TaxTMI 
TaxTMI 
2011 (1) TMI 427
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....roceedings by mentioning that the assessee did not voluntarily surrender the amount for taxation. The penalty proceedings were completed on 26-6-2009. The decision in the case of Punjab State Industrial Development Corpn. Ltd. (supra) was referred to. It was held that the assessee intentionally and wilfully sought to evade tax by furnishing inaccurate particulars of income. Therefore, penalty of Rs. 2,80,870, being the minimum penalty, was levied. 2. Various submissions were made before the CIT(Appeals)-XXIX, New Delhi. He referred to a number of judgments including in the case of CIT v. Escorts Finance Ltd., [2009] 183 Taxman 453 (Delhi), in which it has been held that a claim made in the return which is ex facie bogus would lead to the inference of furnishing inaccurate particulars of income. In view of this decision, the appeal of the assessee was dismissed. 3. Aggrieved by this order, the assessee is in appeal before us. Following grounds have been taken in the appeal :- "1.1 That on the facts and in the circumstances of the case, the ld.CIT(A) has erred in law in confirming penalty of Rs. 2,80,870 levied under section 271(1)(c) of the Income-tax Act, 1961. 1.2 That the ld.....
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....n from the explanation tendered by the assessee. The explanation is that all facts have been fully disclosed. This explanation is bona fide. Therefore, the inference of penalty cannot be drawn in such a case. Reliance has been placed on the decision of Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322; Hon'ble Delhi High Court in the case of CIT v. Zoom Communication (P.) Ltd. [2010] 327 ITR 510/191 Taxman 179; CIT v. IFCI Ltd. [2010] 328 ITR 611/199 Taxman 21 (Delhi); Hon'ble Chhattisgarh High Court in the case of CIT v. Vijay Kumar Jain [2010] 325 ITR 378 (Chhattisgarh) "B" Bench of Mumbai Tribunal in the case of Mimosa Investment Co. (P.) Ltd. v. ITO [2010] 6 ITR (Trib.) 789/[2009] 28 SOT 470 and Hon'ble Punjab & Haryana High Court in the case of CIT v. Shahabad Co-op. Sugar Mills Ltd. [2010] 322 ITR 73. It is also submitted that statutory audit under section 44AB of the Act had been carried out by an independent auditor in column No. 17(a) of his report, nil amount has been mentioned against expenditure of capital nature. Therefore, it is argued that this is not a fit case for levy of penalty. When questioned as to wh....
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....M/s. Bansal & Company, a firm of Chartered Accountants, which shows nil amount in column 17(a), and this amount escaped his attention also while preparing the return of income. On these facts, the question is-whether, the assessee is liable to be penalized under section 271(1)(c)? 7.1 Insofar as the question of admissibility of the expenditure is concerned, the same stands decided against the assessee by the judgment of Hon'ble Supreme Court in the case of Punjab State Industrial Development Corpn. Ltd. (supra) dated 4-12-1996, which made the following observations: "We do not consider it necessary to examine all the decisions in extenso because we are of the opinion that the fee paid to the Registrar for expansion of the capital base of the company was directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit-making, it still retains the character of a capital expenditure since the expenditure was directly related to the expansion of the capital base of the company. We are, therefore, of the opinion that the view taken by the different High Courts in favour of....
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....and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making the claim of this nature, that would give a license to unscrupulous assessees to make wholly untenable and unsustainable claims. It is further mentioned that it is not explained as to who committed the oversight resulting in failure to add this amount and under what circumstances the oversight occurred and why it was not detected by those who checked the income-tax return. The revenue has placed heavy reliance on this case, while the ld. counsel has distinguished this case by mentioning that the assessee has explained the cause of oversight. In the affidavit of Shri S.K. Aggarwal, it is mentioned that the auditors, M/s. Bansal & Company did not show this amount as disallowable in tax audit report in column 17(a) and this matter also escaped his attention. No affidavit has been filed from M/s. Bansal & Company. In the course of hearing, the assessee was requested to state what action has been taken against M/s. Bansal & Company or Shri S.K. Aggarwal. The ld. counsel did not furnish any reply, which means that no actio....
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....facts are that the Assessing Officer rejected the book results and made an addition of Rs. 1,70,920 by estimating the net profit at 10 per cent of the receipts against 6.36 per cent shown by the assessee. The Hon'ble Court considered inter alia the decision in the case of Dharmendra Textile Processor (supra). It has been mentioned that it is not the case of the revenue that the assessee concealed the particulars of his income or any particular of income furnished by him was found to be inaccurate by the Assessing Officer. Therefore, the penalty was cancelled. The facts of this case are clearly distinguishable because that case did not involve any ex facie bogus or false claim. 7.7 In the case of Mimosa Investment Co. (P.) Ltd. (supra), the question before the Tribunal was in regard to levy of penalty in respect of disallowance of Rs. 38,31,322 under section 14A of the Act. The Tribunal considered the meaning of the word "concealed" as mentioned in Webster's New International dictionary, the form of return and the statutory provisions. Finally, the penalty was deleted by mentioning that all relevant material facts had been disclosed. The assessee offered an explanation which was no....
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....oned that it does not perceive any merit in the appeal. The same was dismissed at the stage of admission. From this decision, it transpires that the material issue is whether the claim is ex facie false and whether explanation furnished by the assessee is bona fide? It is a fact that the claim is ex facie false. The plea of bona fide cannot be accepted because the circumstances in which auditors committed the errors have not been explained. Therefore, we are of the view that the lower authorities were right in levying the penalty. 7.10 In the case of Tel-Abridge International Ltd. (supra) the Delhi Tribunal was concerned with the case of levy of penalty in respect of expenditure incurred to increase the share capital. The penalty was confirmed by making the following observations: "We are in agreement with the aforesaid submission of learned counsel for the revenue. We fail to understand as to how the chartered accountants who are supposed to be expert in tax laws, could give such an opinion having regard to the plain language of section 35D of the Act. It would be important to note that assessee has nowhere pleaded that return was filed claiming benefit of section 35D of the Act....