TaxTMI 
TaxTMI 
2009 (4) TMI 805
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....agement Pvt. Ltd. through an account payee cheque which was genuine and fully explained. (b) The appellant received a loan of Rs. 19,00,000 from M/s. Sujata Securities Pvt. Ltd. through an account payee cheque which was genuine and fully explained. (c) The appellant has proved the genuineness of the loans of Rs. 4,00,000 and Rs. 19,00,000 through statements and confirmations of the creditors. (d) The loss of Rs. 50,95,247 has been arbitrarily treated as `speculative loss'." The various reasons given by the learned Commissioner of Income-tax (Appeals) to disallow the abovementioned expenses are misconceived and incorrect. The penalty order is contrary to the facts and law of the case. The appellant craves leave to add, amend or alter any of the foregoing grounds of appeal at the time of hearing. Briefly stated, the facts are that the return of income was filed by the assessee showing a loss of Rs. 50,95,247. While completing the assessment under section 143(3) of the Act, on March 26, 1997, the Assessing Officer says on page 6 of the assessment order that since physical delivery of the shares has not been effected, loss claimed by the assessee is a speculative loss and ca....
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....ned authorised representative for the assessee that regarding the first issue as per which the Assessing Officer has considered the claim of the assessee of business loss of Rs. 50,95,247 as speculative loss, it. was submitted that for the same, no penalty under section 271(1)(c) can be imposed and in support of this contention, reliance was placed on the judgment of the hon'ble Delhi High Court, rendered in the case of CIT v. Auric Investments and Securities Ltd. as reported in [2009] 310 ITR 121. Regarding the other two additions of Rs. 4 lakhs and Rs. 19 lakhs under section 68, it is submitted that although the addition has been confirmed by the Tribunal, penalty under section 271(1)(c) cannot be imposed because the assessee has furnished explanation which the assessee could not substantiate but such explanation is bona fide and all the facts relating to the same and material to the computation of total income have been disclosed by the assessee and as per Explanation 1 to section 271(1)(c), it is not a case of concealment of income or furnishing of inaccurate particulars of income and hence the penalty imposed is not justified. Reliance was also placed on the following two....
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....mere treatment of the business loss as speculative loss by the Assessing Officer does not automatically warrant inference of concealment of income. It was also held that it cannot be said that the assessee has concealed any particulars, so far as its computation of income is concerned and as such, the provisions of section 271(1)(c) of the Act are not attracted. Respectfully following the judgment of the hon'ble Delhi High Court regarding this aspect of the matter, we hold that penalty is not leviable under section 271(1)(c) because it cannot be said that there is concealment of income or furnishing of inaccurate particulars of income merely because the claim of the assessee regarding business loss has been accepted by the Assessing Officer as speculative loss. Regarding the second aspect, i.e., penalty on addition of Rs. 23 lakhs under section 68 of the Act, we find that out of this, there is one loan of Rs. 4 lakhs stated to be received by the assessee from M/s. Elite Management Pvt. Ltd. For this loan, the assessee has furnished the loan confirmation from the party. The Assessing Officer has issued summons to M/s. Elite Management Pvt. Ltd. and has recorded the statement of....
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.... concealed. If the explanation has been found by the Assessing Officer or by the Commissioner of Income-tax (Appeals) to be false, then also, the same consequence will follow. Thirdly, if the explanation given by the assessee could not be substantiated by him and if the assessee fails to prove that such explanation is bona fide and all the facts relating to the same and material to the computation of total income have not been disclosed by the assessee then also, it can be deemed that such addition represents the income in respect of which particulars have been concealed but if it is found that the explanation is bona fide and all the facts relating to the same and material to the computation of total income, had been disclosed by the assessee then no such consequence will follow. In the present case, explanation is offered by the assessee and the same was not found to be false by the Assessing Officer or by the learned Commissioner of Income-tax (Appeals) because the assessee has furnished the confirmation and the party has appeared and has accepted that the cheque in question was given by them to the assessee although not as a loan. Hence, it cannot be said that the explanation o....
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....y the learned Departmental representative for the Revenue, we find that as per the judgment of the hon'ble apex court, penalty is a civil liability but this does not mean that in all the cases where the addition is made, penalty has to be imposed. In those cases, where it is found that although addition is made but the addition does not amount to concealment of income or furnishing of inaccurate particulars of income, penalty under section 271(1)(c) is not imposable. We find that this aspect of the matter was considered by the Tribunal in the case of Gem Granites (Karnataka) v. Deputy CIT [2009] 120 TTJ (Chennai) 992. In this case also, the issue was regarding imposition of penalty under section 271(1)(c) and after considering the judgment of the hon'ble apex court rendered in the case of Dharamendra Textile Processors [2008] 306 ITR 277, it was held by the Tribunal that though the Supreme Court has held that the penalty provision is a civil liability and wilful concealment is not an essential ingredient for attracting this liability, but still the penalty provision requires to prove that there was a concealment of income with a view to avoid the tax and such onus is on the....