TaxTMI 
TaxTMI 
2011 (12) TMI 11
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.... Act. 2. The brief facts of the case are that assessee is an undertaking of Govt. of India. It came into existence by way of National Cooperative Development Corporation Act 1962 (No. 26 of 62). It is engaged in the business of providing long term finance to the State Govt. and Cooperative Societies in all these States. For Asstt. Year 2000-01, it has filed its return of income on 21.11.2000 declaring an income of Rs.28,33,52,920/-. It was processed u/s 143(1) on 26th March, 2001. The AO had formed an opinion that while claiming deduction u/s 36 (1)(viii) of the Act, assessee has included certain receipts which are not derived from the business of providing long term finance. Thus, such receipts namely dividend, interest from bank, misce....
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....u/s 274 read with section 271(1)(c) inviting assessee's explanation as to why penalty be not imposed. In response to the show cause notice, it was contended by the assessee that it has been claiming a similar deduction right from asstt. Year 1994-95. It was always allowed by the AO. First time it was disallowed in 1999-2000. The AO has visited the assessee with the penalty in asstt. year 1999-2000. The assessee further contended that it has disclosed all the facts in the return of income as well as in the audited accounts. It has not furnished any inaccurate particulars nor concealed the particulars. In its understanding, such receipts also qualify for deduction u/s 36(1)(viii). There is no deliberate attempt at the end of assessee to evade....
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.... out that all along in the past, deduction u/s 36(1)(viii) has been allowed to the assessee by different AOs in scrutiny assessment passed u/s 143(3). Thus, assesse in the present year has a prime facie belief that deduction u/s 36(1)(viii) would be admissible to it on such income. It has disclosed all the basic facts truly and correctly. It has not concealed any particulars or furnished any inaccurate particulars. It is the AO who has to assess the true income of assessee on the basis of these very details. It is a difference of opinion between the assessee and the AO about inclusion or exclusion of certain receipts in the gross receipts eligible for deduction u/s 36(1)(viii). Therefore, there cannot be any penalty on such bonafide belief ....
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....missioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)******** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i) and (Income-tax Officer,)******** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1.- Where in respect of an....
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....sessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeals); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the....