High Court Of Madras
India Cine Agencies vs. DCIT
Section 271(1)(c)
Asst. Year 1985-86
R. Jayasimha Babu & S.R. Singharavelu, JJ.
Tax Case (Appeal) No. 5 of 2000
3rd November, 2003
Counsel Appeared :
P.P.S. Janarthana Raja, for the Appellant : Mrs. Pushya Sitaraman, for the Respondent
JUDGMENT
R. Jayasimha Babu, J. :
For the asst. yr. 1985-86, the assessee which carries on business in photographic films, filed a return declaring a total income of Rs. 25,02,120. In the balance sheet for that year it showed a sum of Rs. 19,19,622 as amount due from sundry creditors. On the AO calling upon the assessee to furnish the particulars of those sundry creditors, the assessee stated that that amount represented the discount given by it to the customers who had made purchases from it during that year. The discount given, according to the assessee, was to the extent of 5 per cent of the invoice value of future purchases by the customers who had purchased from it during the previous assessment year. The Tribunal has found that such discount was in fact given during the accounting years 1985-86, 1986-87 and 1987-88 and that as on 31st March, 1989, a sum of Rs. 6,09,410.68 was still with the assessee. When that sum of Rs. 19,19,622 was brought to tax, though the assessee filed an appeal, that appeal was subsequently, withdrawn and the assessee paid tax on that sum as well. A sum of Rs. 13,89,339 was also levied on the assessee as penalty on the ground that the assessee had concealed its income. On appeal by the assessee, the penalty was set aside. The Revenue having carried the matter in appeal to the Tribunal, the Tribunal restored the order of the AO. At the instance of the assessee, this reference has been brought before us.
Learned counsel for the assessee submitted that the view of the Tribunal is erroneous as the assessee cannot be said to have concealed any information, as it had faithfully reported in its returns the figure which it considered to be the correct figure of its income. The fact that the Revenue did not agree with the assessee’s view that the discount to be given by it to its customers which was to take effect in future years could be shown as an amount due to sundry debtors would not by itself justify a finding that the assessee had concealed the income or furnished inaccurate particulars.
The battle of wits between the assessee and their advisors on the one hand and the Revenue on the other is bound to result in different view points being projected and, as long as there is nothing to show that the assessee concealed the income with a dishonest intent or had furnished inaccurate particulars either deliberately or as a result of gross negligence which was not capable of being regarded as an innocent act, penalty is not to be ordinarily levied. We cannot agree with the submission made for the Revenue that intent has no place at all in s. 271(1)(c) of the Act. The word “conceal” as defined in the Concise Oxford Dictionary as “not allowed to be seen; hide; keep secret; prevent from doing known”. Concealment, implies the existence of a deliberate intent to prevent relevant facts from becoming known. This, however, is not to say that the assessees can afford to be routinely careless and casual while submitting the returns. They certainly do have a duty to verify the particulars furnished by them and ensure that particulars furnished are indeed accurate. The power under s. 271 is discretionary and it is while exercising the discretion that the factors referred to by us are required to be taken into account.
On the facts of this case, we do not find sufficient justification for the imposition of the penalty. It cannot be said that there has been concealment of particulars or that the assessee had furnished inaccurate particulars as the particulars had in fact been given, the figures not being disputed, but under a different head. The appeal is, therefore, allowed. The order of the Tribunal is set aside.
[Citation : 275 ITR 430]
