|CORAM:||Amit Shukla (JM), Sanjay Arora (AM)|
|CATCH WORDS:||concealment of income, furnishing inaccurate particulars of income, penalty|
|DATE:||March 13, 2015 (Date of pronouncement)|
|DATE:||March 23, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 271(1)(c): Disclosing income but classifying it under a wrong head amounts to furnishing inaccurate particulars and attracts penalty|
The assessee’s argument supra of the same being only a differential treatment of the very same, i.e., rental, income, so that there has been thus neither any concealment nor furnishing of inaccurate particulars of income, though appealing, is misconceived. The reason is simple. Yes, the assessee has apparently stated the quantum and nature of the income correctly. However, penalty u/s 271(1)(c) is not only qua the misstatement of fact/s but also of law. When the law is clear and well settled, as in the facts of the present case, the so called ‘differential treatment’, which the law does not admit of, i.e., qua the admitted nature of the income, is only admittedly a wrong claim in law. This is more so where the said claim has tax implication. Income has to be necessarily computed under separate, mutually exclusive heads of income, allowing deductions as per the computational provisions of the respective head of income, and toward which the Assessing Officer (A.O.) has relied on United Commercial Bank Ltd. vs. CIT  32 ITR 688 (SC) and CIT vs. Chugandas and Co.  55 ITR 17 (SC). In fact, the ‘differential treatment’ would be rendered as of no consequence, so that no penalty could be levied, where it carries the same or a similar tax burden; the whole premise thereof being only a lesser tax liability, so that whole issue therefore boils down to whether it is the case of tax avoidance, which is legally permissible, or of tax evasion, which the law seeks to penalize, and which therefore has to be adjudged on the basis or edifice of the assessee’s explanation for its adopted treatment. The term ‘differential treatment’, which is thus to be examined on the touchstone of the validity or plausibility, or otherwise, of the legal claim, carries no legal meaning in itself. How could, one may ask, the assessee justify its’ claim of the declared nature of the income as ‘rent’, when it declares as it as ‘business income’, claiming all expenses there-against? That is, could it be said that the assessee has furnished accurate particulars of income when it, de hors settled law, claims all regular, business expenditure, including depreciation on building, there-against, so that the assessee’s claim of having stated ‘fact/s’ correctly is also highly suspect.