TaxTMI 
TaxTMI 
2012 (12) TMI 336
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....te sector and exempt u/s 10(15)(iv)(h) and section 10(23G). However, the balance amount of Rs. 4,66,52,000/- was found being dividend from UTI MIP which is not exempt during the assessment year under consideration i.e. 2003-2004. When the Assessing Officer pointed out the assessee that the dividend amount of Rs. 4,66,52,000/- is not exempted, the assessee vide its letter dated 21.12.2005 admitted the said income. Accordingly, the AO restricted the claim of exemption u/s 10 to Rs. 4,63,59,643/- and assessed the balance amount of Rs. 4,66,52,000/- to tax. Subsequently, the penalty proceedings were initiated u/s 271(1)(c) and levied the penalty in respect of disallowance of depreciation on lease asset and addition of Rs. 4,66,52,000/- on account of the claim of exempt income. The AO levied the penalty equivalent to 100% of the tax sought to be evaded and accordingly work out at Rs. 2,46,47,083/-. The assessee challenged the levy of penalty before the CIT (A). The CIT (A) has deleted the penalty with regard to the claim of depreciation on lease asset. However, the penalty with respect to the claim of dividend income as exempt was confirmed by the CIT (A). 3. The assessee has now raise....
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....said income and took the excuse of over sight. The learned DR further contended that the assessee has concealed the information as well as income which is assessable to tax. He has further submitted that the assessee is not a lay man or an ordinary person who may take a plea of lack of knowledge of law or awareness of law or change of law. The learned DR has submitted that the assessee is availing the facilities of experts and professionals and, therefore, the said excuse of the assessee is not acceptable. He has further contended that no revise return of income was filed and, therefore, the assessee cannot take the benefit of voluntarily offering of income. The learned DR has pointed out that the decision in case of CIT vs. Siddhartha Enterprises (supra) relied upon by the learned AR of the assessee is in fact supports the case of the Revenue as the assessee made a deliberate attempt to avoid the tax. He has relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. Zoom Communication Pvt. Ltd. (2010) 327 ITR 510 and submitted that the explanation of the assessee is not bonafide but was a deliberate attempt to conceal the income. In rebuttal, the learned AR of the....
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....' exempted u/s 10(15) is a patently illegal and wrong claim and there is no possibility of two views on this point. More significant is the fact that the assessee was not filed the details of the income which was claimed as exempted u/s 10(15) of the Income Tax Act along with the return of income. Rather on the query from the Assessing Officer to furnish the details for examination, the assessee did not come out of this truth that the claim with respect to the dividend from UTI MIP of Rs. 4,66,52,000/- was wrongly claimed as exempt income but still the assessee kept quite till the AO subsequently pointed out that the said income is not exempted for the assessment year under consideration. This conduct of the assessee shows that the assessee tried to test the taxing authorities whether they were awakening or not and able to find out the wrong claim made by the assessee. Thus, it cannot be said that the assessee has voluntarily offered the dividend income which was earlier claimed as exempt due to inadvertence and bonafide mistake. The claim of the assessee was wholly untenable and unsustainable and but for the scrutiny undertaken by the AO, the same could not have been detected. It ....
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.... to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law 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 a claim of this nature, that would give a license to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have. 21. We find that the assessee before us did no....