TaxTMI 
TaxTMI 
2016 (5) TMI 689
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.... Rs. 18,73,720/- as levied by the learned A.O. Your appellant submits that it has neither furnished inaccurate particulars of income nor concealed particulars of income. Under the circumstances, penalty of Rs. 18,73,720/ as confirmed by the CIT(A) be deleted. . . 2. The learned CIT(A) failed to appreciate that there was no requisite satisfaction recorded by the learned A.O. for the purpose of initiating as well as levying penalty u/s 271 (l)(c) of the Act. 3. The learned CtT(A) erred in law and on facts in confirming the penalty U/S 271(1)(c) in spite of the fact that all the information and particulars relating to the claim of the appellant for obsolete stock written off and for selling and distribution expenses were adequately disclosed in the return of income, audited accounts accompanying it and also during the course of assessment proceedings. Your appellant submits that the additions are confirmed by the Hon'ble Tribunal in quantum proceedings not on the ground that the information furnished was false. Your appellant submits that under the circumstances the case of the appellant is fully covered by the ratio of Hon'ble Supreme Court decision in the c....
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.... of the Act. 5. Aggrieved, assessee went in appeal before ld. CIT(A) who also dismissed the appeal and confirmed the penalty u/s 271(1)(c) of the Act. 6. Aggrieved, assessee is now in appeal before the Tribunal. Assessee has raised 4 grounds of appeal but the issue revolves on two points - firstly ld. CIT(A) failed to appreciate that there was no requisite satisfaction recorded by the ld. Assessing Office for the purpose of initiating as well as levying penalty u/s 271(1)(c) of the Act and secondly against the imposition of penalty of Rs. 18,73,720/- even when there was no concealment of income nor any inaccurate particulars of income were submitted in the financial statement. 7. As far as the first point regarding no requisite satisfaction being recorded, we find that sufficient opportunity was given by ld. Assessing Officer to the assessee for hearing on 10.2.2010 and 15.3.2010 but none attended on behalf of the assessee nor any written explanation/reply was submitted. Thereafter while framing penalty order u/s 271(1)(c) of the Act, ld. Assessing Officer has discussed in detail the issues arising in the two confirmed additions on account of stock written off of Rs. 13,59....
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....her three additions. In other wards he has applied his mind and arrived at a satisfaction as to which addition requires Imposition of penalty and accordingly he had initiated the penalty in a very reasoned and selective manner. The addition on which the penalty has been finally levied was specifically mentioned by the Assessing Officer for initiation of penalty proceedings in his order. Therefore, the objection that there is no proper satisfaction is without any basis both on facts as well as in law in view of the above stated provisions of section 271(l)(c) of the I.T.Act,1961. Thus, it is clear from the assessment order that the AO was satisfied that the assessee had claimed deductions which were not allowable. Accordingly, the additions were made to the total income of the assessee and penalty proceedings were initiated. 5.7 So far as specifying the charge for levy of penalty in the penalty order is concerned, the AO has in the penalty order has clearly mentioned that the assessee did not avail of the opportunity of being heard granted to it and thus filed no explanation. He has also held that the appellant has written off the stock without any basis and has also claime....
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.... stock written off of Rs. 13,59,000/- and disallowance on account of selling & distribution expenses in regard to Mizoram govt. at Rs. 37,61,506/-. 11. First we take penalty imposed on addition confirmed on disallowance of stock written off of Rs. 13,59,000/-. Ld. AR reiterated the submissions made before the lower authorities and on the other hand ld. DR supported the orders of authorities below. 12. We have heard the rival contentions and perused the material on record. We observe that assessee has written off of stock in the profit and loss account at Rs. 13,59,000/- on account of write off of slow moving items identified by assessee as there was no scope of such inventory being sold out in normal course of business cycle in light of market condition and technological development. Ld. Assessing Officer while making addition of Rs. 13,59,000/- observed as below :- 3.2. I have considered the submission put forth by the assessee. The same is not acceptable. The assessee has simply stated that since the company has identified the slow moving items, which are not moving since considerably long period of time having regard to the nature of asset and new technological de....
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....or obsolete stock. On consideration of the above facts and details pointed out by the learned Counsel for the assessee we find no infirmity in the findings of the learned CIT(A) because majority of the items were issued prior to the starting of the financial year and further no evidence has been furnished in support of the claim of the assessee. In the absence of any material or evidence to support the claim of the assessee, we do not find any justification to interfere with the orders of the authorities below, in absence of evidence case law would not support claim of the assessee. We confirm their findings and dismiss this ground of appeal of the assessee." 15. Now examining the above observations with the angle of imposing of penalty u/s 271(1)(c) of the Act, we find that penalty u/s 271(1)(c) of the Act is imposable if the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income. The impugned disallowance of stock written off finds its origination from the books of account, as the assessee which is maintaining regular books of account with complete quantitative details, figured out certain slow moving items depicted at pages 31 ....
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....l and facts of the case. The appellant made payment of Rs. 37,61,506/- to one individual Mr. Larsing M who issued two bills over a period of two months. The bills mentioned liaisoning, product intimation and coordination services, services towards realization of payment and charges towards product/material deployed. When the Assessing Officer asked the evidences of rendering the services or capability of the said individual to render these services, the appellant only submitted copy of bills, and claimed that the said person is not related. The invoices have been raised and the payments have been made by cheques. The company earned more than Rs. 2 crores in respect of Mizoram Government projects. Apart from these submissions, no evidence in the form of any document or other evidences to prove the involvement of the said person was filed. Even when it was specifically asked during the appeal hearing to prove . with necessary documentary or other evidence, the fact of rendering services, the appellant only relied upon the bills issued by the party. When any expenses is claimed by the appellant, onus is on the appellant to prove that the same has been incurred for the purpose of busin....
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....to prove genuineness of the expenditure incurred for the business of the assessee. Considering the facts of the case in the light of the findings of the authorities below and in the absence of any evidence in form of contract with the party, we are unable to interfere with the orders of the authorities below. We confirm the findings of the learned CIT(A) and dismiss this ground of appeal of the assessee. As a result, ground No.4 of the appeal of the assessee is dismissed. 18. Before us during the proceedings ld. AR submitted that during the year under appeal company earned more than Rs. 2 crores in respect of Mizoram-e-governance project and the same is forming part of the gross revenue and certainly expenditure was required initially to obtain the project by way of filing necessary documents before the concerned department and other incidental expenses relating to liaisoning and marketing, project implementation and services, efforts towards realization of payments, charges towards the products and material deployed in various department, net working equipment and project implementation co-ordination services. 19. On the other hand, ld. DR supported the orders of lower autho....