Assessing Officer cannot impose penalty u/s. 271(1)(c) on the basis of routine and general presumptions
Whether it be a case of only concealment or of only inaccuracy of particulars or both, the particulars of income so vitiated would be specific and definite and be known in the assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a position to initiate the penalty proceedings on one or both of the grounds of default as may have been specifically and directly detected.
CASE LAWS DETAILS
DECIDED BY: ITAT, MUMBAI BENCH `K’, MUMBAI, IN THE CASE OF : ITO v. Oasis Securities Ltd., APPEAL NO: ITA No. 846/M/2008, DECIDED ON: January 29, 2010
RELEVANT PARAGRAPH
7.3 Now coming to the merits of the case, we noticed that the AO levied penalty u/s 271(l)(c) on the ground that the assessee has filed inaccurate particulars of income. What is inaccurate particulars of income within the meaning of provisions of section 271(l)(c) of the Act has been discussed in details by the 1TAT Mumbai Bench in the case of Mimosa Investment Co. Pvt. Ltd, in ITA NO. 2983/Mum/07 for AY 2004-05 order dated 15.01.09. The said order has been followed by the ITAT in the case of ITO Vs. GACL Ltd. in ITA No. 6528/M/05 vide order dated 19.03.2009, the decision cited by the learned AK. The facts of the case of ITO Vs. GACL Ltd were that the assessee claimed loss as loss from trading of shares. The Assessing Officer treated the said loss under Explanation to section 73 and treated the same as deemed speculation loss. The Assessing Officer has apportioned the interest and other expenses attributable to speculation business income. Penalty u/s 271(l)(e) levied by the AO has been cancelled by the ITAT following their another decision in case of Mimosa Investment Co Pvt. Ltd, ITA NO 2983/Mum/07 for AY 2004-05 order dated 15.01.09 wherein it was held that the proceedings under section 271(1) (C) can be initiated only if the A.O or the first Appellate authority is satisfied in the course of any proceedings under the Act. If he is satisfied as per clause (c) that any person has concealed the particulars of his income or has furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty the sum mentioned in sub-clause (iii) of clause (c). The expression used in clause (c) is ‘has concealed the particulars of his income’ or ‘furnished inaccurate particulars of such income’. Therefore, both in eases of concealment and inaccuracy the phrase ‘particulars of income’ are used. It will be noted that as regards concealment, the expression in clause (c) is ‘has concealed the particulars of his income’ and not ‘has concealed his income’, The expressions “has concealed the particulars of income” and has furnished inaccurate particulars of income” have not been defined either in section 271(l)(c) or elsewhere in the Act. There cannot be a straight jacket formula for detection of these defaults of concealment of particulars or of furnishing inaccurate particulars of income. It depends upon the facts of the each case. There was concealment or not is, ordinarily, a question of fact. Once bearing in mind the correct principles comes to the conclusion that the assessee has discharged the onus, it becomes a conclusion of fact. Similarly, whether the explanation offered by the assessee was bona fide or not is also a question of fact. In the assessment proceedings the ITO ascertaining the total income chargeable to tax would be in a position to deduct the specific or definite particulars of income concealed or inaccurate particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it would amount to concealment to that extent. In the same way where specific and definite particulars of income are detected as inaccurate, then such figure will also make the total income inaccurate in particulars to the extent it does not include such income. In other words the AO cannot invoke provision of section 271(1)(c) on the basis of routine and general presumptions. Whether it be a case of only concealment or of only inaccuracy of particulars or both, the particulars of income so vitiated would be specific and definite and be known in the assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a position to initiate the penalty proceedings on one or both of the grounds of default as may have been specifically and directly detected.
7.4 It was also held that from the scheme of the Act, two important things come out arc that it is the duty of the assessee to furnish particulars of income which should be accurate particulars, simultaneously he has right to claim all exemptions and deductions provided in the Act, according to the assessee for which he is entitled. The duty of the Assessing Officer is to assess real and correct income in accordance with law. The CBDT in its Circular No. 14(XL35) of 1955 dated 11.04.1955 stated that officers of the Department must not take advantages of ignorance of an assessee as to his rights, it is one of their duties to assist a tax payer in every reasonable way On the basis of detailed discussions in this regard the ITAT observed that after furnishing particulars regarding determination of income the assessee has right to claim exemption and deduction, according to him which are as per law .The Assessing Officer while discharging his duty allow or disallow assessee’s claim and arrived at. a different figure of total income then the total income declared by the assessee, that case cannot be said to be a case of furnishing inaccurate particulars or concealing of particulars of income.
7.5 In the light of above discussions and the decisions of the 1TAT, we find that on identical set of facts, the ITAT has cancelled the penalty levied u/s 271(l)(c), therefore, to maintain consistency we bound to follow the decisions of ITAT and in the light of that the order of CIT(A) is upheld. On merit, we find that in the case under consideration the assessee has filed all particulars of income which were necessary for determining total income. The assessee was of the view that the expenses related to own share trading/speculation business activities were negligible therefore apportionment of expenses toward own share trading/speculation business was not necessary. Whereas the AO was of the view that apportion of expenses in between speculation business and other business were required and he do so on the basis of particulars file by the assessee. Merely the AO and assessee were having different views that does not amount to a case of furnishing inaccurate particulars of income. Under the circumstances this is not a case of furnishing inaccurate particulars. Since it is not a case of furnishing inaccurate particulars, penalty provisions under section 271(l)(c) are not applicable, we accordingly find that the CIT(A) has rightly directed AO to exclude the amount of Rs. 34,23,891/- for calculation of penalty u/s 27 1 (l)(c).
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