| COURT: | ITAT Indore |
| CORAM: | Mukul Shrawat (JM), P. K. Bansal (AM) |
| SECTION(S): | 271(1)(c) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | concealment of income, furnishing inaccurate particulars of income, penalty |
| COUNSEL: | Pankaj Shah |
| DATE: | November 12, 2014 (Date of pronouncement) |
| DATE: | November 14, 2014 (Date of publication) |
| AY: | 2003-04 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 271(1)(c): Penalty initiated without specifying whether it is for concealment or for furnishing inaccurate particulars it invalid | |
(i) It is incumbent upon the Assessing Officer to state whether penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. There are two different charges i.e. the concealment of particulars of income or furnishing of inaccurate particulars of income. The penalty can be imposed for a specific charge. Furnishing of inaccurate particulars means when the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are incorrect. Concealment of particulars of income means when the assessee has concealed the income and has not shown the income in its return or in its books of accounts;
(ii) In the case of furnishing inaccurate particulars of income, the onus is on the Revenue to, prove that the assessee had furnished the inaccurate particulars, while in the case of concealment of particulars of income, where the Explanation (1) is applicable, the onus is on the assessee to prove that he has not concealed the particulars of income;
(iii) The AO failed to discharge his onus as he was not sure at the initiation of penalty u/s 271(1)(c) for which specific charge penalty has been initiated by the Assessing Officer. Even while levying the penalty also, the Assessing Officer simply relied on the explanation to Section 271(1)(c) even though he levied the penalty for furnishing the inaccurate particulars of income. This is apparent from the provisions of Section 271(1)(c) that explanation of Section 271(1)(c) is not applicable in case inaccurate particulars are furnished. Therefore the basis of levy of penalty itself is not correct (New Sorathia Engineering Co (2006) 282 ITR 642 (Guj) followed)
The doctrine of reasonableness. Powers must be exercised reasonably reconciled with the no less important doctrine that court just not usurp the discretion more so the public authorities too are equally liable as none can usurp the legislative discretion by way of its sections it passed; else all would land under Wednesbury principle of unreasonableness. today administrators as public servants fall into the trap and if they indulge, naturally they might lose vicarious liability doctrine as they acted beyond their own legal jurisdiction.
Now court here is rightly said..
similarly if an ITO fails under sec 143(2)(ii) his notice has to be set aside without much inquiry.. that way all quasi judicial bodies need to act, else they too might fall into the trap of Wednesbury principle!
Lord Green M.R. held in B.Johnson &Co(Builders) Ltd v Minister of health…’Lis’ of course implies conception of an issue joined between two parties. The decision of a ‘Lis’ in ordinarily used legal language is the decision of the issue that is what is described here on ‘lis’ the raising of objection to the Order, the the consideration of the matter so raised and the representation of local authority and the objectors – is (called) , merely a stage in the process of arriving at and on a decision. it is a stage which the Courts have always said requires a certain method of conduct , but it is not on ‘Lis interpartes’ and for the simple reason that local authority and the objector are not parties to anything resembling litigation’ quoted Justice Hidayathulla then in an SC bench in Commissioner of Sales tax v Pine chemicals & ors (1996) 1 SCC 58 and held while reading into Art.137, in only areas apparent on the face of record as provided in Order XL, r.1 of SC Rules 1966) that if a reasoning in judgement under review is at a variance with clear and simple language of a statute , the judgement under review suffer from a ‘manifest error’ of law, an error apparent on the face of record and is liable to be rectified.
Hence, in review part we have to decide – whether reasoning and diversion in judgement under review is at variance with the clear and simple language employed in Act and accordingly whether judgement under review suffered from manifest error of law apparent on record …set aside the order;
in a seven member judgement in Ramachsndra Rao v St of karnataka it was held
– in para 27. Court can declare the law , they can interpret the law and they can remove obvious lacunae and fill the gap but they cannot entrench upon the field of legislation properly meant for legislature’
In UOI v Deoki nandan Agarwal, court held ‘court cannot correct or make up for deficiency or omission in the language of the statute , justice V Ramaswamy wrote judgement on behalf of three member bench of supreme court held..’It is not the duty of the court to enlarge the scope of legislation (statute) or the intention of the legislature when the language is plain and unambiguous . The court cannot rewrite or reframe the legislation for the very good reason that it has no power to legislate . The power to legislate has not been conferred on court . The court cannot add words to a statute or read words into it which are not there . Assuming there is a defect or an omission the words used by legislature the court could not that are excluded by law from the jurisdiction .
that is the limitation on court. so it sets aside is the reasoning of ultra vires.