2012 (10) TMI 777

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...., 1961. 2. The brief facts of the case are that assessee has filed its return of income on 30th October, 2006 declaring an income of Rs.19,85,000. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Act was issued and served upon the assessee. On scrutiny of the capital account of Shri Deepak Seth, Partner, reveals an addition to capital of Rs.211,65,691 during the year. Assessing Officer has directed the assessee to explain this addition to the capital account. The assessee has submitted the details. Learned Assessing Officer has accepted the details except the following amounts: Date Source of addition Amount 30/7/2005 Sale of car No. DDB5331 of Sh. Deepak Jain 15,050/- ....

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....authorities below while imposing the penalty is that assessee has not committed bona fide mistake, rather it is a deliberate attempt. Learned Assessing Officer was of the view that once auditors have qualified that deduction of auditors remuneration and freight charges would not be admissible to the assessee, then assessee should be vigilant to write back these amounts while preparing the return. In our opinion, this reasoning is not sustainable, because in the capital account of Deepak Seth, an addition of Rs.211,65,691 was made. Out of this total addition, source of a sum of Rs.59,837 remained to be explained by the assessee. The assessee has given an explanation that this amount represents sale of car and recovered from the blues on a....