SRI T. ASHOK PAI versus COMMISSIONER OF INCOME TAX, BANGALORE

Citation: [2007] 7 S.C.R. 556 · Decided: 18-05-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
SRI T. ASHOK PAI 
~ 
v. 
COMMISSIONER OF INCOME TAX, BANGALORE 
MAY 18, 2007 
B 
(S.B. SINHA AND MARKANDEY KA TJU, Jl] 
fa 
Income Tax Act, I96I: 
y 
c 
s. 27 I (J)(c)-Filing of revised returns by assessee furnishing of all 
requisite particulars when asked for better particulars of investment-Penalty 
for concealment of income-Imposition of-Held: Furnishing of an assessment 
of value of the property is not furnishing of inaccurate particulars to attract 
s 27I(J)(c)-Mere omission or negligence would not constitute a deliberate 
act of suppressio veri or suggestio falsi-Also not a case where penalty has 
D been imposed for breach of contravention of commercial statute-Thus, order 
.of High Court that penalty under section 271 (1)(c} was exigible, set aside. 
.. 
s. 271 (J)(c) explanation 1 (a)-Penalty for concealment of income-
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Burden of proof-Held: Lies on the Department-It is to arrive atfinding that 
the explanation offered by assessee was a false one, not bona fide and that he 
E has not disclosed all the facts material to the computation of his incqme-
If explanation given by assessee regarding the mistake is treated to be bona 
fide and it is found that he had acted on the basis of wrong legal advice, 
failure to discharge his burden would not arise. 
Reference-Finding of fact that assessee not guilty of deliberate 
F concealment of his income-Finding of fact not challenged as being perverse 
before High Court-Held: High Court must accept the finding-Income tax 
,,Joo-
+ 
Act, 1961. 
Appellant-individual apart from income by way of salary was having 
G 
shares of profits in various firms and also income from dividend and interest. 
A professional group filed returns of income on beh~lf of appellant-assessee. 
Respondent called for better particulars of investments by appellant. Revised 
returns were filed. Application was filed for settlement of tax due which was 
rejected. Appellant then filed second revised return and the same was accepted. 
However, proceedings for imposition of penalty in terms of section 27l(l)(c) 
~ 
H 
556 
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""" -y 
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T. ASHOK PAI v.COMMNR. OF INCOME TAX, BANGALORE 
557 
of the Income Tax Act, 1961 was initiated. Appellant contended that he had A 
acted bont:t fide as tax affairs were looked after by professional group. 
Tribunal held that on discovery, some omission or some wrong statement in 
the original return is found, a penalty proceeding for concealment of any 
particulars of income or furnishing inaccurate particulars of such income 
under section 271(1)(c) of the Act is not attracted. Reference was filed. High B 
Court he.Id that in the facts and circumstances of the case the tribunal was 
not right in holding that penalty u/s 271(1)(c) ~as not exigible in the instant 
case. Hence the present appeal 
Allowing the appeal, the Court 
HELD: 1.1 Reference of the question to the High Court was general in c 
nature. No question was referred as to whether the finding of the Tribunal 
was perverse or not. Existence of mens rea is essentially a question of fact • 
. The Tribunal alone, as the highest authority empowered to determine ~he 
question of fact, would be entitled to go thereinto. However, hasten to add that 
the same would not mean that the High Court will have no jurisdiction in this D 
behalf. High Court, should not ordinarily disturb the finding of fact arrived 
at by the Tribunal. Question oflaw should generally arise only accepting the 
finding of fact to be correct. [Para 9) (562-C, D) 
Commissioner of Income-Tax v. Mukundray K. Shah 2007 (290) ITR 433; 
K Ravindranathan Nair v. Commissioner of Income-Tax, (2001) 247ITR178 E 
and Century Flour Mills Ltd v. Commissioner of Income Tax, (2001) 247 ITR 
276, referred to. 
1.2. 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 clause (a) of Explanation 1 that the 
Assessing Officer is required to arrive at a finding that the explanation offered 
F 
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 bona fide but an the facts 
relating to the same and material to the income were not disclosed by him. G 
Thus, apart from his explanation being not bona Jule, it should be found as of 
fact that he has not disclosed all the fact

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