TaxTMI 
TaxTMI 
2012 (10) TMI 1044
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....mpared to earlier years is as under:- A.Y. Gross Receipts Net Profit N.P. Rate Depreciation Net Profit N.P. Rate After Depreciation Before depreciation 2005-06 3,57,55,837 19,35,555 5.41% 51,49,096 70,82,654 19.81% 2006-07 6,46,13,431 52,67,354 8.15% 40,92,920 93,60,274 14.49% 2007-08 10,48,70,987 65,42,991 6.24% 56,89,817 1,22,32,808 11.66% (iii) The assessee is regularly assessed to tax under section 143(3). In A.Y. 2005-06, AO after rejecting the books of accounts, made trading addition of ₹ 4 lacs (PB 68-71). In A.Y. 2006-07, AO made trading addition of ₹ 2 lacs (PB 64-67). (iv) The assessment for A.Y. 2007-08 was taken for scrutiny vide notice dated 22.09.2008. Thereafter, the AO issued notice u/s 142(1) for the first time on 29.09.2009 with a detailed questionnaire fixing the hearing on 30.09.2009. The assessee attended the hearing from time to time and produced books of accounts, bills, vouchers etc., which were examined on test check by the AO. (v) While the assessment proceedings were in progress, a survey u/s 133A was conducted at the business premises of the assessee on 25.11.2009. In survey, the asses....
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.... furnishing of inaccurate particulars of income. He, therefore, imposed penalty of ₹ 50,77,800/- on amount of ₹ 1,50,85,500/- which includes disallowance of claim of deduction u/s 80G. Submission- (i) From the facts stated above, it can be noted that surrender made by the assessee out of unpaid sundry creditors and unpaid salary/ bonus/ security deposit to staff as on 31.03.2007 is on adhoc basis without reference to any specific creditor/ employee. The total outstanding creditor/ amount payable to the employee as on 31.03.2007 was ₹ 3,81,54,566/- out of which assessee initially surrendered ₹ 2 crores but later on reduced it to ₹ 1.50 Crores. Neither in the assessment proceedings nor in the penalty proceedings, the list of ₹ 1.50 Crores was obtained or identified. In respect of unverifiable liability/ bogus expenses, the assessee in assessment proceedings vide reply dated 17.12.2009 (PB 54-55) explained that the outstanding sundry creditors, bonus payable and salary payable has been subsequently paid. It was also clarified that assessee has employed about 400 employees in respect of work executed for JVVNL which includes installation of hig....
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.... the creditor/ employee at the end of the year is bogus/ fictious. The AO has simply relied on the surrender made by the assessee. Such surrender made by the assessee, therefore cannot be held to be the income for which inaccurate particulars has been furnished. (iv) In various cases decided by the courts, the principle laid down is that unless concrete material is found that assessee has furnished inaccurate particulars of income or concealed his income and the explanation given by him is found to be false, unsubstantiated, unplausible and malafide, no penalty can be imposed even if assessee has made surrender in survey/ assessment proceedings. Reliance in this connection is placed on the following cases:- CIT Vs. M/s Cafco Syndicate Shipping Co. 2007-TIOL-599-HC-MAD-IT Assessee engaged in the business of clearing and forwarding of import and export cargo at Chennai Port filed its return of income on 30.10.2002 admitting a total income of ₹ 7,27,150/-. There was a survey operation under Section 133A on 10.12.2002. During the course of survey at the business premises of the assessee, it was noticed that some of the vouchers of expenses were self-vouchers and they were n....
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....e in the revised return only due to its incapacity to produce the proper voucher for the expenses incurred. The AO simply relied on the surrender made by the assessee without pointing out any specific voucher which is unverifiable/bogus/fictious. The assessee also explained the reasons for outstanding liabilities. This explanation was not found to be false or malafide. In these circumstances, on the amount surrendered suo motto, to buy peace of mind, penalty can not be imposed. (v) A glance at the provisions of section 271(1)(c) suggests that in order to be covered, 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. Present is not the case of concealment of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be inco....
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....ment recorded under oath at the time of survey. The return was subsequently revised on 09.03.2004 offering additional income of ₹ 12,82,260/- which was stated to be invested in fixed deposits with various banks. Scrutiny assessment was completed & the AO accepted the income returned in the revised return but initiated penalty proceedings by observing that the consequent disclosure of additional income of ₹ 7 lacs & its subsequent revision offering additional income of ₹ 12,82,260/- is the outcome of survey operations, thereby, concealing the particulars of income & furnishing inaccurate particulars. It was held that no incriminating material was gathered either during the survey action or during post survey enquiries. Order of the lower authorities contains mere oblique reference to the enquiries made from the bank and certain scanty material against the assessee which is quantitatively disproportionate to the extent of disclosure made by the assessee. Neither the AO nor the CIT(A) has highlighted the incriminating nature of the material in their respective orders. None of these documents were produced to demonstrate that the additional income was declared by the ....
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.... 271(1)(C). Sant Das Nihal Chand Vs. CIT (1996) 135 CTR 174 (Raj.) It was held that mere agreement by assessee to pay tax does not amounts to concealment. Navnitlal Pochalal Vs. CIT(1995) 213 ITR 69 (Guj.) It was held that penalty cannot be levied in absence of any material on record to prove that the amount of agreed addition was income of assessee for the concerned year. M.George & Bros. Vs. CIT (1986) 160 ITR 511 (Ker) It was held that penalty can't be imposed only on the basis of surrender of income, positive facts regarding concealment have to be proved. Thus, where the original return was filed on estimate basis and the assessee subsequently reached a settlement with the department for certain additions, there was no case warranting levy of penalty. Gajanand Shyamlal Vs. CIT (1978) 111 ITR 816 (Gauhati) It was held that in absence of any evidence that surrender is concealed income, penalty cannot be levied. In view of the above, penalty levied by the AO with reference to surrender of ₹ 1.50 crores be deleted. (vi) So far as levy of penalty on the disallowance of claim of deduction u/s 80G for ₹ 85,500/- is concerned assessee gave donation of ₹ 1,11,....
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....payment after verifying the inventory. The payments to either creditor or the employee were made subsequently when payment received from JVVNL .The assessee has filed a liability chart of unpaid salary of staff, SD deposited from the employees, bonus payable and salary payable during the course of appellate proceedings. On verification of this chart it is found that the assessee has paid the liability subsequently. The adhoc disclosure was made to by peace and was not concealed income of the assessee or in respect of inaccurate particulars. The assessee had admitted the additional income during the course of survey on the basis of adhoc outstanding liabilities. The accommodation entry mentioned in the penalty order are not specific w.r.t. liabilities. If any accommodation entries were taken through Shri Subhash Chand Gupta, CA, New Delhi is pertained to AY 2008-09.The AO had not mentioned in penalty order any incriminating books of account found during the course of survey. The regular books were produced before the survey and after the survey. The AO himself had accepted the reduced disclosure without any objection. The assessee did not produce the exemption certificate to claim 8....