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The revenue in its cross appeal has raised the following effective ground of appeal:

3 ITA1503 & 1504/A/09 ITA 1768 & 1769/A/09 "1. On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in deleting the penalty levied u/s 271(1)(c) on disallowance of deduction u/s 80IB of Rs.3,27,954/- and deduction u/s 80HHC of Rs.1,05,09,298/- overlooking the ratio laid down by the apex court in the case of Dharmendra Textile Processors 306 ITR 277 (SC) wherein it was laid down that penalty u/s 271(1)(c) was civil wrong & mens rea is not required to be established."

12.2 The learned departmental representative basically relied on the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors 306 ITR 277 (SC) wherein it is held that penalty u/s 271(1)(c) is not a civil wrong and mens rea is not required to be established. This judgment was considered by the Hon'ble Punjab & Haryana High Court in the case of Haryana Warehousing Corporation (2009) (supra) wherein it is held that the issue arose before the Apex Court was u/s 11C inserted in the Central Excise Act, 1944 by the Finance Act, 1996 where penalty for evasion of payment of tax had to be mandatorily levied irrespective of the fact whether it was an intentional or innocent omission. Thus, the Apex Court was examining a proposition whether mens rea was an essential ingredient before levy of penalty u/s 11AC of the Central Excise Act, 1944. We, therefore, are of the considered view that the ratio of the decision of the Hon'ble Apex Court in Dharmendra Textile Processors (supra) cannot be imported in general in the case where penalty is sought to be levied u/s 271(1)(c) of the Act. It is to be seen strictly within the parameters of provisions of section 271(1)(c) including explanations. Explanation to section 271(1)(c) has in fact thrown back the onus on the assessee provided conditions laid down in clauses (A) and (B) to Explanation 1 are satisfied. The onus for them is also on the revenue to show that conditions laid down in those clauses are satisfied. Once the revenue discharges the onus then it raises a presumption of deemed concealment which has to be rebutted by the assessee. Where there is no such rebuttal penalty is required to be levied. Thus, as such mens rea has no active role to play except strengthening the inference drawn in the 8 ITA1503 & 1504/A/09 ITA 1768 & 1769/A/09 main provision or in the Explanations. In the present set of facts deduction has been claimed by the assessee under statutory interpretations held by various courts which was also upheld partly by appellate authorities. Therefore, the question of holding that assessee's case will fall in the Explanation and accordingly would be a case of deemed concealment would also not arise. In fact, no case is made out that either the condition laid down in clause (A) or clause (B) of Explanation 1 are satisfied. The assessing officer had in fact after referring to clauses (A) & (B) of Explanation 1 immediately switched over to main provisions of section 271(1)(c) of Act and gave a finding that assessee has furnished inaccurate particulars without there being any material on record to support such conclusion. In fact the Hon'ble Gujarat High Court has held that in National Textiles Ltd vs CIT (2001) 249 ITR 125 (Guj) that there should be something on record to show that addition proposed by the assessing officer was income of the assessee. It was held therein that in order to justify levy of penalty two factors must co- exist; one is there must be some matter or circumstances leading to the reasonable conclusion that amount did represent assessed income. It is not enough for the purposes of penalty that amount has been assessed as income and consequently there should be circumstances to show that there was animous conscious concealment. Explanation 1 only concerns with second factor, i.e. it creates a case of deemed concealment or deemed animous. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that amount does not represent concealed income with the hypothesis that it does.