TaxTMI 
TaxTMI 
2016 (8) TMI 1042
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.... Appeal No. 2393 of 2010 is concerned, the assessee is a non banking financial company and a venture of Government of Gujarat. The return of income for the assessment year 2001-02 was accompanied by the audited profit and loss account, balance sheet, auditor's report in Form No. 3CA and 3CD and supporting statements of accounts. The profit and loss account showed the net profit of Rs. 27,80,90,559/-. In the return, from the above net profit the assessee provided for an amount of Rs. 1,62,81,556/- for bad and doubtful debt; whereas the amount of Rs. 21,98,638/- was the provision made for diminution in value of investments in accordance with the accounting standard. The Assessing Officer disllowed the same. The assessee preferred an appeal before CIT(A) but the CIT(A) confirmed the views of the Assessing Officer on both the counts. The assessee preferred an appeal before the Tribunal and the Tribunal following the decision of the Special Bench of the Tribunal in the case of the assessee in its earlier decision, held against the assessee. 2.1 So far as Tax Appeal No. 601 of 2013 is concerned, the assessee is a partnership firm running educational institution. The firm had claimed d....
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....hat the Tribunal erred in holding that the fact of the assessee being a Government Company is of no relevance, on the contrary, higher onus is there on the assessee because it has better professional assistance and its accounts are compulsorily subject to audit and how their auditors failed to notice that in law wrong claim was being made. He submitted that the Tribunal held that since the onus under clause (b) of Explanation (1) to section 271(1)(c) is not discharged, the assessee is guilty of concealment. He submitted that the Tribunal totally missed that the assessee had claimed it in accordance with the prudential norms of Reserve Bank of India and therefore it is not a case to which clause (b) will apply. 3.2 Mr. Shah submitted that CIT(A) pointed in para 5.1.2 that ; "They resorted to the new claim of the provisions of the RBI Act overriding the provisions of Income-tax Act" forgetting that in computation itself it is pointed out that the provision for bad and doubtful debt was made in accordance with RBI directions but the CIT(A) found that this was an afterthought. He submitted that the CIT(A) ultimately held that the assessee had furnished inaccurate particulars and and....
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....ner of Income Tax reported in [2013] 33 taxmann.com 393 (Gujarat) wherein this court has held that the assessee had made full disclosure about the claim which was also certified by the chartered accountant and necessary declarations in the prescribed forms were made. It is further held therein that may be in the case of the assessee, such claim on merits was not granted. However this did not mean that the assessee had concealed any income. It is further held therein that the issue ultimately at any rate was debatable since one High court has already held in favour of the assessee. (II) Decision of this Court rendered in Tax Appeal No. 1052 of 2010 wherein this Court has held as under: "5. Having thus heard learned counsel for the parties and having perused the documents on record, we find that the Tribunal has given sufficient reasons for upholding the orders of CIT(Appeals) deleting the penalty. The Tribunal records that deduction claimed by the assessee in respect of bad debts and disallowance of expenses on estimation basis were not found to be false or fabricated by the Assessing Officer. The disallowances were made only on technical point which was highly disputabl....
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....n was attributable to an intention or desire on part of the assessee to conceal the income so as to avoid imposition of tax thereon. In the present case, the assessee is a cooperative society managed through a governing board and as stated by the society, there is no personal interest involved. The omission has occurred not with an intention but due to oversight. As held by this Court, absence of proof acceptable to the department cannot be equated with fraud or willful default. The circumstances must show that there was a conscious act of concealment or furnishing of inaccurate particulars on part of the assessee. There is nothing on record to show that any particular individual has any personal interest in committing the act of omission of showing the amount received from Insurance Company as income of the assessee, a cooperative society. In fact, the entries in the books of account reflect that the assessee had credited the said sum to the fund account directly and the said entry appeared in the balance sheet without going through the profit and loss account." (IV) Price Waterhouse Coopers Pvt. Ltd vs. Commissioner of Income Tax, Kolkatta - I and Another reported in 2012 (348....
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....ncurred for raising loan for the carrying on of a business cannot in all cases be regarded as an expenditure of a capital nature. On the facts of the case they held that as construction and sale of the building was the sole business of the firm and the building was its stock-intrade, and the loan was raised and used wholly for the purpose of acquiring this stock-in- trade and not for obtaining any fixed assets or raising any initial capital or for expansion of the assessee's business, the expenditure incurred for the raising of loan was not an expenditure of capital nature but revenue expenditure. Although the conclusion of the High Court was correct, we are not able to agree with the principle that the nature of the expenditure incurred in raising a loan would depend upon the nature and purpose of the loan. A loan may be intended to be used for the purchase of rawmaterial when it is negotiated, but the company may after raising the loan change its mind and spend it on securing capital assets. Is the purpose at the time the loan is negotiated to be taken into consideration or the purpose for which it is actually used ? Further suppose that in the accounting year the purpose is ....
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....ealing with this matter finally, recorded that the question as regards reopening of the assessment under Section 147(a) of the Act would not arise further. The question in the facts of the matter under consideration is thus covered by the judgment of this court in State Bank of Travanwre v. CIT [1986] 158 ITR 102. ' 4. Mr. M.R. Bhatt, learned Senior Counsel appearing with Ms. Mauna Bhatt, learned advocate appearing for the revenue in Tax Appeal No. 2393 of 2010 has drawn the attention of this Court to the reasonings adopted by the CIT(A) as well as the Tribunal and submitted that in view of the concurrent findings arrived at by the authorities below this Court may not interfere in the appeal. He submitted that the Tribunal has discussed the case in detail and rightly come to the conclusion that this is a case of concealment and therefore the penalty has been rightly imposed. He submitted that the assessee committed the default of concealment of its income by furnishing inaccurate particulars thereof in relation to its claim for deduction of provision for bad and doubtful debts and provision made for diminution in value of the investments. In support of his submissions, he has re....
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....sessing Officer regarding concealment of income or for furnishing any inaccurate particulars. Therefore, from the plain reading of the assessment order itself it is clear that the assumption of jurisdiction to levy penalty is lacking in the present case. The notice issued by the Assessing Officer has also not stated whether the penalty proceedings are initiated for concealment of income or for furnishing inaccurate particulars. 6.1 From the perusal of the impugned orders passed by the CIT(A) as well as the Tribunal, it is clear that there has been an ambiguity in the and/or difference of opinion amongst the authorities below as to whether the assessee has made a wrong claim or has concealed certain particulars. 6.2 The contention with regard to section 45Q of the Act has been raised by learned advocate for the assessees. Though technically it ought not to have been claimed under the Income tax Act, but now by way of the decision of this Court rendered in Tax Appeal No. 531 of 2015, the claim has been allowed by this Court. This Court in Tax Appeal No. 531 of 2015 has observed as under: "28. In the light of the view adopted by the court, it is not necessary to enter into an....
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....iding effect vis-?vis income recognition principles in the Companies Act, the Assessing Officer is bound to follow the RBI Directions so far as income recognition is concerned. The contention that the assessee cannot indirectly claim the benefit which would amount to a benefit similar to that under section 43D of the Act, therefore, does not merit acceptance." 7. We have also considered the decisions rendered in the case of Reliance Petroproducts (supra) wherein the Apex Court has observed as under: "8. A glance at this provision would suggest 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. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars 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 wor....
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....deliberate act or omission on behalf of the assessee. It went on to hold that Clause (iii) of Section 271(1) provided for a discretionary jurisdiction upon the Assessing Authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the assessee must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, M....
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.... Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. " 7.1 Similarly in the case of Dahod Sahakari Kharid Vechan Sangh Ltd (supra), this Court has held as under: "24. Applying the aforesaid principles to the facts of the case, it is apparent that the assessee's contention that it had no malafide intention or mens rea has not been found to be untrue by any of the authorities. The finding by the Tribunal in this context that the assessee had made separate claim in the profit and loss account for deduction of gratuity on the basis of actual payment ....