TaxTMI 
TaxTMI 
2010 (7) TMI 1083
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....y at Mira Rd. ₹ 3,00,000/- vi. Disallowance of security charges and rates & taxes ₹ 3,09,768/- The A.O. also initiated penalty proceedings under section 271(1)(c) of the Act. In respect of the amount of ₹ 20,64,389/-, the A.O. observed from the computation of income that the assessee had shown agricultural income of ₹ 20,64,389/- and claimed expenditure of ₹ 3,43,328/- against the agricultural income. Disbelieving the source of income, the A.O. treated the same as unaccounted income under section 68 and added to the income of the assessee. The expenditure of ₹ 3,43,328/- claimed for agrl. Operations was also added to the income of the assessee by the A.O. The A.O. also treated the subsidy received of ₹ 24,133/- as income from other sources. Regarding the adjustment in finished stock/WIP of ₹ 4,65,992/-, the A.O. observed from the details filed that the assessee had developed 647.90 sq.mt. of shop area and 2285.15 sq.mt. of residential area resulting into total development of 2933.14 sq.mt. In respect of Priyadarshani Project at Goa, the total cost of the project was ₹ 1,71,71,777.75. The A.O. worked out the finished stock o....
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....s levied by the A.O. for furnishing inaccurate particulars of income. The assessee is a private limited company and along with the return of income for A.Y. 2005-06, its audited accounts and Tax Audit Report were filed. The A.O. did not notice any incorrect particulars in these statements. In fact he has not disputed any of the figures mentioned in the return of income or the statements sent along with the return of income. The A.O. has not brought on record any information to show that the particulars furnished were inaccurate. What the A.O. did was merely rejecting the explanation furnished by the assessee. In support of this claim the assessee relied on the decision of the Mumbai Bench of the ITAT in the case of ACIT vs. VIP Industries reported at 2009-TIOL-193-ITAT Mumbai. In para 6 of his order the CIT(A) observed that as the assessee has not filed an appeal before the CIT(A) against the assessment order made by the A.O., the same indirectly amounted to acceptance of additions made in the assessment. Courts held that findings in the assessment proceedings are relevant but not conclusive in penalty proceedings. In penalty proceedings the assessee is entitled to adduce evidence ....
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....Copy of the appellate order dated 18.10.2002 passed by the CIT(A)-XXV for A.Y. 1997-98 wherein the CIT(A) in para 3.2 of his order directed the A.O. to take the agricultural income of the assessee at ₹ 2,93,000/- instead of ₹ 2,00,000/- adopted by the A.O. while determining taxable income under section 115JA of the I.T. Act vide pages 54 to 56 of the paper book. vi) Copy of the assessment order dated 28.03.2006 passed by the A.O. for A.Y. 2003-04 wherein against item 10 the A.O. mentioned that the assessee carried on the business of construction and development and agriculture vide pages 57 & 58 of the paper book. As there was no whole sale market for fruits and vegetables near the agricultural land owned by the assessee, the assessee has been selling the agricultural produce to persons at the premises of the assessee. The persons interested in purchasing the above fruits and vegetables used to pluck them and collect the same. As these persons are illiterate the assessee prepared receipts for the sales made to them who affixed their thumb impressions. These sale bills were produced before the A.O. These purchasers sell the fruits/vegetables to hawkers in the neighbou....
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....ges 93 and 102 of the paper book. This was paid by the assessee as an advance as the seven persons promised to vacate the site occupied by them. The balance was to be paid after the assessee obtained possession of the site. However, in spite of efforts made these seven persons did not vacate the site occupied by them. The assessee could not also recover the advances amounting to ₹ 3,00,000/- made. The same was therefore written off in the year ended 31.03.2005. With reference to the disallowance of expenditure claimed it was submitted that the assessee owns a building in Juhu, Mumbai which houses the registered office of the assessee company. Depreciation is claimed year after year on this building and allowed on the income tax assessments made on the assessee. This expenditure of ₹ 3,09,768/- comprises (a) ₹ 1,19,800/- paid towards security charges, (b) ₹ 1,89,968/- paid as Municipal Tax and Land Revenue. The assessee paid the sum of ₹ 1,19,800/- to Detective Security Service which Firm sent it persons as security guards to protect the assessee's Registered Office. The details of payments made to Detective Security Service are at pages 105to 124 of th....
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....osition in A.Y. 2008-09 wherein also in the order under section 143(3) assessee's agricultural income as declared was accepted. Only during the impugned year the A.O. disbelieved the agricultural activity treating income returned as income from other sources. In addition he also disallowed the expenditure claimed in agricultural activity. Similar action undertaken in earlier years also has resulted in appellate proceedings and ultimately the assessee's agricultural income was directed to be accepted. In view of these facts, as far as assessee's agricultural activity is concerned, on merits the assessee has supported that that it has earned agricultural income and the A.O. simply disbelieved the agricultural income and treated the same as income under section 68. The expenditure is also disallowed even though the assessee has submitted necessary evidences. Even the agricultural subsidy received from the Government of Goa by way of cheque to the extent of ₹ 24,113/- was also treated as other source of income by the A.O. Similarly the claim of ₹ 3,00,000/- paid to seven parties for purchase of property, which was in dispute and ultimately written off in assessee's property....
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....ld depend upon the return filed by the assessee, 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. The attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will no amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 9. In view of this just because the assessee's claims were not accepted by the A.O. penalty proceedings under section 271(1)(c) are not attracted. The additions in the assessment may be good enough for disallowance of expenditure but not sufficient to consider them as concealment of income under section 271(1)(c). One of the reasons for the CIT(A) to confirm the penalty is that the asse....