Income Tax Appellate Tribunal - Ahmedabad
Shri Kishorebhai Bhikhabhai Virani,, ... vs The Acit, Circle-1,, Bhavnagar on 29 May, 2017
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'Mh* अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
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BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER
And SMT MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./I.T.A.No. 282/Ahd/2014
( नधा रण वष / Assessment Year : 2006-07)
Kishorebhai Bhikhabhai बनाम/ ACIT,
Virani, Vs. Circle -1,
Plot No.66, Shanta Bhuvan, Bhavnagar.
Kumud Wadi,
Bhavnagar - 364 003.
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAWPV 1516 G
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से/ Appellant by : Shri D. K. Puj, A.R.
यथ क ओर से/Respondent by: Shri Lalit P. Jain, Sr. D.R.
ु वाई क तार ख/
सन Date of Heari ng 08/10/2018
घोषणा क तार ख /Date of Pronounce ment 15/11/2018
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)-I, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-I/Cir-I- BVN/122/2013-14 dated 01.11.2013 arising in the matter of penalty order passed under Sec.271(1)(c) of the Income Tax Act, 1961(here-in- after referred to as "the Act") dated 23.03.2011 relevant to Assessment Year (AY) 2006-07.
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2. The grounds of appeal raised by the assessee are as under:-
"1. The learned Commissioner of Income Tax, (Appeals)-I, Ahmedabad has erred in confirming the penalty of Rs. 17,10,136/- levied by the learned Assistant Commissioner of Income Tax, Circie-1, Bhavnagar under section 271 (1) (C) of the Income Tax Act, 1961.
2. The learned Commissioner of Income Tax (Appeals) has further erred in holding that the Assessing Officer was justified in levying the penalty u/s. 271(1)(C) of the Act, simply because the Appellant has carried forward long term capital loss on sale of shares which was exempted u/s. 10 (38) of the Income Tax Act.
3. The learned C.I.T. (Appeals) has equally erred in disbelieving the Appellant's contention that the Appellant was of the bonafide view that such loss is allowed to be carried forward, in view of the provisions contained in Section-74 (1) (b) of the Act. Precisely for this reason, the Appellant has raised this issue upto the Hon'ble Gujarat High Court. The learned C.I.T. (Appeals) has further erred in holding that wherever there is a difference between the returned and assessed income, there is an inference of concealment as a rule of law. He has further erred in holding that the responsibility for rebutting such inference is squarely on the Appellant. He has completely failed to appreciate that the Appellant has offered an explanation which could not be said to be false and merely because such explanation was not acceptable to the Department, penalty u/s. 271 (1) (c) could not have been levied and/or confirmed.
4. The learned C.I.T. (Appeals) has further erred in holding that the Assessing Officer is not required to bring on record any additional or new evidence, which was not forming part of regular assessment, once having held by him that penalty proceedings are independent proceedings. He has equally erred in holding that where the Order itself contains facts, which would justify an inference of concealment, the penalty order is sustainable.
5. The learned C.I.T. (Appeals) should have appreciated that the carried forward of long term capital loss was claimed by the Appellant not because of any contumacious conduct of the Appellant and there was no mens rea on the part of the ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07 -3- Appellant. The penalty u/s. 271(1)(C) of the Act therefore could not have been levied and/or confirmed. The learned C.I.T. (Appeals) should have further appreciated that it was not established that the carried forward of long term capital loss claimed by the Appellant was because of any contumatious conduct. On the contrary, the Appellant has established that the claim made by the Appellant was based on his bonafide belief, and the Appellant has derived the support from the provisions of the Section 74 (1) (b) of the Act. The Appellant has therefore established that his conduct and explanation was bonafide and hence the penalty could not have been levied and/or / • confirmed.
6. The learned C.I.T. (Appeals) has therefore grievously erred in holding that the Appellant failed to offer any explanation as to why the Appellant has claimed carried forward of long term capital loss. He has further erred in holding that it cannot be considered a bonafide omission or mistake on the part of the Appellant.
7. The learned C.I.T. (Appeals) has also drawn an unwarranted inference that the Appellant was very well aware that the long term capital gain arising out of sale of shares on which STT was payable was exempt u/s. 10 (38) of the Act. The learned C.I.T. (Appeals) has therefore erroneously held that the Appellant deliberately chose to claim the carried forward of losses even though the Appellant knew fully well that the loss was exempt u/s. 10 (38) of the Act.
8. The learned C.I.T. (Appeals) should have appreciated that the Assessing Officer has completed the Assessment by invoking the provisions of section 14 (A) read with Rule-8. The Assessing Officer has observed in his Assessment Order that Section-14 (A) of the Act has been inserted by the Finance Act, 2001 and it provides that no deduction shall be allowed in respect of expenditure incurred by the Assessee in relation to income which does not form part of the total income. For this purpose, he relied upon the judgment of the Hon'ble Madras High Court in the case of C.I.T. V/s. Thiagarajan 129 I.T.R. 115 and the judgment of Hon'ble Apex Court in the case of C.I.T. V/s. Harprasad & Co., Pvt. Ltd., 99 I.T.R. 118 (SC). The learned ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07 -4- Assessing Officer has not invoked the provisions of Section-10 (38) of the Act.
9. The learned C.I.T. (Appeals) should have further appreciated that in first appeal challenging the Assessment Order, the learned First Appellate Authority has observed that in light of the provisions of the section 14 (A), the benefit of set off cannot be allowed to the Appellant from the head which is already exempt head. It is for the first time before this Tribunal, in Quantum Appeal, it was held that long term capital loss on sale of shares on which STT is payable, does not enter into the computation made u/s. 48 to 55 because u/s. 10(38), income on such transaction is exempt. However, none of the authorities, in quantum proceedings has considered the specific provision of section-74 (1) (b) of the Act, which says that where in respect of any Assessment Year, the net result of the computation under head Capital Gains is a loss to the Assessee.
The whole loss shall, subject to other provisions of this chapter, be carried forward to the following year and in so far as such loss relates to a long term capital asset, it shall be set off against income, if any, under the head Capital Gains assessable for that Assessment Year in respect of any other capital asset not being a short term capital asset.
10. The learned C.I.T. (Appeals) should have therefore appreciated that disallowance of the long term capital loss is a matter of interpretation of the different provisions of law and there being difference of opinion between the Assessing Officer as well as the Appellate authority, it cannot be said that there was a concealment of income or the Appellant has claimed wrongful deduction.
11. The learned C.I.T. (Appeals) should have further appreciated that Penal provisions u/s. 271(1)(C) cannot be applied to the reasonable compliance of law by claiming deduction u/s. 74 (1)
(b) and therefore no penalty could have been levied and/or confirmed u/s. 271 (1) (c) of the Act.
12. Appellant begs to rely on the decision of this Hon'ble Tribunal in the case of I.T.O. V/s. H.A.Shodhan (1986) 17 ITD 479 wherein, in its return of income, the Assessee had not shown capital gains derived from the sale of a land on the ground that it ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07 -5- was agricultural land. The Tribunal however held that the said land was not agricultural land and hence the Assessee is liable to capital gains. On a question being raised before this Tribunal, as to whether in view of the fact that the issue in dispute, namely, the land in question was agricultural land or otherwise, was highly debatable, penalty u/s. 271 (1) © could be levied on the Assessee merely on the ground that the Assessee failed to show sale of said land for claiming exemption from capital gain in the Return of Income, this Tribunal has held that no penalty could have been levied.
13. The Appellant further begs to rely on the decision of this Tribunal in the case of I.T.O. V/s. Sanatkumar Jayantilal (1987) 20 ITD 86 wherein, the Assessee showed in his Return certain long term capital gains resulting from sale of shares. However, among these shares, there were certain bonus shares, which were issued to the Assessee on such a date which period was shorter than the period required to make them long term capital assets. The Assessee did not disclose the aforesaid facts in his Return and the Assessment was completed. However, the Assessment was reopened u/s. 147 (a) of the Act and appropriate addition was made. The question therefore arose before the Tribunal as to whether in view of the fact that there was a decision of Tribunal in favour of the Assessee and relying on that decision, the Assessee had acted in the said manner, the Assessee could be held liable for concealment of income and penalty was imposable u/s 271(1)(c), it was held that no penalty could have been levied.
14. Having regard to the facts and circumstances of the case, and considering the relevant statutory provisions, more particularly, in the context of levy of penalty u/s. 271 (1) (C), the Appellant requests this Hon'ble Tribunal to quash and set aside the Orders passed by the authorities below levying and/or confirming the penalty u/s. 271 (1)(C) of the Act.
15. The Orders passed by the Authorities below are even otherwise bad in law, unwarranted of facts, against the evidence on record, contrary to the judicial principles and hence deserve to be quashed and set aside.
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16. The Appellant craves leave to add, alter, amend or substitute any of the grounds raised hereinabove."
3. The assessee has raised as many as 16 grounds of appeals but the interconnected issue raised by the assessee is that ld. CIT(A) erred in confirming the penalty imposed by the AO for Rs. 17,10,136/- u/s 271(1)(c).
4. Briefly stated facts are that the assessee in the present case is an individual and derives income from the partnership as a share of profit and interest income on capital. The assessee during the year has incurred capital loss of Rs. 1,44,72,463/- on the sale of shares of a company namely Suhashish Diamond Ltd. At the same time, the assessee earned a long-term capital gain income of Rs. 1,03,00,809/- on the sales of the shares of a company namely Karp Diamond Pvt. Ltd. The assessee has set off the long-term capital loss against the long-term capital income.
However, the AO observed that the capital gain income from the sale of listed securities is exempted u/s 10(38) of the Act. Therefore, he was of the view that the loss incurred by the assessee from the sale of shares of Suhashish Diamond Ltd. cannot be set off against the long-term capital gain from the sale of unlisted securities. Accordingly, the AO vide letter dated 18.12.2008 sought an explanation from the assessee for the set off of the loss claimed against the long-term capital gain income as discussed above. In compliance to it, the assessee submitted that the provisions of ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07 -7- Section 10(38) are applicable to the income. As such the provision of the section does not apply to the losses incurred by the assessee.
However, the AO disregarded the contention of the assessee and held that the loss in respect of the income which does not form part of the total income could not be set off against the income chargeable to tax. Accordingly, the AO disallowed the claim of the assessee for Rs. 75,25,319/- and added to the total income of the Assessee.
4.1 Accordingly, the assessment was framed by the AO u/s 143(3) of the Act vide order dated 23.12.2008 by inter alia making the disallowance of Rs. 75,25,319/- only. The AO during the assessment proceedings initiated the penalty proceedings u/s 271(1)(c) of the Act on account of furnishing inaccurate particulars of income and thereby concealing the income.
4.2 Subsequently, the AO issued a show-cause notice dated 23.12.2008 u/s 274 r.w.s. 271(1)(c) of the Act for initiating the penalty proceedings on account of concealment of income by way of furnishing inaccurate particulars of income. In response to the notice issued by the AO, the assessee vide letter dated 27.01.2011 submitted that he had filed an appeal before the Hon'ble ITAT. However, the AO levied the penalty u/s 271(1)(c) of the Act for Rs. 17,10,136/- being 100% of the tax sought to be evaded.
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5. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld. CIT(A) submitted that he had not furnished any inaccurate particulars income or concealed particulars of income. Therefore, there is no question of levying the penalty u/s 271(1)(c) of the Act. However, the ld. CIT(A) disregarded the contention of the assessee and confirmed the order of AO by observing as under:
7. I have gone through the penalty order and submissions of the A.R. of the appellant carefully. It is seen that this ground is also without any basis because the order passed by the CIT(A) has been confirmed by the ITAT vide its order dated 31.12.2012. As far as the merits of the case are concerned, it is seen that the appellant had long term capital loss on sale of shares which was exempted u/s.10(38) of the IT. Act, 1961. Hence, the same could not have been carried forward since it was exempted u/s.10(38) of the I.T. Act, 1961. The contention of the A.R. of the appellant that the specific provisions of Section 74(l)(b) of the I.T. Act, 1961 have not been followed is also not correct because the carried forward losses on sale of long term capital assets is allowable only when such losses are not exempt. It is settled law that the income includes losses. Hence, both the profit as well as loss arising from sale of shares on which STT is payable is exempt from taxation u/s. 10(38) of the I.T. Act 1961. Such exempt loss does not enter the computation of income at all. Thus, there was no question of carried forward any long term capital loss u/s.10(38) of the T.T. Act, 1961. In view of the above, the Assessing Officer is justified in levying the penalty u/s.271(1)(c) of the I.T. Act, 1961.
8. The facts of the case and arguments of the appellant have been carefully considered. With reference to penalty proceedings, the following propositions can be laid down on the basis of language of relevant section of the IT Act and decisions of various judicial authorities:
(i) Wherever there is a difference between the returned and assessed income, there is an inference of concealment as a rule of law.
(ii) The responsibility for rebutting such inference is squarely on the tax payer.ITA No.282/Ahd/2014
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(iii) The assessee is expected to offer an explanation for the difference. Absence of any explanation, by itself, will merit penalty.
(iv) The explanation where offered, should not be found to be false.
(v) Merely because the assessee is not able to substantiate his explanation, penalty may not be exigible, it such explanation is bona fide and all the facts relating to the same and material to the computation of his total income have been disclosed by him.
8.1 It is also held that penalty proceedings are independent proceedings. A penalty order should contain reasons for its conclusion. But this does not mean that the AO is required to bring on record additional or new evidence, which was not part of regular assessment. Where the assessment order itself contains facts, which justify an inference of concealment, the penalty order is sustainable. This view derives support from the decision of Hon'ble Allahabad High Court in the case of Raj Kumar Chourasiya vs. C1T reported in 288 ITR 329.
9. Hon'ble Supreme court made the following observations in the case of M/s. Dharmendra Textiles Processors (306 ITR 277):
"We are of the view thai there is a conflict of opinions between the judgments of the Division Bench of this Court in the case of Dilip N. Shroff on one hand and on the other hand we have another judgment of this Court in the case of Shriram Mutual Fund. Secondly, it may be pointed out that the object behind enactment of section 271(1)(c) read with the Explanation quoted above indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under the said section is a civil liability. Willful concealment is no! an essential ingredient for attracting the civil liability as is the case in the matter of prosecution ii/s, 276C of the Act. While considering an appeal against an order made u/s. 271(1)(c) what is required to be examined is the record which the officer imposing the penalty had before him and if that record can sustain the finding there had been concealment, that would be sufficient to sustain the penalty. Keeping in mind these two circumstances, we are of the view that the judgment of Division Bench in the case of Dilip N. ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07
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Shroff needs consideration. The explanations added to section 271(1)(c) in that entirety also indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing returns. The judgment in Dilip N. Shroffs case has also not considered the provisions of section 276 of the IT Act. Therefore, in our view, the judgment in the case of Dilip N. Shroff needs consideration by the larger Bench of the Court particularly when it has ramifications not only regarding provisions of the IT Act but also with regard to the provisions of sections 3A and 11 AC of the Central Excise Act and rule 96ZQ(5) of the Central Excise Rules."
10. According to section 271(I)(c), there are two basic ingredients for levy of penalty.
(a) Satisfaction of AO regarding concealment on the part of the assessee or
(b) Satisfaction regarding furnishing inaccurate particulars by the assessee.
11. The judgment of the Hon'ble Supreme Court (SC) in UOI vs. Dharmendra Textile Processors (306 ITR 111) has to be understood in the correct perspective. Penalty u/s. 271(1)(c) has been held to be a "civil liability' in contradistinction to prosecution u/s. 276C. It is wrong to infer that because the liability is a 'civil liability' it ceases to be penal in character. There is no contradistinction in a liability being a civil liability and the same liability being a penal liability as well, though a civil liability cannot certainly be a criminal liability as well.
12. The only impact of a liability being a civil liability is that mens rea or the intentions of the assessee need not be proved. Unless contravention of law takes place and unless the conditions for imposition of penalty u/s. 271(1)(c) are satisfied, even a civil liability cannot be invoked. The action which triggers the civil liability is the lapse on the part of the assessee.
13. There can be three distinct mutually exclusive situations in case of an addition to income:
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(a) where the addition is on account of contumacious conduct of the assessee and mens rea is established - in this situation penalty was always leviable and continues to be so leviable;
(b) where it can neither be established that the addition is on account of contumacious conduct of the assessee nor is it established that the assessee's conduct and explanation is bona fide - in this situation under Dilip Shroff penalty would not have been leviable since the onus of establishing mens rea could not have been discharged by the AO, but pursuant to the decision of Dharmendra Textile penalty in such a case will be leviable.
(c) Where it is established that the assessee's conduct and explanation is bona fide - in this situation penalty was never leviable and even post the decision of Dharmendra Textile there is no change. Therefore, legal position has changed only in situation (b).
14. When the present case is examined in view of this legal position, it is found that in this case appellant failed to offer any explanation regarding why it had claimed carried forward of long term capital loss. This cannot be considered a bonafide omission or mistake on the part of appellant. The appellant was very well aware that the long term capital gain arising out of sale of shares on which STT was payable was exempt u/s.10(38) of the IT. Act, 1961. In such a situation, case of appellant clearly falls in the category (b) of Para 13 as mentioned above. 1 therefore hold that levy of penalty u/s. 27l(l)(c) is fully justified in this case in view of decision of Hon'ble Supreme Court in the case of Dharmendra Textile. It would be a travesty of truth and justice to express a view to the contrary. The situation could have been different if appellant had mistakenly made the claim and accepted his mistake later on. However, the appellant deliberately chose to claim the carried forward of loses even though it knew fully well that the loss was exempt u/s. 10(38) of the IT. Act, 1961 and hence could not be carried forward. In view of the above, penalty u/s.271(l)(c) of the IT. Act, 1961 was clearly leviable. Penalty levied by AO is confirmed, This ground is dismissed."
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Being aggrieved by the order of ld. CIT(A) assessee is in appeal before us.
6. The ld. AR before us filed a paper book running from pages 1-65 and submitted that the assessee had filed an appeal in the Supreme Court against the quantum addition made by the AO on account of loss set off against the capital gain income.
6.1 The ld. AR further submitted that the assessee has neither concealed particulars of income nor furnished any inaccurate particulars of income. The claim made by the assessee may be a wrong claim, but that does not amount to furnishing inaccurate particulars of income. Therefore, no penalty u/s 271(1)(c) of the Act can be imposed in the given facts and circumstances.
7. On the other hand ld. DR vehemently supported the order of authorities below.
8. We have heard the rival contentions and perused the materials available on record. In the instant case, the assessee has set off the long- term capital loss which was exempted u/s 10(38) of the Act against the long-term capital gain from the shares of the unlisted company. Therefore, the AO disallowed the same and further levied the penalty u/s ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07
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271(1)(c) of the Act. The ld. CIT-A subsequently confirmed the view taken by the AO.
8.1 Now the controversy before us arises whether the assessee has concealed his particulars of income or furnished inaccurate particulars of income as per the provisions specified u/s 271(1)(c) of the Act. At this juncture, we are inclined to reproduce the relevant portion of the statement of the income where the assessee has shown its gain and losses from the sale of shares. The relevant extract of the computation of income is reproduced as under:
CAPITAL GAINS:
Long Term Capital Gain:
Karp Diamond Ltd. 750 Shares Date of Transfer 23.03.2006 Date of acquisition 31.03.1990 Sale Price - 56,250 Less: Indexed cost of acquisition (7500 * 497/172) 21,672 34,578 Karp Diamond Ltd. 131850 Shares Date of Transfer 23.03.2006 Date of acquisition 31.03.1991 Sale Price - 9,888,750 Less: Indexed cost of acquisition (131850 * 497/182) 3,600,519 6,288,231 Karp Diamond Ltd. Bonus Shares 53040 Date of Transfer 23.03.2006 Date of acquisition 31.03.1991 Sale Price - 3,978,000 Less: Indexed cost of acquisition 0 ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07
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3,978,000 Long Term Capital Gain on Karp Diamond Ltd. Shares 1,03,00,809 Suashish Diamond Ltd. 499000 Shares Date of Transfer 18.07.2005 Date of acquisition 14.02.1995 Sale Price 4,198,578 Less: Indexed cost of acquisition (9730500 * 497/259) 18,672,041 Long Term Capital Loss on Suashish Diamonds Ltd. Shares -14,473,463
-4,172,654 From the perusal of the above statement, we note that all the details about the losses vis-à-vis gains from the sale of shares were disclosed in the statement of income. The assessee has also not claimed an exemption under section 10(38) of the Act in respect of the gain from the sale of securities of the unlisted company. Therefore, we are of the view that the assessee has made the wrong claim in its income tax return, but the assessee furnished no wrong particulars of income. Thus there cannot be levied any penalty u/s 271(1)(c) of the Act on account of the wrong claim made by the assessee in its income tax return as it does not amount to furnishing the inaccurate particulars of income. In this regard, we find support and guidance from the judgment of Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. reported in 322 ITR 158 wherein it was held as under:
"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 of the ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07
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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 "particulars" 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 no information given in the Return was found to be incorrect 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 learned 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 the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT v. Atul Mohan Bindal [2009] 9 SCC 589, where this Court was considering the same provision, the Court observed 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."
8.2 We also note that the ld. CIT(A) in his order has heavily relied on the judgment of Hon'ble Supreme Court in the case of Union of India vs. Dharmendra Textile reported in 306 ITR 277 wherein the following issue is involved.
"The stand of the assessee was that the absence of specific reference to mens rea is a case of casus omisus. If the contention of the assessee was to be accepted that the use of the expression 'assessee shall be liable' in section 11A proves the existence of discretion, it would lead to a very absurd result. In fact, in the same provision there is an expression used, i.e., 'liability to pay duty'. It can, by no stretch of ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07
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imagination, be said that the adjudicating authority has even a discretion to levy duty less than what is legally and statutorily leviable. [Para 12] It is a well-settled principle, in law, that the Court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the Legislature. The language employed in a statute is the determinative factor of the legislative intent. [Para 13] It is of significance to note that the conceptual and contextual difference between section 271(1)(c) and section 276C was lost sight of in Dilip N. Shroff's case (supra ) [Para 24] The Explanations appended to section 271(1)(c) entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars of income while filing return. The judgment in Dilip N. Shroff's case (supra ) had not considered the effect and relevance of section 276C. Object behind enactment of section 271(1)(c ), read with the Explanations thereto, indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability, as is the case in the matter of prosecution under section 276C. [Para 25] In the Union Budget of 1996-97, section 11AC was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget, reference has been made to the provision stating that the levy of penalty is mandatory. In the notes on clauses also, the similar indication has been given. [Para 26] Above being the position, the plea that the rules 96ZQ and 96ZO have a concept of discretion inbuilt could not be sustained. Dilip N. Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The matter shall now be placed before the Division Bench to deal with the matter in the light of what has been stated above, only so far as the cases where challenge to vires of rule 96ZQ(5) are concerned. In all other cases, the orders of the High Court or the Tribunal, as the case may be, are to be quashed and the matter was to ITA No.282/Ahd/2014 Kishorebhai Bhikhabhai Virani vs. ACIT A.Y. 2006-07
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be remitted back to it for disposal in the light of the instant judgments. [Para 27]"
From the above, we note that the issue adjudicated by the Hon'ble Supreme Court in the case of Dharmendra Textile (supra) was on different facts of the case. Therefore, we are reluctant to place our reliance on the above judgment as relied on by the ld. CIT(A).
In view of above, we hold that the penalty imposed u/s 271(1)(c) of the Act and subsequently confirmed by the ld. CIT(A) is not sustainable. Hence, we set aside the order of ld. CIT(A) and direct the AO to delete the penalty u/s 271(1)(c) of the Act. Thus, the ground of appeal of the assessee is allowed.
9. In the result, the appeal of the assessee is allowed.
This Order pronounced in Open Court on 15/11/2018
sd/- Sd/-
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(MADHUMITA ROY) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 15/11/2018
Priti Yadav, Sr.PS
ITA No.282/Ahd/2014
Kishorebhai Bhikhabhai Virani vs. ACIT
A.Y. 2006-07
- 18 -
आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं'धत आयकर आयु)त / Concerned CIT
4. आयकर आय)
ु त(अपील) / The CIT(A)-I, Ahmedabad.
5. ,वभागीय /त/न'ध, आयकर अपील य अ'धकरण, अहमदाबाद / DR, ITAT, Ahmedabad.
6. गाड4 फाईल / Guard file.
आदे शानुसार/BY ORDER, स या,पत /त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad