DILIP N. SHROFF versus JOINT COMMISSIONER OF INCOME TAX, MUMBAI AND ANR.

Citation: [2007] 7 S.C.R. 499 · Decided: 18-05-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

DILIP N. SHROFF 
A 
v. 
JOINT COMMISSIONER OF INCOME TAX, MUMBAI AND ANR. 
MAY 18, 2007 
[S.B. SINHA AND P.K. BALASUBRAMANY AN, JJ.] 
B 
Income Tax Act, 196I: 
Section 27 I (J)(c )-Concealment of income and furnishing of 
inaccurate particulars of such income-Ingredients of-Imposition of C 
penalty-AY 1998-99-Assessee, an HUF, filed a return of income showing a 
long term capital loss-The said capital loss had arisen on account of sale 
of property in which the assessee had a I/4th share-The assessee had 
appointed a registered valuer for valuation of the said property-The value 
of the property was fixed at a certain sum-In the valuation report, it was D 
. stated that the pwpose of valuation was for computation of capital gains-
The Assessing Officer referred the valuation to the District Valuation Officer-
The valuation of the property as made by the District Valuation Officer was 
adopted and on the basis thereof long term capital gain was determined-
As there was a difference between the two valuations, a show cause notice E 
was served on the assessee for concealment of income and furnishing of 
inaccurate particulars of such income-The assessee explained that there 
was no concealment of income as all the details of property were submitted 
along with the return of income and the difference in the matter of valuation 
of the I/4th share of the assessee did not amount to concealment-The 
Assessing Officer r 
cted the explanation of the assessee and levied a minimum 
penalty on the assessee-Appeals field by the assessee rejected by CIT 
(Appeals), !TAT and the High Court-Correctness of-Held: The expression 
"conceal" 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 
F 
or furnishing of inaccurate particulars-The Assessing Officer is required to G 
arrive at a finding that the explanation offered by an assessee, in the event 
he offers one, was false-Primary burden of proof, therefore, is on the 
revenue-The statute requires satisfaction on the part of the assessing officer 
that the assessee deliberately concealed his income or furnished inaccurate 
499 
H 
500 
SUPREME COURT REPORTS 
[2007) 7 S.C.R. 
A particulars in respect of such income-A mere omission or negligence would 
not constitute a deliberate act-S. 271(/)(c) remains a penal statute-Rule 
of strict construction shall apply thereto-Mere difference of opinion between 
two experts regarding the valuation of the property does not constitute 
concealment of income or furnishing inaccurate particulars-The impugned 
B order, therefore, suffers from non-application of mind-Penalty set aside. 
Words & Phrases: 
"Concealment" and "inaccurate particulars"-Meaning of-In the 
context of Section 27 l(/)(c) of the Income Tax Act, 1?61. 
C 
The appellant was an assessee under the Income Tax Act, 1961 and was 
an HUF. For the assessment year I998-99, a certain income was declared by 
him, inter alia, showing a long term capital loss. The said capital loss was 
said to have arisen on account of sale of property being land and building in 
which the appellant had a I/4th share. The appellant entered into an agreement 
D for the sale of the undivided I/4th share in the said property for a certain 
sum with one Mr. 'L'. For the purpose ofvaluation of the said property a 
registered valuer was appointed. The value of the said I/4th share in the 
property was fixed at a certain sum. In the valuation report, it was stated that 
the purpose was valuation for computation of capital gains. As regard 
existence of sale instances, however, although a sheet was said to have been · 
E attached thereto, no such thing was done. By reason of a consent decree, the 
I/4th undivided share was sold and possession was transferred to 'L' against 
final payment 
The return filed by the appellant for the assessment year I998-99 came 
up for scrutiny before the Assessing Officer, who, in exercise of the power 
F 
under Section SSA of the Act, referred the matter for valuation of the said I/ 
4th undivided share of the appellant to the District Valuation Officer. The 
valuation of the land as made by the District Valuation Officer was adopted 
and on the basis thereof long term capital gain was determined. 
G 
In view of the said order of assessment, a show cause .notice under 
Section 274 read with Section 27I of the Act was served on the appellant to 
which a reply was med by the appellant claiming

Excerpt shown. Read the full judgment & AI analysis in Lexace.