Income Concealed to be Particularized by AO for Imposing Penalty



Court :
High Court

Brief :
Section 271(1)(c) Penalty: Merely using the words that there is concealment of income and / or furnishing inaccurate particulars of income is not sufficient.


Citation :
Not Avilable

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

Commissioner of Income Tax2 (Appellant)
v/s.
M/s. L & T Finance Ltd. (Respondent)
Mr. Suresh Kumar for the appellant
Mr. NirajShethi/b AtulJasani for the respondent

CORAM : M.S. SANKLECHA & SANDEEP K. SHINDE, J.J.

DATED : 4th JUNE, 2018.

1. These three Appeals under Section 260A of the Income Tax Act, 1961 (the Act) challenge the common order dated 19th March, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of Assessment Years 1995-96, 1996-97 and 1997-98.Thus, the three appeals.

2. The Revenue has urged only the following identical reframed question of law in all three appeals for our consideration:

(i) Whether in the facts and circumstances of the case and in law, the Tribunal was justified in deleting the penalty levied under Section 271(1)(c) of the Act?

 

3. The respondent assessee had claimed depreciation in respect of the assets acquired / purchased from the lessee and given back on lease basis popularly called “sale and lease back”. In quantum proceedings, the Tribunal by order dated 30th April, 2014 has held the respondent assessee entitled to claim depreciation on the assets used on sale and lease back basis. This by following the decision of the Supreme Court in ICDS Ltd. Vs. Commissioner of Income Tax, 350 ITR 527.

4. Being aggrieved by the order dated 30thApril, 2014 of the Tribunal in quantum proceedings, the Revenue had filed three appeals being Income Tax Appeal Nos.1625 of 2014, 1670 of 2014 and 1694 of 2014 in this Court. On 8th March, 2017 all the three appeals were admitted on identical substantial question of law, which reads as under :

“1. Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing depreciation on assets given on sale and lease back basis when the transactions were purely financial transactions?”

5. In the meantime, pending disposal of the quantum appeal by the Tribunal, the Deputy Commissioner of Income Tax imposed penalty under Section 271(1)(c) of the Act by three separate orders all dated 29th March, 2011 in respect of the Assessment Years 1995-96, 1996-97 and 1997-98.

This by following the decision of the Delhi High Court in the case of Commissioner of Income Tax Vs. Zoom Communication Pvt. Ltd. 371 ITR 570. Finally, the Tribunal by the impugned order dated 19th March, 2015 allowed the respondent’s appeals in penalty proceedings. This by holding that on merits it had by its order dated 30th April, 2014 in quantum proceedings for all the three years, held that the respondent assessee is entitled to the claim of depreciation on its assets as claimed. Thus, deleted the penalty.

6. The Revenue seeks admission of these appeals from the impugned order dated 19th March, 2015 deleting penalty under Section 271(1)(c) of the Act on the ground that the appeals in the quantum proceedings have been admitted by this Court.

It is a settled position in law that mere rejection of a claim made by the assessee would not ipso facto result in penalty under Section 271(1)(c) of the Act.

 

In fact, in Commissioner of Income Tax Vs. Reliance Petroproducts Pvt. Ltd.2010 (11) SCC 762, the Apex Court observed that “Merely because theassessee’s had claimed the expenditure, which claim was not accepted or not acceptable to the Revenue, that by itself would not in our opinion attract penalty under Section 271(1)(c)”.

Before penalty can be imposed under Section 271(1)(c) of the Act, the Revenue in terms thereof must be satisfied that the assessee had concealed particulars of income or furnished inaccurate particulars of his income.

In case, where an assessee makes a complete disclosure of facts it then cannot be said to have concealed the particulars of income or furnished inaccurate particulars of income.

Thus, mere making a claim for benefit under a particular provision of law would not attract penalty under Section 271(1)(c) of the Act if there is absence of concealment and / or furnishing of inaccurate particulars of income. This has been so held by the Apex Court in Reliance Petroproducts Pvt. Ltd. (supra).

7. We called upon Mr. Suresh Kumar, learned Counsel appearing for the Revenue to show us a finding by the Authorities under the Act that there has been concealment of particulars of income or furnishing inaccurate particulars of income on the part of the respondent assessee.

In fact, we perused the orders of the Assessing Officer imposing penalty as well as the order of the Commissioner of Income Tax (Appeals) [CIT(A)] upholding the penalty and also the impugned order of