TaxTMI 
TaxTMI 
2016 (1) TMI 895
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....come Tax Act, 1961 [hereinafter referred to as the 'Act'] raising the following sole effective ground. "1. On the facts and in circumstances of the case and in law the CIT(A) erred in upholding the action of the AO to levy penalty of Rs. 8,66,165 under section 271(1) (c) of the Act on the alleged ground that the Appellant has furnished inaccurate particulars of income." 2. The assessee is a Company engaged in the business of manufacturing and sale / trading of pharmaceutical formulations, dietetic specialities and animal husbandry. The assessee filed its return of income for the assessment year 2009- 10 on 06-10-2009 disclosing total income of Rs. 38,09,80,856/-. The Assessing Officer [hereinafter referred to as the 'AO'] comple....
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....ieved, the assessee is now in appeal before us. 3. We have heard the rival contentions and perused the materials on record. The learned AR for the assessee argued that the assessee had itself made suo moto disallowance of Rs. 52,39,420/- in its computation of income and the assessee adopted gross current assets in the balance sheet, while disallowing the interest expenditure under Rule 8 (2) (ii) to the tune of Rs. 19,22,294/-; whereas the AO disallowed the interest expenditure to the tune of Rs. 21,28,190/-. The ld. AR submitted that the assessee's view is supported by the order of the ITAT, Mumbai Benches in the case of Shitanshu Bipin Vora Vs. ACIT passed in ITA No.2585/Mum/2013. It is also argued that while disallowing the indirect e....
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....ccurate particulars of income to avoid payment of tax and hence, the order of the learned CIT(A) is quite legal and requires no interference. 5. Keeping in view the arguments advanced by both the parties and on careful perusal of the materials on record, it has come to our notice that while disallowing the interest expenses incurred in relation to the exempt income, the assessee adopted the gross current assets in the balance sheet whereas, the AO had taken the net assets (current assets less current liabilities) and on account of assessing the indirect expenses, the assessee had applied 0.5% of average investment or actual dividend received whichever was lower. Thus, the assessee had followed the ratio that if no dividend is actually re....
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.... false or devoid of bonafide. As per Explanation 1 to Sec. 271(1) (c), if the AO finds that the explanation offered by the assessee is false, then the penalty can be levied on the amount which is found to be concealed. Therefore, the whole idea behind Explanation 1 is that the AO has to first record reasons for arriving at a conclusion that there is concealment on the part of the assessee. After seeking an explanation if the authority comes to a conclusion that it is false, then the AO can proceed to levy penalty. The findings given in the assessment proceeding cannot operate as res-judicata, because the consideration that arise in the penalty proceedings are different from those in the assessment proceeding. 8. In the case of Reli....