Nirmal Kumar Bardia, M/S Kalpataru Gems, Ummaid Bhawan, Baragangore Ka Rasta, Jaipur v. Deputy Commissioner Of Income Tax, Central Circle-2, Jaipur , New Central Revenue Building Statue Circle, C-Scheme, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 50 / 2016 Nirmal Kumar Bardia, M/s Kalpataru Gems, Ummaid Bhawan, BaraGangore Ka Rasta, Jaipur ----Appellant Versus Deputy Commissioner of Income Tax, Central Circle-2, Jaipur , New Central Revenue Building Statue Circle, C-scheme, Jaipur 302001. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Gunjan Pathak with Ms. Ishita Rawat For Respondent(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 31/10/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the assessee and confirmed the order ofthe CIT(A) and AO. 2.This court while admitting the appeal on 02.05.2017 framedthe following question of law:- “A. Whether on the facts and in the circumstances of thecase and in law, the Tribunal was justified in levying ofPenalty u/s 271(1)(c) of the Act of 1961 merely on thebasis of addition made during assessment proceedingswithout there being any cogent material with the ld.Respondent to show that appellant had consciouslyconcealed the particulars of income or deliberatelyfurnished inaccurate particulars?” 3.Counsel for the appellant has contended that the assesseehas received some amount by way of salary from foreign countrywhere the tax was already paid, whereas he was denied thebenefit of capital gain by the accounting scheme. He has taken usthrough the provision of Section 271(1)(c) of the Income Tax Actwhich reads as under:- “[Failure to furnish returns, comply withnotices, concealment of income, etc. If the[Assessing] Officer or the [Commissioner(Appeals)] [or the [Principal Commissioneror] Commissioner] in the course of anyproceedings under this Act, is satisfied thatany person— notices, concealment of income, etc. If the[Assessing] Officer or the [Commissioner(Appeals)] [or the [Principal Commissioneror] Commissioner] in the course of anyproceedings under this Act, is satisfied thatany person— (c) has concealed the particulars of hisincome or inaccurate particulars of [suchincome, or]”income or inaccurate particulars of [suchincome, or]” 4. He has relied on the following decisions:- (I) Dilip N. Shiroff vs. Joint Commissioner of Income Tax & Anr. (SC) (2007) (291 ITR 0519 (ii) Commissioner of Income Tax Vs. Skyline Auto Products (P)Ltd. (2004) 271 ITR 0335 (Mad HC)Ltd. (2004) 271 ITR 0335 (Mad HC) (iii) Price Waterhouse Coopers Pvt. Ltd. vs. Commissioner ofIncome Tax (SC) (2012) 348 ITR 0306Income Tax (SC) (2012) 348 ITR 0306 (iv) Shervani Hospitalities Ltd. vs. Commissioner of Income Tax(Del HC) (2013) 85 CCH 0076 (v) Chandra Pal Bagga vs. Income Tax Appellate Tribunal and Anr.(Raj HC) (2003) 261 ITR 0067 (vi) Commissioner of Income Tax vs. Sumerpur Truck OperatorsUnion (2006) 203 CTR 0205 (Raj HC) 5. He has strongly relied on the decision of Supreme Court of India in Commissioner of Income Tax Vs. Reliance PetroProducts (P) LTD. (SC) (2012) 348 ITR 0306 wherein it has been held as under:- “7. As against this, Learned Counsel appearing on behalfof the respondent pointed out that the language ofSection 271(1)(c) had to be strictly construed, this beinga taxing statute and more particularly the one providingfor penalty. It was pointed out that unless the wordingdirectly covered the assessee and the fact situationherein, there could not be any penalty under the Act. Itwas pointed out that there was no concealment or anyinaccurate particulars regarding the income weresubmitted in the Return. Section 271(1)(c) is as under: 5. He has strongly relied on the decision of Supreme Court of India in Commissioner of Income Tax Vs. Reliance PetroProducts (P) LTD. (SC) (2012) 348 ITR 0306 wherein it has been held as under:- “7. As against this, Learned Counsel appearing on behalfof the respondent pointed out that the language ofSection 271(1)(c) had to be strictly construed, this beinga taxing statute and more particularly the one providingfor penalty. It was pointed out that unless the wordingdirectly covered the assessee and the fact situationherein, there could not be any penalty under the Act. Itwas pointed out that there was no concealment or anyinaccurate particulars regarding the income weresubmitted in the Return. Section 271(1)(c) is as under: 271(1) If the Assessing Officer or theCommissioner (Appeals) or the Commissioner inthe course of any proceedings under this Act, issatisfiedthatanyperson- (c) has concealed the particulars of his income orfurnished inaccurate particulars of such income. A glance at this provision would suggest that inorder to be covered, there has to be concealmentof the particulars of the income of the assessee.Secondly, the assessee must have furnishedinaccurate particulars of his income. Present is notthe case of concealment of the income. That is notthe case of the Revenue either. However, theLearned Counsel for Revenue suggested that bymaking incorrect claim for the expenditure oninterest, the assessee has furnished inaccurateparticulars of the income. As per Law Lexicon, themeaning of the word "particular" is a detail ordetails (in plural sense); the details of a claim, orthe separate items of an account. Therefore, theword "particulars" used in the Section 271(1)(c)would embrace the meaning of the details of theclaim made. It is an admitted position in thepresent case that no information given in theReturn was found to be incorrect or inaccurate. It isnot as if any statement made or any detail suppliedwas found to be factually incorrect. Hence, at least,prima facie, the assessee cannot be held guilty offurnishing inaccurate particulars. The LearnedCounsel argued that "submitting an incorrect claimin law for the expenditure on interest wouldamount to giving inaccurate particulars of suchincome". We do not think that such can be theinterpretation of the concerned words. The words are plain and simple. In order to expose theassessee to the penalty unless the case is strictlycovered by the provision, the penalty provisioncannot be invoked. By any stretch of imagination,making an incorrect claim in law cannottantamount to furnishing inaccurate particulars. InCommissioner of Income Tax, Delhi v. Atul MohanBindal MANU/SC/1496/2009 : 2009 (9) SCC 589where this Court was considering the sameprovision, the Court observed that the AssessingOfficer has to be satisfied that a person hasconcealed the particulars of his income or furnishedinaccurate particulars of such income. This Courtreferred to another decision of this Court in Unionof India v. Dharamendra Textile ProcessorsMANU/SC/4448/2008 : 2008 (13) SCC 369 as also,the decision in Union of India v. Rajasthan Spg. &Wvg. Mills MANU/SC/0786/2009 : 2009 (13) SCC448 and reiterated in para 13 that: 13. It goes without saying that for applicability ofSection 271(1)(c), conditions stated therein mustexist. 13. It goes without saying that for applicability ofSection 271(1)(c), conditions stated therein mustexist. 8. Therefore, it is obvious that it must be shownthat the conditions under Section 271(1)(c) mustexist before the penalty is imposed. There can beno dispute that everything would depend upon theReturn filed because that is the only document,where the assessee can furnish the particulars ofhis income. When such particulars are found to beinaccurate, the liability would arise. In Dilip N.Shroff v. Joint Commissioner of Income Tax,Mumbai and Anr. MANU/SC/3182/2007 : 2007 (6)SCC 329 this Court explained the terms"concealment of income" and "furnishing inaccurateparticulars". The Court went on to hold therein thatin order to attract the penalty under Section 271(1)(c), mens rea was necessary, as according to theCourt, the word "inaccurate" signified a deliberateact or omission on behalf of the assessee. It wenton to hold that Clause (iii) of Section 271(1)provided for a discretionary jurisdiction upon theAssessing Authority, inasmuch as the amount ofpenalty could not be less than the amount of taxsought to be evaded by reason of suchconcealment of particulars of income, but it maynot exceed three times thereof. It was pointed outthat the term "inaccurate particulars" was notdefined anywhere in the Act and, therefore, it washeld that furnishing of an assessment of the valueof the property may not by itself be furnishinginaccurate particulars. It was further held that theassessee must be found to have failed to prove that his explanation is not only not bona fide but allthe facts relating to the same and material to thecomputation of his income were not disclosed byhim. It was then held that the explanation must bepreceded by a finding as to how and in whatmanner, the assessee had furnished the particularsof his income. The Court ultimately went on to holdthat the element of mens rea was essential. It wasonly on the point of mens rea that the judgment inDilip N. Shroff v. Joint Commissioner of IncomeTax, Mumbai and Anr. was upset. In Union of Indiav. Dharamendra Textile Processors (cited supra),after quoting from Section 271 extensively and alsoconsidering Section 271(1)(c), the Court came tothe conclusion that since Section 271(1)(c)indicated the element of strict liability on theassessee for the concealment or for givinginaccurate particulars while filing Return, there wasno necessity of mens rea. The Court went on tohold that the objective behind enactment of Section271(1)(c) read with Explanations indicated with thesaid Section was for providing remedy for loss ofrevenue and such a penalty was a civil liability and,therefore, willful concealment is not an essentialingredient for attracting civil liability as was thecase in the matter of prosecution under Section276C of the Act. The basic reason why decision inDilip N. Shroff v. Joint Commissioner of IncomeTax, Mumbai and Anr. (cited supra) was overruledby this Court in Union of India v. DharamendraTextile Processors (cited supra), was that accordingto this Court the effect and difference betweenSection 271(1)(c) and Section 276C of the Act waslost sight of in case of Dilip N. Shroff v. JointCommissioner of Income Tax, Mumbai and Anr.(cited supra). However, it must be pointed out thatin Union of India v. Dharamendra Textile Processors(cited supra), no fault was found with thereasoning in the decision in Dilip N. Shroff v. JointCommissioner of Income Tax, Mumbai and Anr.(cited supra), where the Court explained themeaning of the terms "conceal" and inaccurate". Itwas only the ultimate inference in Dilip N. Shroff v.Joint Commissioner of Income Tax, Mumbai andAnr. (cited supra) to the effect that mens rea wasan essential ingredient for the penalty underSection 271(1)(c) that the decision in Dilip N.Shroff v. Joint Commissioner of Income Tax,Mumbai and Anr. (cited supra) was overruled.” of concurrent finding of all the authorities, no interference is called for. 7.We have heard both the parties. 8.In view of well settled proposition and decision of the Supreme Court in the case of Reliance Petro Products (Supra, thiswill not amount to concealment. Hence, the issue is answered in favour of the assessee against the department. 9. The appeal stands allowed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. B. M. G./Gourav/19