TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 279
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....oduce certain bills and documents as well as reconciliation of various bank statements and confirmations for various outstanding credits. Additions were made on account of estimations and non-production of details. Even though no satisfaction was recorded while initiating penalty, notice u/s. 271(1)(c) was issued. In the order u/s. 271(1)(c), Assessing Officer (AO) has given an opportunity to assessee. Assessee explained that the firm is not in the business and due to inability in furnishing the necessary evidence in the course of assessment, they have admitted various additions on which there was no appeal. It was further submitted that most of the credits do not pertain to the year and simply because additions were made and accepted it do....
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....ing the assessment proceedings. These cannot lead to levy of penalty. It was further contended that citation given by assessee that of Bhuramal Manikchand Vs. CIT [138 ITR] is not correct citation as there is no such case. It was submitted that on verification it is found that there was a reported decision in 121 ITR 840 and another reported in 130 ITR 129, wherein the penalty was cancelled. It was contended that AO simply stated a citation, did not apply his mind while considering the levy of penalty. It was further contended that addition u/s. 68 was made in assessee's case on un-reconciled balance of bank account and for not furnishing of confirmations of Sundry Creditors. Assessee relied on the decision of the Supreme Court in the c....
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....n my opinion no penalty is impossible on such additions and in such a cryptic manner". 6. Ld. DR vehemently contended that CIT(A) was not correct in deleting the penalty. It was submitted that assessee has surrendered only on enquiry and AO was prevented in establishing the concealments as assessee has consented in the course of assessment itself. There is no need to establish concealment on the part of assessee when the assessee himself admitted the incomes during the course of assessment after AO started enquiry about various purchases and entries in the Books of Accounts. The Ld. DR relied on the following case law: i. Kamal Chand Jain Vs. ITO [277 ITR 429] (Delhi ); ii. CIT Vs. Jagabandhu Prasanna Kumar Ruplal Sen Poddar [133 ITR 15....
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....me or furnished inaccurate particulars. This is not a case of furnishing inaccurate particulars as assessee has made claims which are disallowed. 9. The issue is whether mere disallowance of expenditure/ claims and additions made on the basis of un-reconciled amounts or unconfirmed creditors can lead to penalty for concealment of income. I am of the opinion that facts do not indicate that there is any concealment. Assessee has explained during the assessment proceedings as well as during the penalty proceedings that it was not in the business at the time of assessment and was not in a position to furnish the bills/vouchers for two items i.e., purchases and expenses disallowed. With reference to bank reconciliation, the details were furnish....
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....lty. 11. Ld. DR relied on various case law. In the case of Kamal Chand Jain Vs. ITO [277 ITR 429] (Delhi), Hon'ble Delhi High Court has upheld the levy of penalty on the reason that after insertion of Explanation-I to Section 271(1)(c), it is obligatory on the part of assessee to substantially support his explanation and if no proper explanation from assessee was offered except surrendering certain amount for taxation to by peace and avoid further litigation, penalty is justified. This decision is not applicable to the facts of the case as assessee has a bonafide explanation that it went out of the business and was not in a position to reconcile the amounts. 12. In the case of Rajkumar Chaurasia Vs. CIT [288 ITR 329] (Allahabad), the ....
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....es claimed as deduction and estimated income in Pakistan which was subject to rectification. This case law infact support assessee's case that penalty cannot be levied in case of disallowance of expenditure. 15. The Hon'ble Supreme Court in the case of B.A. Balasubramaniam and Bros. Co., Vs. CIT [236 ITR 977] (SC), in fact was considering the presumption of concealment where the returned income was less than 80% of income assessed. It was held that Explanation to Section 271(1)(c) became applicable and Income Tax Officer was justified in imposing penalty because, assessee had not been able to discharge the onus which was on it under the Explanation1 to Section 271(1)(c). This case law also is in fact supporting assessee's case ....