Twin Star Jupiter Co-operative Hsg.
Society Ltd. v. ITO
A.Ys. : 1998-99, 1999-2000 and 2000-01
Dated : 15-4-2009
S. 271(1)(c) — AO must have definite evidence to refuse
assessee’s claim or explanation — Mere non-acceptance of explanation cannot
indicate concealment of income.
For the relevant assessment year, the Assessing Officer
made certain additions to the total income of assessee and, thereafter, levied
penalty u/s. 271(1)(c). The CIT(A) deleted the penalty partly.
The Tribunal deleted the entire penalty. The Tribunal noted
as follows :
(1) The proceedings u/s.271(1)(c) can be initiated only
if the Assessing Officer or the first appellate authority is satisfied, in
the course of any proceeding under the Act, as per clause (c) that any
person has concealed the particulars of his income or has furnished
inaccurate particulars of such income.
(2) There cannot be a straitjacket formula for detection
of these defaults of concealments or of furnishing inaccurate particulars of
income and indeed concealment of particulars of income and furnishing of
inaccurate particulars of income may at times overlap.
(3) The Assessing Officer cannot invoke provisions of S.
271(1)(c) on the basis of routine and general presumptions. Whether it be a
case of only concealment or of only inaccuracy or both, the particulars of
income so vitiated would be specific and definite and be known in the
assessment proceedings by the Assessing Officer who, on being satisfied
about each concealment or inaccuracy of particulars of income, would be in a
position to initiate the penalty proceedings on one or both of the grounds
of defaults as may have been specifically and directly detected.
(4) Part A of the Explanation 1 to S. 271(1)(c) states
that “if the assessee fails to offer an explanation or offers an explanation
which is found by the AO or the CIT(A) or the CIT to be false”. This
Explanation can, therefore, be applied only where the assessee has either
not offered any explanation or where he has offered any explanation, the
same is found to be false by the AO, etc. Mere non-acceptance of explanation
offered by the assessee cannot form a basis for the satisfaction of the AO
to the effect that the assessee has concealed particulars of his income. The
AO must have some definite evidence to refuse the assessee’s claim or
explanation.
(5) When the assessee is able to offer a reasonable
explanation based on some evidence, the AO cannot invoke Part B of the
Explanation 1 unless he has given a finding based on some contradictory
evidence to disapprove that explanation offered by the assessee which the
assessee is not able to substantiate and fails to prove that such
explanation is bona fide and that all the facts relating to the same
and material to the computation of his total income have been disclosed by
him.
(6) In this case, the assessee had disclosed all relevant
material for the purpose of computation of total income. It was also found
that the assessee had furnished an explanation in this regard, which was not
found false by the Assessing Officer. When the assessee had filed all the
particulars of income, the correct assessment and calculation of total
income had to be done by the Assessing Officer. If in such process the
Assessing Officer found different total income to be assessed than the
income offered by the assessee, in such case it was not automatically a case
where penalty u/s.271(1)(c) was leviable.
