M/S.gangotri Textiles Ltd v. The Deputy Commissioner Of Income Tax,Corporate Circle 2,Coimbatore

In the High Court of Judicature at Madras Orders Reserved On Orders Pronounced On 18.08.2020 25.08.2020 Coram : The Honourable Mr.Justice T.S.SIVAGNANAMand The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.266 of 2018and C.M.P.Nos.4876 & 4877 of 2018 M/s.Gangotri Textiles Ltd.,35, Robertson Road,RS Puram, Coimbatore.PAN: ...Appellant Vs The Deputy Commissioner of Income Tax,Corporate Circle 2,Coimbatore. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 againstthe order dated 26.05.2017 in ITA No.3413/Mds/2016 on the fileof the Income Tax Appellate Tribunal Chennai 'A' Bench for theassessment year 2012-13. Against the order dated 28/09/2016 made in Appeal No.148/15-16,on the file of the Commissioner of Income Tax (Appeal)-I,Coimbatore for the assessment year 2012-13. against the order dated 12/03/2015 and 25/09/2015 made in PANNO.AAACG8018M on the file of the Deputy Commissioner of IncomeTax Corporate Circle-2, Coimbatore respectively for theassessment year 2012-13 For Appellant : M/s.S.YogalakshmiFor Respondent : Mr.T.R.Senthil Kumar M/s.K.G.Usha Rani Standing Counsel JUDGMENTJudgment was delivered by T.S.SIVAGNANAM,J This appeal by the assessee filed under Section 260A of theIncome Tax Act, 1961 (“the Act” for brevity), is directedagainst the order dated 26.05.2017 passed by the Income TaxAppellate Tribunal, Chennai 'A' Bench (for brevity, theTribunal) in ITA No.3413/Mds/2016 for the assessment year 2012-13. 3.The appeal is entertained on the following substantialquestions of law: “1.Whether the penalty imposed u/s. 271(1)(c)of the Act for the Assessment Year 2012-13 issustainable in law despite the invalid initiationof the said proceedings on the issuance of theshow cause notice dated 12.03.2015? 2.Whether the penalty imposed u/s. 271(1)(c)of the Act for the Assessment Year 2012-13 issustainable in law despite the complete disclosureof the sale of windmills and vacant lands in thefinancial statements which formed part of theannual report and return of income?3.Whether the penalty under consideration issustainable on the debatable issue on thereporting of capital gains pertaining to the saleof windmills and vacant lands? 3.We have elaborately heard M/s.S.Yogalakshmi, learnedcounsel for the appellant/assessee and M/s.K.G.Usha Rani,learned Standing Counsel appearing for the respondent/revenue. 4.The assessment for the year under consideration, AY 2012-13 was completed under Section 143(3) of the Act by order dated12.03.2015. During the course of the scrutiny assessment, theAssessing Officer noticed that the assessee had sold two landedproperties at Kalapatti and Dharapuram and the capital gain wasworked out for both the properties at Rs.1,37,31,142/-. Howeverthis was not admitted by the assessee in the return of income.Further, the Assessing Officer found that the sale of windmillamounting to Rs.21,60,00,000/- was not admitted by the assesseein the return of income filed and the short term capital gainarising on the sale of windmill was Rs.21,59,90,469/- afterreducing the opening WDV of Rs.9,531/-. The Assessing Officercalled upon the assessee to explain this aspect and in thecourse of assessment, the assessee admitted to have omitted thesale of land and windmill and filed a letter dated 03.03.2015 along with a computation of Long Term Capital Gain on thesale of lands and the Short Term Capital Gain on the saleof windmill. Taking note of the admission made by the assessee,the LTCG and the STCG were added to the total income of theassessee and accordingly assessment was completed. Theassessment order stated that the penalty proceedings underSection 271(1)(c) is initiated separately. A notice underSection 274 r/w. 271(1)(c) of the Act dated 12.03.2015 wasissued to the assessee to show cause as to why an order imposingpenalty should not be made under Section 271 of the Act.Personal hearing was offered to the assessee. The assesseeavailed the opportunity and filed their written submissionsdated 08.04.2015 inter alia stating that they would be put togreat hardship if penalty is imposed, that they had disclosedparticulars of all income voluntarily and that there was noconcealment of any income or furnishing of inaccurateparticulars of income and therefore, there was no question ofconcealment of income under Section 271(1)(c) of the Act and thequestion of levy of penalty would not arise. They relied uponthe decision of this Court in CIT vs. K.R.Chinni Krishna Chetty[246 ITR 121 (Madras)] and the decision of the Hon'ble SupremeCourt in the case of Hindustan Steel Ltd. vs. State of Orissa[83 ITR 26(SC)]. By notice dated 31.07.2015 the assessee wascalled upon to appear before the Assessing Officer on 11.08.2015and on receipt of the notice, the assessee sent a representationdated 31.07.2015 requesting for dropping the penaltyproceedings, wherein they stated that at the time of assessment,they found out the omission with regard to the LTCG and the STCGand voluntarily offered the capital gains, that they actedbonafidely and that the omission to mention the same in thereturn of income was an inadvertent bonafide mistake. TheAssessing Officer after considering the submissions made and thedecisions relied on, by order dated 25.09.2015 levied minimumpenalty of 100%. 5.Aggrieved by such order, the assessee preferred an appealbefore the Commissioner of Income Tax (Appeals)[CIT(A)]. Apartfrom reiterating the stand regarding the bonafide inadvertentmistake, the assessee submitted that the entire Unit of theassessee has been sold by the bankers, that the assessee did noteven have an office space to function, that the assessee haddisclosed the relevant details regarding the sale of the landsand windmill in their annual report, which was published andthat there was no concealment to the said effect. The CIT(A)rejected the stand taken by the assessee and held that there wasconcealment of income and penalty was leviable and accordinglyconfirmed the order of the Assessing Officer. Aggrieved oversuch order, the assessee preferred an appeal before the Tribunalreiterating the stand that there was no willful concealment ofparticulars and prayed for deleting the penalty. The Tribunal took note of the submissions, more particularly, the submissionthat it was an inadvertent mistake and rejected the same, afternoting the conduct of the assessee and accordingly confirmed theorder passed by the CIT(A) and dismissed the appeal. took note of the submissions, more particularly, the submissionthat it was an inadvertent mistake and rejected the same, afternoting the conduct of the assessee and accordingly confirmed theorder passed by the CIT(A) and dismissed the appeal. 6.M/s.S.Yogalakshmi, learned counsel for the appellantstrenuously contended that the notice dated 12.03.2015 issuedunder Section 274 r/w. 271(1)(c) of the Act is defective and itis an outcome of non-application of mind and therefore, thenotice is non-est in law. Consequently, all proceedingsculminating in the order of the Tribunal have to be declared asnon-est. Secondly, it was submitted that the assessee actedwith bonafide that there was no malafide intention on the partof the assessee, that the assessee incurred huge loss, thatthere was no positive income as the banks have sold the propertyand that on re-working of the capital gains, the loss gotreduced from RS.33 Crores to Rs.11 Crores which was a paperloss. It is further submitted that the imposition of penaltyunder Section 271(1) of the Act is not automatic and theAssessing Officer has to give reasons as to why penalty shouldbe imposed and though mens rea may not apply yet the bonafide ofthe assessee are required to be considered which was not done bythe Assessing Officer. Further, it is submitted that theAssessing Officer held that the assessee furnished inaccurateparticulars. On appeal, the CIT(A) held that the assesseeconcealed its income and it was totally on a different ground,on which, the order of CIT(A) was affirmed by the Tribunal.This also shows the non-application of mind. It is furtherreiterated that the Assessing Officer has to record reasons andthat the penalty order dated 25.09.2015 is devoid of reasons andhence liable to be set aside. In support of her contentions thelearned counsel referred to the following decisions which areenumerated below under five sub headings which are as follows: I - Sec 271 (1) (C) of IT Act penalty set-aside based onBonafide conduct of assessee / inadvertence: 1. CIT vs. Pricewaterhouse Coopers Pvt. Ltd. [2012-ITRVSC-244] 2. T. Ashok Pai vs. CIT [(2007) 161 Taxmann 340 (SC)] 3. Hindustan Steel v. State of Orissa [(1992) 83 ITR 26] 4. CIT vs. Societex [2012-ITRV-HC-DEL-163] 5. CIT vs. Bennett Coleman & Co. Ltd [2013-ITRV-HC MUM-030] 6. CIT vs. Sania Mirza [2013-ITRV-HC-AP-002] 7. CIT vs. Balaji Distilleries Ltd. [(2003) 126 TAXMAN 264(Mad.)] 8. CIT vs. S.D.Rice Mills [(2005) 275 ITR 206] 9. Jagannath Singh v. CWT [(1980) 122 ITR 114] 10.Acit Circle-4(1) Visakhapatnam V. Sri Ganta Srinivasa RaoVisakhapatnam. [2016 SCC ONLINE ITAT 1631] II - Penalty set-aside for invoking two limbs of Section 271 (1)(c) of IT Act by AO: 2. CIT V. Manjunatha Cotton and Ginning Factory [(2012) SCCOnLine Kar 8862] 10.Pr. CIT vs. Smt. Baisetty Revathi - [2017] 398 ITR 88(Andhra Pradesh HC) 12.Muninaga Reddy vs. Assistant Commissioner of Income Tax ITANOS. 251/2016 & 390/2016 (T-IT) III - Sec 271 (1) (C) of IT Act – Concealment of income &Furnishing inaccurate particulars of income have differentconnotations: IV - Sec 271 (1) (C) of IT Act “Satisfaction” of the AO isessential while holding penalty: 1. Mak Data P. Ltd vs Commissioner Of Income Tax- (2013) – 358ITR 593 https://hcservices.ecourts.gov.in/hcservices/ 2. D.M. Manasvi - 86 ITR 557 (SC) 3. CIT vs. SSA Emerrald Meadows - ITA No. 380/2015 (Kar) 4. PCIT vs M/S Deccan Mining Syndicate Pvt - 2018 I.T.A.No.501/2017 (Kar HC) 6. Commissioner of Income Tax vs. Dee Control and ElectricPvt. Ltd (2017) 100 CCH 0185 AllHC 7. CIT vs. Jain Export Private Ltd - ITA No.235/2013 8. CIT vs. MWP Ltd - ITA No.332/2007 9. CIT vs. Rucha Engineers Pvt. Ltd – 2015-ITRV-HC-MUM-025 10.CIT vs. Dalmia Dyechem Industries - ITA No.1396/2013. IV - Sec 271 (1) (C) of IT Act “Satisfaction” of the AO isessential while holding penalty: 1. Mak Data P. Ltd vs Commissioner Of Income Tax- (2013) – 358ITR 593 https://hcservices.ecourts.gov.in/hcservices/ 2. D.M. Manasvi - 86 ITR 557 (SC) 3. CIT vs. SSA Emerrald Meadows - ITA No. 380/2015 (Kar) 4. PCIT vs M/S Deccan Mining Syndicate Pvt - 2018 I.T.A.No.501/2017 (Kar HC) 6. Commissioner of Income Tax vs. Dee Control and ElectricPvt. Ltd (2017) 100 CCH 0185 AllHC 7. CIT vs. Jain Export Private Ltd - ITA No.235/2013 8. CIT vs. MWP Ltd - ITA No.332/2007 9. CIT vs. Rucha Engineers Pvt. Ltd – 2015-ITRV-HC-MUM-025 10.CIT vs. Dalmia Dyechem Industries - ITA No.1396/2013. V - Question of Law can be raised at any stage:K. LUBNA & ORS. VS BEEVI & ORS – (2020) CIVIL APPEALNOs.2442-2443 OF 2011 – SC. 7.Per contra, M/s.K.G.Usharani, learned Standing Counsel forthe respondent/revenue submitted that the first appellateauthority and the Tribunal after examining the factual positionconcurrently held that the assessee is liable for payment ofpenalty and there is no substantial question of law arising forconsideration in this appeal. The conduct of the assessee inconcealing the income by not mentioning the sale of windmill andthe lands will clearly establish the lack of bonafides on thepart of the assessee. To demonstrate the conduct of theassessee, the learned standing counsel referred to the list ofdates and pointed out that the conduct of the assessee willclearly show that the concealment was motivated and intended tobenefitthe assessee. Further it is submitted that at no earlierpoint of time, the assessee challenged the validity of thenotice dated 12.03.2015 and the assessee is precluded fromraising such a contention before this Court for the first time.Further it is submitted that the defect in the notice issued atthe first instance, which was never canvassed by the assessee atany point of time and now canvassing for the first time beforethis Court cannot be a substantial question of law. The learnedStanding Counsel referred to the return of income filed on26.09.2012 and pointed out that under the head 'capital gains',the assessee has shown 'Nil' in all the columns. That apart,the assessee never filed a revised return and for the firsttime, the assessee admitted to do so on 1[st] March 2017 when thematter was before the Tribunal. This will clearly establishthat the conduct of the assessee is not bonafide. Further it issubmitted that the penalty proceedings cannot be set asidemerely on the ground that the return of income and the assessed income was a loss. In this regard, placed reliance on thedecision of the Hon'ble supreme Court in CIT vs. Shree ChowatiaTubes (India) (P) Ltd. [(2017) 80 Taxmann.com 388]. Further, itis submitted that the non-disclosure of the capital gains cameto light based on the annual information report and that is howthe Assessing Officer came to know that the sale of the land andwindmill were not admitted by the assessee in the return ofincome, which led to issuance of notice under Section 143(2) ofthe Act. The assessee never declared anywhere in the return ofincome about the sale of the lands and windmill and the copy ofthe annual report was not placed before the Assessing Officer orbefore the CIT(A). The learned standing counsel placed relianceon the decisions in the case of N.G.Technoligies (InLiquidation) vs. Commissioner of Income Tax [(2016) 70Taxmann.com 37 (SC)], Kuldeep Wines vs. Commissioner of IncomeTax [(2014) 52 Taxmann.com 248(SC)], Jivanlal and Sons vs.Assistant Commissioner of Income Tax [(2019) 103 Taxmann.com 208(SC)], Hamirpur District Cooperative Bank Ltd. vs. Commissionerof Income Tax, Kanpur [(2020) 113 taxmann.com 447 (SC)],Sundaram Finance Ltd. vs. Deputy Commissioner of Income Tax[(2018) 99 taxmann.com 152 (SC)] and [(2018) 93 taxmann.com 250(Madras)] and Chemmancherry Estates Co. vs. Income Tax Officer,Ward-VIII(2) [(2019) 111 taxmann.com 66 (Madras)]. 8.After elaborately hearing the learned counsels on eitherside and carefully perusing the materials placed before thisCourt including the decisions relied on by the learned counselson either side, the first issue to be considered is whether thenotice dated 12.03.2015 issued under Section 274 r/w. 271(1)(c)of the Act is defective. The argument of M/s.S.Yogalakshmi,learned counsel for the appellant is that the notice stated thatit appears to the Assessing Officer that the assessee concealedthe particulars of income or furnished inaccurate particulars ofincome. It is the argument that the word 'or' has been used andnot 'and' . The Assessing Officer did not apply his mind whileissuing the notice to state as to whether he was of the primafacie view that the assessee concealed the particulars of incomeor furnished inaccurate particulars of income. Therefore it isthe submission that this defect is inherent, which goes to theroot of the matter and all consequential proceedings would haveto be rendered as nonest. Among the decisions, which wererelied on by M/s.S.Yogalakshmi, learned counsel for theappellant, emphasis was laid on the decision in ManjunathaCotton and Ginning Factory. This decision is pressed intoservice to substantiate her contention that if the notice doesnot specify as to which limb of Section 271(1)(c) is attracted,the penalty proceedings are vitiated. Unfortunately, no suchcontention was advanced by the assessee at any earlier point oftime and for the first time before this Court such a contentionis advanced. The submission of the learned counsel is that this, being the question of law, can be raised. We do not agreewith the submission for more than one reason. Firstly a defectin the notice, if according to the assessee would result in ajurisdictional error, is not merely a pure question of law, buta mixed question of fact and law. If such is the position, thevigilant assessee, more particularly, a listed Company like theassessee before us should point out the factual issue at thevery first instance. If that was not done by the assessee, thenit goes to show that the assessee was not prejudiced by the useof the expression 'or'. this, being the question of law, can be raised. We do not agreewith the submission for more than one reason. Firstly a defectin the notice, if according to the assessee would result in ajurisdictional error, is not merely a pure question of law, buta mixed question of fact and law. If such is the position, thevigilant assessee, more particularly, a listed Company like theassessee before us should point out the factual issue at thevery first instance. If that was not done by the assessee, thenit goes to show that the assessee was not prejudiced by the useof the expression 'or'. 9.This very question was considered in the case of SundaramFinance Ltd., wherein an identical submission was made by theassessee by placing reliance on Manjunatha Cotton and GinningFactory. The Court taking note of the fact that the authoritiesconcurrently rejected the explanation offered by the assesseeand refused to interfere with the factual finding. In paragraph16 of the judgment, the argument regarding the defective noticewas considered and answered against the assessee which is quotedherein below: 16. We have perused the notices and we findthat the relevant columns have been marked, moreparticularly, when the case against the assessee isthat they have concealed particulars of income andfurnished inaccurate particulars of income.Therefore, the contention raised by the assessee isliable to be rejected on facts. That apart, thisissue can never be a question of law in theassessee's case, as it is purely a question offact. Apart from that, the assessee had at noearlier point of time raised the plea that onaccount of a defect in the notice, they were put toprejudice. All violations will not result innullifying the orders passed by statutoryauthorities. If the case of the assessee is thatthey have been put to prejudice and principles ofnatural justice were violated on account of notbeing able to submit an effective reply, it wouldbe a different matter. This was never the plea ofthe assessee either before the Assessing Officer orbefore the first Appellate Authority or before theTribunal or before this Court when the Tax CaseAppeals were filed and it was only after 10 years,when the appeals were listed for final hearing,this issue is sought to be raised. Thus on facts,we could safely conclude that even assuming thatthere was defect in the notice, it had caused noprejudice to the assessee and the assessee clearlyunderstood what was the purport and import ofnotice issued under Section 274 r/w, Section 271 of the Act. Therefore, principles of natural justicecannot be read in abstract and the assessee, beinga limited company, having wide network in variousfinancial services, should definitely be precludedfrom raising such a plea at this belated stage. 10.The SLP filed by the assessee against the above decisionwas dismissed, [(2018) 99 taxmann.com 152 (SC)]. Further, wefind that in the reply given by the assessee on 08.04.2015, theassessee would state that there is no concealment any income orfurnishing any inaccurate particulars. Therefore, the assesseeunderstood the notice to be a notice for concealment of anyincome or furnishing any inaccurate particulars and thereforethe assessee cannot be permitted to raise a contention beforethis Court for the first time alleging defect in the notice.Thus, in the considered view of this Court, the assessee isprecluded from raising any such contention regarding thevalidity of the notice. 11.M/s.S.Yogalakshmi, learned counsel for the appellantstrenuously contended that the assessee acted bonafidely,voluntarily disclosed the details, that there was no intentionto suppress the material, that the sale of lands and windmillwere disclosed in the annual report and that without consideringthis aspect, the Assessing Officer has levied penalty. 11.M/s.S.Yogalakshmi, learned counsel for the appellantstrenuously contended that the assessee acted bonafidely,voluntarily disclosed the details, that there was no intentionto suppress the material, that the sale of lands and windmillwere disclosed in the annual report and that without consideringthis aspect, the Assessing Officer has levied penalty. 12.Among the decisions relied on, emphasis was laid on thedecision in the case of CIT vs. Pricewaterhouse Coopers Pvt.Ltd. To answer this issue, it would be first necessary toexamine the factual position and to assess the conduct of theassessee, which is being projected as being absolutely bonafide.The return of income was filed by the assessee on 26.09.2012. Anotice under Section 143(2) was issued on 13.08.2013 for whichthere was no response and the Assessing Officer issued noticeSection 142(1) dated 09.09.2014 calling for details. Theassessee submitted their reply dated 22.09.2014 in which,admittedly no information was disclosed about the sale the landsand windmill. On 03.03.2015, a letter was filed by theassessee, which is in response to the notice under Section 143(2), in which, the assessee states that due to oversight, theyhad not offered the capital gains in their return and attached asummary of total income adjusting profit on the LTCG and theSTCG. To be noted, the assessee did not file a revised return.The assessment was completed under Section 143(3). In responseto the penalty notice dated 12.03.2015, the assessee stated thatthere is no concealment of income or furnishing of anyinaccurate particulars and therefore, Section 271(1)(c) will notstand attracted. Further opportunity was given to the assesseeand submissions were made, after which, the Assessing Officerconsidered and levied penalty which order has been affirmed by the CIT(A) and the Tribunal. From the above dates and events,it is seen that the assessee took 19 months to respond to thenotice dated 13.08.2013 issued under Section 143(2) and for thefirst time stated that due to oversight the sale of the landsand windmll have not been offered under the capital gains. Itis not in dispute that the assessee did not disclose about thesale of the lands and windmill in the return of income. This isclear from the perusal of the return of income and in therelevant column, it is stated as 'Nil'. The assessee reliesupon the annual report and substantial portion of the report wasread to us by the learned counsel to impress upon us that theassessee's non-disclosure was bonafide and an inadvertentmistake. Firstly, this annual report is not a report, which isfiled under the Income Tax Act. Furthermore, on facts, it isadmitted that this annual report was never filed with the IncomeTax Department. That apart, the Chartered Accountant hasreported the captial gains as Nil and this has been signed bythe Managing Director of the Company. If such is the factualposition, it will not only be a case of filing inaccurateparticulars, but also a case of concealment of income. Theinformation came to the Department through the AIR, which wasforwarded by the Registration Department and after verifying thesame, when notice was issued under Section 143(2), the assessee,for the first time statef that due to inadvertence, they did notdisclose the particulars relating to the capital gains. Theabove facts will clearly show that the assessee did not actbonafidely and the belated explanation sought to be offereddeserves to be rejected. 13.One more attempt made by the assessee was 24 months afterthe assessment were completed by attempting to file a revisedstatement of income on 01.03.2017. This statement can neverimprove the case of the assessee nor exonerate them frompenalty. Another contention advanced by M/s.S.Yogalakshmi isthat the Assessing Officer had not recorded his satisfactionthat penalty proceedings have to be initiated, by relying to thedecision in the case of D.M.Manasvi to support the argument thatthe enire circumstances should have been considered, moreparticularly, the financial distress to which the assessee wasthrown. 14.We have carefully perused the penalty order dated25.09.2015 and we find that the Assessing Officer considered allthe factual aspects raised by the assessee and rejected the sameto be absolutely without bonafides. The decisions relied on bythe assessee were also taken note of and each of the decisionswas dealt with. The Assessing Officer placed reliance on thedecision of the Hon'ble Supreme Court in Mak Data P. Ltd vs.CIT-II [(2018) 38 taxmann.com 448 (SC)] and stated thatvoluntary disclosure does not release the assesee from mischief of penalty proceedings under Section 271(1)(c) of the Act.Therefore, we find that the penalty order is a reasoned order. 15.The learned counsel had argued that the defect in thepenalty notice is a question of law which can be raised by theassessee at any point of time. We have considered thissubmission and we have rejected it. The learned counsel reliedon the decision of the Hon'ble Supreme Court in the case ofK.Lubna to submit that if the factual foundation for a case hasbeen laid and the legal consequences of the same having beenexamined, the examination of such legal consequences would be apure question of law. We have noted the factual position. Theassessee understood the notice to be under both heads, namely,furnishing of inaccurate particulars and concealment of income.This is evident from the assessee's reply dated 08.04.2015 tothe show cause notice dated 12.03.2015. Therefore, the decisionin the case of K.Lubna does not help the assessee, as there isno substantial question of law arising from such contention. 16.The learend counsel argued that the financial conditionof the assessee Company was also a relevant factor to assesstheir bonafides. This contention cannot be accepted because thesettled legal position is that penalty cannot be cancelled onthe mere ground that return of income and assessed income was aloss. In the said decision, the Hon'ble Supreme Court hadrelied upon the decision in the case of Commissioner of IncomeTax vs. Gold Coin Health Food Pvt. Ltd. [(2008) Vol. 304 ITR308], wherein it was held that Explanation 4(a) to Section 271(1)(c)(iii) is intended to levy penalty not only in a case whereafter addition of concealed income, a loss returned, afterassessment becomes positive income, but also in a case whereaddition of concealed income reduces the returned loss andfinally the assessed income is also a loss or a minor figure.In this regard, it will be beneficial to refer to the decisionin Union of India vs. Dharmendra Textile Processors [(2008) 306ITR 277(SC)], which has been referred to and relied on in thecase of N.G.Technologies Ltd. 17.As against the ecision in the case of Jivanlal and Sons,a Special Leave Petition filed against the decision of the HighCourt which confirmed the penalty order passed by the Tribunalrejecting the assessee's explanation that it had claimeddeduction on wrong advice given by the Chartered Accountant wasdismissed. The operative portion of the judgment of the HighCourt of Bombay in [(2019) 103 taxmann.com 207(Bom) is asfollows: 17.As against the ecision in the case of Jivanlal and Sons,a Special Leave Petition filed against the decision of the HighCourt which confirmed the penalty order passed by the Tribunalrejecting the assessee's explanation that it had claimeddeduction on wrong advice given by the Chartered Accountant wasdismissed. The operative portion of the judgment of the HighCourt of Bombay in [(2019) 103 taxmann.com 207(Bom) is asfollows: 2.We are unable to agree for more than onereason. The assessee is a Firm. It was throughoutbeing advised and represented by a CharteredAccountant. The Tribunal rightly proceeded on thereason. The assessee is a Firm. It was throughoutbeing advised and represented by a CharteredAccountant. The Tribunal rightly proceeded on the basis that a Chartered Accountant is deemed to beaware of the law and its intricacies. Being aprofessional, he could not have committed a mistakeas was attributed to him. The tax paid isundisputedly an inadmissible expenditure from theprofits of the business. Hence this amount shouldhave been statutorily added back. Further, from thecomputation of income, the assessee added backcertain inadmissible expenditure. However, heexcluded the amount of income tax paid to the extentof Rs.48,90,114/-. Thus, the addition was onlypartial and not full. Unless and until the legalprovision then in force permitted exclusion of theamount of income tax already paid, the CharteredAccountant could not have done this. The CharteredAccountant cannot feign ignorance of Section 40(ii)of the Income Tax Act as he is well trained and wellversed in law representing not only the assessee,but various other clients. As far as the assessee'smalafide intention is concerned, the burden wasentirely on the assessee to then show in terms ofExplanation-I to the provision permitting impositionof penalty that such intention never existed whenthe above act was committed. For that, there was nomaterial either in the form of evidence of theassessee or the affidavit of the CharteredAccountant. Hence the Commissioner was right,according to the Tribunal, in imposing this penalty.The attempt to blame the Chartered Accountant cannotresult in the assessee's exoneration and claimed inabsolute terms. In the circumstances, the penaltywas rightly imposed. 18.Thus, for the above reasons, we find that the orderpassed by the Tribunal does not call for any interference andthe Substantial Questions of law framed for consideration haveto be answered against the assessee. 19.In the result, the tax case appeal is dismissed and theSubstantial Questions of law are answered against the assessee.No costs. Consequently, connected miscellaneous petitions areclosed. Sd/- Assistant Registrar //True Copy// To 1. The Income Tax Appellate Tribunal, Madras 'A' Bench. 2. The Commissioner of Income Tax (Appeal)-I, Coimbatore. 3. The Deputy Commissioner of Income Tax Corporate Circle-2, Coimbatore. Coimbatore. +1cc to M/s.Wallcliffs Law Firm, Sr.No.27547 +1cc to M/s.T.R.Senthilkumar, Advocate, Sr.No.27663 Pre-delivery judgment made in TCA.No.266 of 2018 and C.M.P.Nos.4876 & 4877 of 2018 rsv (co)rr ii (28/09/2020)