Burden of Proof for Penalty under Income Tax on Revenue: SC

Jurisdiction of Dispute Resolution Panel-Income Tax Order No.3 Delhi High Court directs Army & Air Force to grant Permanent Commission to Women Officers Employment of washing process in the manufacture of agglomerates etc from imported plastic waste and scrap-SEZ Instruction No.48 Haryana Government imposes surcharge ranging from 0.25 per cent to 0.7 per cent on VAT Service Tax Notification No. 17/2010 which exempts the taxable service providing packaged or canned software, intended for single use and packed accordingly amended-Service Tax Notification No.18 Procurement, Import and Export of Prohibited and Restricted Goods by SEZ Units-SEZ Instruction No. 47 Tractors are chargeable to tractor cess in terms of the Tractor Cess Rules, 1992 read with the IDRA Act, 1951-Central Excise Circular No. 916 Authority for Advance Ruling rules the amounts received/receivable by Technopromexport from NTPC under contract for Offshore supply of all plant and equipment including mandatory spares are not liable to tax in India under the provisions of the Income-tax Act, 1961 and DTAA between India and Russia-AIT-2010-79-AAR whether Cess levied under section 5 of Textile Committees Act, 1963 is includable as a component of CVD-AIT-2010-78-HC Export warehousing –Extension of facility at Gautam Budh Nagar in UP and Nagpur in Maharashtra-Central Excise Circular No. 917 Implementation of the provisions of COTP Act, 2003 and The Cigarettes and Other Tobacco Products (Packaging and Labelling) Rules, 2008- Empowering the Customs & Central Excise Officers-Central Excise Circular No. 918 Toilet linen and kitchen linen, of terry toweling or similar terry fabric, of cotton and of other textile materials added in Focus Product Scheme for exports made after 1st Jan 2010-DGFT PN 46 TDS on payment of interest on time deposits under Section 194A of the Income Tax Act by banks following Core-Branch Banking Solutions software-Income Tax Circular No.3 Tariff value for import of Brass scrap is 3732 and for poppy seeds 4640-Customs Non-Tariff Notification No.19 Duty Credit Scrips can also be used / debited towards payment of Customs Duties in case of EO defaults under Authorizations issued under Chapters 4 and 5 of the Policy-DGFT Notification No.32 SC Ruling-the nature of roll over premium charge incurred by the assessee as also the scope and applicability of Section 43A of the Income Tax Act, 1961, in the context of such charges-we find no merit in the contention of the assessee that roll over charges have nothing to do with the fluctuation in the rate of exchange-AIT-2010-75-SC Pre-authentication of excise invoices dispensed with Excise duty on Goggles and OTS cans hiked to 10 per cent av gas and mosquito net impregnated with insecticides subjected to 4 per cent excise Outright exemption from additional duty of customs (of 4%) leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975 to goods imported in a pre-packaged form and intended for retail sale Benefit of allowing Cenvat credit to be reversed on proportionate basis (when common inputs are used for the manufacture of dutiable and exempt products) extended retrospectively Bad News for flat bookers-unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly Bad News for ladies-sanitary napkins & kids diapers subjected to 10 per cent excise excise duty @ 4% imposed on specified IT products like microprocessor other than motherboards, floppy disc drives, CD-Rom drive etc when these items are meant for external use with a computer or laptop as a plug-in device Packaged software or canned software exempted from excise excise duty on Cartons, boxes and cases, of corrugated paper or paperboard manufactured by Standalone manufacturers lowered from 8% to 4% all ceramic tiles, whether manufactured by using electricity for firing the kiln or not, will attract a single excise duty rate of 10% process of drawing or redrawing of aluminium tubes and pipes as amounting to " manufacture" Excise duty on replaceable kits of all domestic water filters except those operating on RO technology reduced from 8% to 4% Excise duty exemption on parts, components and accessories of mobile handsets including cellular phones extended to parts of two accessories namely, battery chargers and hands-free headphones of these devices.

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Burden of Proof for Penalty under Income Tax on Revenue: SC

AIT News Network

NEW DELHI. Giving relief to several Income Tax payers who are subjected to Penalty by the Department; the Apex Court vide a recent ruling AIT-2007-204-SC has ruled as under:

In penalty proceeding under Section 271(1)(c) of the Income Tax Act, Primary burden of proof is on the revenue. The statute requires satisfaction on the part of the assessing officer. He is required to arrive at a satisfaction so as to show that there is primary evidence to establish that the assessee had concealed the amount or furnished inaccurate particulars and this onus is to be discharged by the department
While considering as to whether the assessee has been able to discharge his burden, the assessing officer should not begin with the presumption that he is guilty.
The order imposing penalty is quasi-criminal in nature and, thus, burden lies on the department to establish that the assessee had concealed his income. Since burden of proof in penalty proceedings varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted, though a finding in the assessment proceeding constitute good evidence in the penalty proceeding. In the penalty proceedings, thus, the authorities must consider the matter afresh as the question has to be considered from a different angle.
'Concealment of income' and 'furnishing of inaccurate particulars' are different. Both concealment and furnishing inaccurate particulars refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. Although it may not be very accurate or apt but suppressio veri would amount to concealment, suggestio falsi would amount to furnishing of inaccurate particulars.
The expression "conceal" is of great importance. According to Law Lexicon, the word "conceal" means: "to hide or keep secret. The word "conceal" is con+celare which implies to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of; to withhold knowledge of. The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income tax authorities." In Webster's Dictionary, "inaccurate" has been defined as: "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." It signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars.
The term 'inaccurate particulars' is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the explanations are taken recourse to, a finding has to be arrived at having regard to clause (a) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income.
The explanation, having regard to the decisions of this Court, must be preceded by a finding as to how and in what manner he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the Income Tax Officer must arrive at a satisfaction in this behalf.
It is furthermore of some significance that the Commissioner in its order dated 30.11.2000 made a terse comment that the assessee cannot shift the burden of concealment to any other person, meaning thereby, the registered valuer. He, furthermore, made a comment that the registered valuer had adopted a strange way of valuing although no reason, far less than sufficient or cogent reason, has been assigned in support thereof. The said comments were unwarranted.
Before, thus, a penalty can be imposed, the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had furnished inaccurate particulars thereof.
It is now a well-settled principle of law that more stringent the law, more strict construction thereof would be necessary. Even when the burden is required to be discharged by an assessee, it would not be as heavy as the prosecution.
It is one thing to say that the valuation based on a newspaper is totally unacceptable, but it is another thing to say that by reason of the return, the assessee furnished inaccurate particulars. The question which was inter alia required to be posed was whether the method adopted by the registered valuer was wholly unknown to law or was contrary to all modes of valuation. Whether the particulars sought to have been concealed were necessary for the purpose of arriving at a correct valuation or otherwise misleading? Whether the method of valuation adopted by the registered valuer resulted in a grossly unfair valuation which could not have been done by any reasonable person? Was the methodology adopted totally wrong?
The methods of valuation, as we know, may be different. A registered valuer is supposed to know as to which method or mode should be adopted for the purpose of valuing particular land or a building having regard to a large number of factors involved therein. The tax on capital gains does not envisage that the valuation given must be true and exact market value. Even the market value of a property may be found to be different having regard to the locale thereof. There was no direct sale instance. The sale instances relied upon by the District Valuer were of 1979 and 1982.
A duty may be enjoined on the assessee to make a correct disclosure of income but if such disclosure is based on the opinion of an expert, who is otherwise also a registered valuer having been appointed in terms of a statutory scheme, only because his opinion is not accepted or some other expert gives another opinion, the same by itself may not be sufficient for arriving at a conclusion that the assessee has furnished inaccurate particulars.

(Click here for full text of Ruling AIT-2007-204-SC)