IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 04.10.2017 CORAM : HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P No.7861 of 2017 and W.M.P.No.8582 of 2017 Gopalratnam Santha Mosur Rep. by Power of Attorney Mr. Arun Kumar Mehta 244 (Old No. 138) 2nd Floor Angappan Naicken Street, George Town Ch- 600 001. PAN No: BLTPS3488R ... PETITIONER Vs Income Tax Officer (International Taxation)-2(2) No.16 Greams Road Chennai 600 006. ... RESPONDENT Prayer:Writ petition is filed under Article 226 of Constitution of India for issuance of Writ of Certiorari, calling for records of respondent in PAN No.BLTPS3488R for Assessment Year 2014-15 and quash order under Section 271(1)(c) dated 22.02.2017 passed therein by respondent. For Petitioner : Mr.R.L.Ramani Senior Counsel for M/s.J.Sreevidhya For Respondent : M/s.Hema Muralikrishnan 2 Standing Counsel ORDER Heard Mr.R.L.Ramani, learned Senior Counsel for petitioner and Mrs.Hema Muralikrishnan, learned Standing Counsel appearing on behalf of respondent / Department. As pleadings are completed, with consent of learned counsels on either side, writ petition itself is taken up for final disposal. 2.The petitioner has impugned order passed by respondents levying penalty under Section 271(1)(c) of Income Tax Act, 1961 [hereinafter called as Act ]. facts which are necessary for disposal of writ petition are briefly stated as hereunder:- 2.1.The petitioner was co-owner of immovable property situated in Tamil Nadu and she had sold property and paid entire capital gain tax applicable in respect of transaction. petitioner thereafter claimed 50% of capital gains tax as rebate under Indo-Canadian DTAA. However, before assessment proceedings could commence, respondent issued notice dated 30.06.2016 referring to Article 13 of Indo-Canadian DTAA and stated that gains from alienation of any property, other than referred 3 under Clause 1 of Article 13 of Indo-Canadian DTAA may be taxed in both contracting States and petitioner's case is that she has transferred immovable property situated in India and hence, gains arising on same is taxable in India. 2.2.It was further stated that there is no provision as per Article 13 of DTAA to claim rebate for Taxes paid in other country and petitioner was directed to show cause as to why rebate claimed of Rs.1,02,90,323/- cannot be disallowed. 2.3.In response to said show cause notice, petitioner sent reply on 28.07.2016, whereby she submitted revised Income Computation Statement for Assessment Year 2014-15 after disallowing rebate claimed and petitioner enclosed letter dated 08.07.2016 along with revised computation and requested respondent to give effect to revised tax payable and issue refund at earliest. 2.4.The revised Computation of Income was scrutinized by respondent and assessment was completed by order dated 26.08.2016. Thereby, assessed income tax was arrived at sum of Rs.9,10,60,370/-. In 4 penultimate paragraph of assessment order dated 26.08.2016, respondent has stated that penalty proceedings under Section 271(1)(c) of Income Tax Act will be initiated separately. 2.5.The petitioner was surprised to note that penalty proceedings would be initiated separately, despite fact that entire tax due was already remitted in full and there is no loss of revenue and mistaken and inadvertent claim of rebate cannot result in penalty proceedings especially when Income Computation statement was accepted and assessment was completed. As stated in assessment order, respondent issued notice under Section 274 read with Section 271 of Act, dated 26.08.2016. copy of such notice is found in page 16 of typed set of papers and it appears to be in printed format. relevant column has not been filled up except that respondent had made 'a tick mark' in short paragraph have concealed particulars of your Income or ______________ furnished inaccurate particulars of such income. 2.6.The petitioner was directed to appear before respondent to show cause why order imposing penalty should not be made under Section 5 271(1)(c) of Act and opportunity of personal hearing was afforded on 20.01.2017. petitioner, through her authorised representative, appeared before respondent on 06.02.2017 and also attended personal hearing. respondent has passed order dated 22.02.2017 and levied penalty of Rs.23,31,787/- under Section 271(1)(c) of Act. This order is impugned in this writ petition. 3.Before examining correctness of impugned order, it may be necessary for Court to see under what circumstances penalties are imposable under Section 271 of Act. said provision falls under Chapter XXI of Act and Section 271 deals with failure to furnish returns, comply with notices, concealment of income, etc. 4.Sub Section 1 of Section 271 of Act states that if Assessing Officer in course of any proceedings under Act is satisfied that any person has failed to comply with notices as specified in Clause (b) of Section 271 or as prescribed under Sub Clause (c) of Section 271 of Act that any person has concealed particulars of such income or furnished inaccurate particulars of such income, he may be directed to pay by way of penalty. 5.In instant case, respondent has invoked Section 271(1)(c) which 6 reads as follows:- 271.(1) If Assessing Officer in course of any proceedings under this Act, is satisfied that any person-- (a)........... (b)........... (c)has concealed particulars of such income or furnished inaccurate particulars of such income. ............. 6.Thus, it has to be seen as to whether in instant case petitioner has concealed income or furnished inaccurate particulars of such income. Admittedly, there is no such allegation made in show cause notice dated 26.08.2016. As pointed out earlier, notice is printed format with some of relevant portions left blank. In response to notice, petitioner had submitted reply dated 06.02.2017 stating that after she was served notice under Section 143(2) of Act, she has furnished all required documents called for during course of assessment and Assessing Officer had asked for details on rebate claimed by Assessee as per DTAA and in response to such show cause notice, assessee mentioned that she had inadvertently claimed rebate of 50% on total tax payable and submitted 7 revised computation withdrawing rebate claimed. 7.Thus, in facts and circumstances, there is no concealment of income nor submitting of inaccurate information, as all relevant details were furnished by assessee. 8.Further, there has been no misrepresentation of facts to Assessing Officer and that inadvertent claim of rebate on Tax Liability which has admittedly been paid in other country shows intention of assessee in not to furnish inaccurate particulars or conceal her income. 9.Though above was reply given by petitioner, respondent in impugned order would state that but for scrutiny assessment, assessee would not have withdrawn her claim, instead, would have received refund of Rs.1,05,48,140/-. This Court is unable to appreciate reasoning assigned by respondent especially when matter had not attained any finality. fact that petitioner had claimed rebate was not frivolous claim. Probably, on advice of authorised representative or Chartered Accountant, at relevant point of time, petitioner was led to brief that she is entitled to claim rebate for taxes 8 paid in other country. On notice being issued by respondent, on being advised, petitioner has withdrawn claim and in fact, that was accepted by respondent and assessment was completed by order dated 26.08.2016. Until and unless respondent had rendered specific finding that conduct of petitioner amounted to concealment of particulars of her income or furnished inaccurate particulars of such income, question of invoking Clause (c) of Sub Section (1) of Section 271 of Act does not arise. In fact, certain words and expressions used in impugned order are uncalled for. There is no reason assigned by respondent as to how he had formed opinion that claim for rebate made by assessee could be termed as furnishing inaccurate particulars of income. Mere quoting of statutory provision is not sufficient as Assessing Officer has to form opinion that it was case where penalty proceedings have to be initiated and all more, reasons are required to justify order of imposing penalty. These basic parameters had not been fulfilled in impugned order. 10.The learned Senior Counsel for Revenue by referring to decision of Hon'ble Supreme Court in MAK Data (P.) Ltd. V. Commissioner of Income-tax-II reported in [2013 ] 38 taxmann.com 448 (SC) submitted that impugned order is appealable order and petitioner without 9 exhausting appellate remedy could not have filed this writ petition before this Court. Reference was also made to decision of Division Bench in case of Lanxess India (P.) Ltd. V. Assistant Commissioner of Income Tax reported in [2015] 60 taxmann.com 352 (Madras) which has been rendered following decision in MAK Data (P.) Ltd. (supra). 11.In case pertaining to MAK Data (P.) Ltd., assessee filed return declaring certain income and during course of assessment proceedings, it was found by Assessing Officer that certain documents comprising of share application forms, bank statements etc., had been impounded in course of survey proceedings conducted in case of sister concern of assessee. By show cause notice, Assessing Officer sought for details regarding documents . In reply, assessee made offer to surrender sum of Rs.40.74 lakhs with view to avoid litigation and buy peace. Assessing Officer completed assessment wherein amount surrendered was brought to tax and also passed penalty order under Section 271 (1) (c) of Act. Tribunal set aside order of penalty stating that it cannot be solely based upon assessee's surrender. High Court reversed order passed by Tribunal and Hon'ble Supreme Court pointed out that it is not case of voluntary surrender and surrender was made in 10 view of detection made by Assessing Officer in search conducted in sister concern of assessee. 12.The facts of present case as has been set forth above would clearly show that there was no allegation against petitioner of furnishing inaccurate particulars and petitioner on receiving notice submitted response stating that claim for rebate is not allowable, petitioner had filed revised computation statement and accordingly, assessment was completed. Thus, withdrawal of rebate claimed was voluntary and in any event, same cannot be brought within expression concealment of particulars or furnishing inaccurate particulars as in case of M/s.MAK Data (supra). Therefore, decision of Hon'ble Supreme Court is clearly distinguishable on facts. 13.In CIT., Ahmedabad Vs. Reliance Petroproducts Private Ltd., in Civil Appeal No.2463 of 2010 reported in 322 ITR 158 (SC), question which arose for consideration was whether assessee was liable to pay penalty under Section 271 (1) (c) of Act. Considering facts of said case, to see as to whether assessee has given inaccurate particulars or not, after noting dictionary meaning of word particulars , it has been held as hereunder: 11 9. ....... We have already seen meaning of word particulars in earlier part of this judgment. Reading words in conjunction, they must mean details supplied in Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by assessee in its Return were found to be incorrect or erroneous or false. Such not being case, there would be no question of inviting penalty under Section 271(1)(c) of Act. mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of assessee. Such claim made in Return cannot amount to inaccurate particulars. 14.The above decision of Hon'ble Supreme Court would apply with full force on present case. respondent has not rendered any finding that details supplied by petitioner in its return were erroneous or false or that mere claim for rebate would amount to furnishing inaccurate particulars. Thus impugned order cannot be sustained in eye of law. 15.For all above reasons, writ petition is allowed and impugned order is quashed. No costs. Consequently, connected miscellaneous 12 petition is closed. 04.10.2017 maya Speaking /Non-speaking order Index:Yes/No Internet:Yes /No To Income Tax Officer (International Taxation)-2(2) No.16 Greams Road Chennai 600 006 13 T.S.SIVAGNANAM, J maya W.P No.7861 of 2017 04.10.2017 Gopalratnam Santha Mosur v. Income-tax Officer (International Taxation)-2(2), Chennai