TaxTMI 
TaxTMI 
2013 (12) TMI 196
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....bsequently, a notice under Section 148 of the Act was issued on 19.08.2002, proposing to reassess the income for the said assessment year. The assessment under Section 143(3) read with Section 147 of the Act was completed on 29.11.2002, disallowing the claim for provision for liquidated damages in respect of delays in supply of materials, amounting to Rs.74,50,000/-. The Assessing Officer thereafter issued a notice and initiated proceedings under Section 271(1)(c) of the Act. The assessee was called upon to clarify as to why penalty should not be imposed. The assessee submitted its reply vide letter dated 14.03.2005. Not satisfied of the reply, by order dated 17.03.2005, the Assessing Officer imposed penalty of Rs.26,50,000/-. Aggrieved by the assessment order dated 29.11.2002, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals) and a separate appeal as against the order dated 17.03.2005, imposing penalty. With regard to the appeal filed against the assessment order dated 29.11.2002 (quantum appeal), after considering the contentions put forth by the assessee, by order dated 27.05.2003, the Commissioner of Income Tax (Appeals) dismissed the appeal. By order....
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....a, the learned counsel appearing for the assessee submitted that the contract was a composite contract which required purchase of erecting of the paint shop for the automobile assembly equipment for HMIL. The counsel further stated that the assessee was responsible for all activities relating to procurement and supply of the materials to the site of the customer. The contract provided for handling fee for local content, supervision, fabrication, installation and commissioning assistance installation and as per the delivery schedule under clause 4.0 of the contract, dated 10.03.1997, the equipment shall be supplied between the delivery dates being April 1997 and July 1997. Clause 10 provided for penalty for late delivery subject to certain conditions that the HMIL would raise its claim only after 01.05.1998. Admittedly, there was delay in supply of equipment and therefore, the assessee was under the bonafide belief that HMIL being entitled to invoke clause 10 of the contract, which provided for payment of liquidated damages, if the delivery dates set forth in scope of supply for installation are not met due to reason attributable to supplier's (assessee) where force majeure is not i....
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....mar, learned counsel appearing for the Revenue and Dr.Anita Sumanth, learned counsel appearing for the assessee and carefully considered the submissions and materials available on record. 6. The contract entered into between the assessee and HMIL dated 10.03.1997, is a contract for procurement, supply and erection of automobile assembly equipment. In terms of clause 1.1.0, delivery date has been defined to mean the date of final acceptance i.e., 01.10.1998. Clause 2 deals with scope of supply, purchase and erection. The assessee has to procure the equipment as per the List in Scope of Supply from local Indian market in the name and on account of HMIL and act as a purchase agent with regard of purchasing of materials from Indian sub-suppliers. The Indian subsuppliers shall invoice directly to the HMIL and the assessee has to approve the invoices and release them for payment to the Indian sub-suppliers by HMIL. The total value for materials and fabrication is as specified in clause 2.1.1. The Contract price and terms of payment are as contained in clause 3.0. The first payment in terms of clause 3.3.1 being Rs.50,000,000/- was to be made by cheque within one week from the date of ....
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....amages would be payable, the assessee had written back the provision in their books of accounts and offered it to tax in the assessment year 2001-02. Therefore, it is the case of the assessee that there is no malafide intention of concealing income and in fact, there was no escapement of income. 8. Section 271 of the Income Tax Act deals with failure to furnish returns, comply with notices, concealment of income etc. Section 271(1)(c) of the Act states that if the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income shall pay penalty as per clause (iii) of Section 271(1)(c). Explanation 1 to clause (iii) of Section 271(1) would be relevant, which states that where in respect of any facts materials to the computation of the total income of any person under the Act and such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false or such person offers an explanation which he is not able to sub....
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....g would depend upon the return filed, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In the case of Dilip N.Shroff vs. Joint CIT reported in [2007] 6 SCC 329, the Hon'ble Supreme Court while explaining the terms of 'concealment of income' and 'furnishing inaccurate particulars', held that in order to attract penalty under Section 271(1)(c) bonafide of the conduct was necessary, as according to the Court, the word 'inaccurate' signified a deliberate act or omission on the part of the assessee. Further, it was held that clause (iii) of Section 271(1)(c) provided for a discretionary jurisdiction upon the Assessing Authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded. The Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Reliance Petroproducts Pvt., Ltd., (supra), observed that it was only on the point of mens rea, the judgment in Dilip N.Shroff vs. Joint CIT (supra), was upset and pointed out that in the case of Union of India and Ors vs. Dharmendra Textiles Processors & Ors., (supra), afte....