TaxTMI 
TaxTMI 
2011 (11) TMI 165
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....r the AO made addition on various issues out of which following two additions have been sustained by the CIT(A) and Hon'ble ITAT: 1. Inter corporate deposits and interest thereon Rs. 12,91,500/- 2. Sales Commission Rs. 53,010/- 3. Factory Miscellaneous expenses Rs. 23,084/- Rs. 13,67,594/- Mentioning the decisions of Hon'ble Allahabad High Court in the case of Banaras Texterium Varanasi v. CIT [1988] 169 ITR 782/36 Taxman 76 and in the case of CIT v. Zeekoo Shoe Factory [1981] 127 ITR 837 (All.) and the decision of Hon'ble Gujarat High Court in the case of CIT v. Jamnadas & Co. [1994] 210 ITR 218/[1995] 78 Taxman 573 the AO held that the assessee has furnished inaccurate particulars of in....
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....e. The CIT(A) granted partial relief and for the balance addition sustained the ITAT did not grant relief on the ground that no further fresh evidences have been furnished by the assessee. Similarly, the second addition was of Factory Miscellaneous expenses. These were also disallowed on the ground of inadequate proof and evidences. It is submitted that books of accounts are subject to Internal Audit, Statutory and Tax audit. For all expenses there are always possibility of full details and evidences are not available or preserved. But merely because of that if the AO disallowed some small expenditure of such a big Public Limited Company, the addition automatically cannot result into a view that the assessee has concealed the particulars....
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.... reasons the ld. AO has simply stated that the additions having been confirmed and in view of the paragraphs extracted from the judgment he was satisfied that inaccurate particulars of income were furnished. In doing so he has ignored the detailed explanation given in reply to show cause notice by holding that the assessee has failed to submit any reply. The penalty thus levied is without application of mind and simply because addition has been made, the same is levied. The same deserves to be cancelled and the same be cancelled. The ld. AO has relied upon the decision of the Supreme Court in the case of Union of India v. Dharmendra Textile Processors 166 Taxman 65 (SC) by holding that penalty is civil liability and willful concealment i....
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.... The ld. CIT(A) considering the facts and circumstances of the case as also the submissions of the assessee deleted the penalty holding that the assessee is a public limited company and is accepting deposit in large number from public. If the assessee fails to produce some of the depositors to prove the genuineness and creditworthiness inspite of the efforts made it may result into addition u/s 68 but it cannot lead to penalty for furnishing inaccurate particulars of income. Aggrieved, the Revenue is in appeal before us. 3. The ld. DR relied on the penalty order and submitted that penalty u/s 271(1)(c) is civil liability and for attracting such civil liability, willful concealment is not an essential ingredient as is case in matter o....
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....the AO be restored. 4. The ld. counsel of the assessee heavily relied on the order of ld. CIT(A) and reiterated the submissions made before the first appellate authority. He submitted that ld. CIT(A) has correctly appreciated the facts of the case and deleted the penalty. His order may kindly be upheld. 5. We have considered the rival submissions and perused the material on record. The undisputed fact is that the assessee is a Public Limited Company having huge turnover but suffering losses and has ultimately been closed down. The net loss returned is Rs. 59,54,460/- and there was no intention to reduce any taxable income. Even after additions the assessed income remained a loss. The accounts are subject to Internal Audit, Statutory A....
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....sive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income with the hypothesis that it does. If the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the explanation cannot help the Department because there will be no material to show that the amount in question was the income of the assessee. This case is also covered by the decision of the Tribunal, Ahmedabad in the case of ACIT v. Excel Forging (P.) Ltd. in IT Appeal No.1709/....