TaxTMI 
TaxTMI 
2012 (10) TMI 861
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....led return of income declaring total income at Rs. 'Nil'. However, the assessment after making certain disallowances including addition of sundry creditors Rs. 9,79,615/- u/s 41(1) of the Income Tax Act, 1961 (the Act) was completed at an income of Rs. 'Nil' after allowing set off of business loss for A.Y. 2002-03 Rs. 3,41,520/- vide order dtd. 9-12-2009 passed u/s 143(3) of the Act. While passing the assessment order, the A.O. also initiated penalty proceeding u/s 271(1)(c) of the Act and accordingly the assessee was asked to show cause as to why penalty should not be imposed u/s 271(1)(c) of the Act. In response, it was inter alia submitted by the assessee that cessation of liability was unilateral action on the part of the A.O. to treat ....
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....e assessee is a small scale industry, the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 are not applicable to the assessee company. However, the management is hopeful of turning around and, hence, the accounts of the company are prepared on going concern basis. These facts are also stated by the Statutory Auditors in their audit report dtd. 1-9-2007. As per the Audited Balance Sheet, the current liabilities of the company as at 31-3-2007 were Rs. 47,83,933/- consisting of sundry creditors for goods, expense and provisions. The details of sundry creditors, which were outstanding for more than 3 years and which was submitted to the A.O. is as under:- Sl No. Name & address of the creditors Outstanding from ....
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.... liabilities were added to the respective account of the parties during the financial year 2006-07. The learned A.O. has made addition of the amount payable to these parties u/s 41(1) also treating the same as furnishing of inaccurate particulars of income by the assessee to reduce the Income Tax liability. Due to continuous losses and inability to pay professional fees, the assessee has not filed appeal against the quantum addition. The A.O. has also levied penalty u/s 271(1)(c) with a remark that the assessee has furnishing inaccurate particulars of income and the said penalty is also confirmed by the CIT(A). He further submits that the assessee has not passed any entries in the books of account for writing back the liabilities but the A.....
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....true or the assessee has concealed the particulars of its income. 7. The Hon'ble Apex Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158(SC) after considering various decisions including Dilip N. Shroff vs. JCIT (2007) 291 ITR 519(SC) and Union of India vs. Dharamendra Textile Processors (2008) 306 ITR 277(SC) has observed and held (page 158 head notes) as under: "A glance at the provisions of section 271(1)(c) of the Income- tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) woul....