Ld. CIT(A) held that there was no instance of the assessee filing inaccurate particulars. The Ld. CIT(A), following order of the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Ahmedabad Vs. Reliance Petroproducts (P) Ltd. (2010) 189 Taxman 322 (SC), directed the Assessing Officer to delete the aforesaid amount of Rs.70,59,100/- penalty levied u/s 271(1)(c) of the Act. Relevant portion of the impugned order of the Ld. CIT(A) is reproduced as under: - “It is seen that penalty has been imposed by the AO on grounds that the appellant had file inaccurate particulars. I have gone through the assessment order passed by the AO. It is apparent that there has been no instance of the appellant filing inaccurate particulars here. The Supreme Court decision in Commissioner of Income-tax, Anmedabad v Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC), drives home this point. The decision concludes as: 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 as under: 271. (4 ) 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 {he 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 sense); the details of a claim, or the separate items of an account. Therefore, the word “particular” 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 the information given in the Return was found to being correct or inaccurate. 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 ‘earned Counsel argued that “submitting an incorrect claim in law for the expenditure on interest 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 plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by provision, the penalty provision cannot be invoked. By any stretch of imagination, making incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT v. Aru Mohan Bindal [2009] 9 SCC 989, where this Court was considering the sanie provision, the Court observer 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 v. Rajasthan Spg &Wvg. Mills [2009] 13 SCC 448 and reiterated in para 13 that :- 13: It goes without saying that for applicability of section 271(1)(c), conditions stated therein must exist.” Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Jt. CIT [2007] 6 SCC 329, this Court explained the terms: “concealment of income" and “furnishing inaccurate particulars" The Court went on to hold therein that in order to attract a penalty under section 271(1)(c) mens rea was necessary, as according to the Court, the word “inaccurate” signified a deliberate act or omission on behalf of the assessee. It went on to hold that Clause (iii) of section 271(1)(c) provided for a discretionary jurisdiction upon the Assessing Authority, inasmuch as the amount 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 defined anywhere in the Act and therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the 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 and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the clement of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroffs case (supra) was upset In Dharamendra Textile Processors’ case (supra), after quoting from section 271 extensively and also considering section 271(1)(c), the Court came to the conclusion that since section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars 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 for providing remedy for loss of revenue and such a penalty was a penalty liability and, therefore willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act The basic reason why decision in Dilip N. Shroff's case (supra) was overruled by this Court in Dharamendra Textile Processors’ case (supra), was that according to this Court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in case of Dilip N. Shroff (supra). However, it must be pointed out that in Dharamendra Textile Processors’ case (supra), no fault was found with the reasoning in the decision in Dilip N Shroffs case (supra), where the Court explained the meaning of the terms “conceal” and “inaccurate” It was only the ultimate inference in Dilip N. Shroff's case (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's case (Supra) was overruled.
We are not concerned in the present case with the 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, 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. Therefore, 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)(c) of the Act A ere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee Such claim made !n the Return cannot amount to the inaccurate particulars. Respectfully following the SC decision, I have no hesitation in directing the AO to delete the penalty imposed.”
Page 6 of 7 (4.1.1) The Ld. Departmental Representative (DR) for Revenue, though relying on the aforesaid order dated 03.05.2017 passed u/s 271(1)(c) of the Act, did not bring any facts and circumstances to persuade us to take a view different from the view taken by the Ld. CIT(A) in the impugned appellate order.
(4.2) In view of the foregoing discussion, we are of the view that there is no case for any interference from us in the impugned appellate order passed by the Ld. CIT(A). We are also of the view that the order of the Hon'ble Supreme Court in the case of Reliance Petroproducts (P) Ltd. (supra) is applicable in the facts and circumstances of the present case before us. In view of the foregoing, we decline to interfere with the impugned appellate order passed by the Ld. CIT(A), and accordingly, the appeal filed by the Revenue is dismissed.
In the result, the appeal of Revenue is dismissed.
Order was orally pronounced in the open Court on 11/11/2024 after conclusion of the hearing. This detailed order in writing is pronounced today in open court on 13/11/2024.