TaxTMI 
TaxTMI 
2016 (9) TMI 14
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....onsequently CIT(A) failed to appreciate that such a mistake of non- disclosure of salary income was under bonafide belief that tax has already been deducted on such salary income and there is no further requirement of disclosing it in return of income and thus it was not concealment of income. 4.0 That the Ld. AO and consequently CIT(A) failed to appreciate that the assessee has voluntarily accepted such income in assessment proceedings and paid the demand in question without going in further appeal although some of the additions were unwarranted. 5.0 That the Ld. AO has erred in law in levying the penalty by treating the credit card expense as income of the assessee which in any way has been paid out of salary income credited in the bank and already assessed to tax. 6.0 That the Ld. AO/CIT(A) has erred in law in levying/confirming penalty on disallowance of housing loan interest and credit card expenses on which no penalty proceedings was initiated in the assessment order. 7.0 Without prejudice to the above grounds, the Ld. AD and consequently CIT(A) has erred in law in not considering tax already deducted and deposited to the credit of central government for levying p....
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....s disallowed Rs. 1,61,294/- 4. Concealment of savings bank interest. Rs. 12,863/- Rs.32,53,158/- Rs.39,92,838/- Assessed income Rs.39,92,830/- Rounded off Rs.39,92,830/- 2.3 The Ld. A.O. initiated penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate particulars of salary and for concealment of interest income in the return. He levied 100% penalty which worked out to Rs. 9,99,011/-. 3. Aggrieved by the order of the A.O., assessee preferred the appeal before Ld. CIT(A). Before Ld. CIT(A), the assessee contended that he was under the bona fide belief that salary received from the employers was included in the return of income and no tax was required to be paid as TDS had already been deducted. The assessee submitted that he was not aware about the interest on S/B account being taxable in nature. 3.1 Ld. CIT(A) did not appreciate the facts that the assessee had not included the salary received from the previous employers during the financial due to bona fide mistake and the interest on saving bank account was missed out as the assessee was not ....
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.... do with the inadvertent error. It should not mean that the assessee is guilty of either furnishing inaccurate particulars of attempting to conceal its income." 5.3 In respect of interest on housing loan, the Ld. A.R. submitted that it is a legal issue regarding eligibility of claim of interest. He submitted that the Assessing Officer disallowed 50% of interests as the housing loan as the loan was in the joint name of the assessee and his wife. Ld. A.R. further submitted that he Assessing Officer while making addition in respect of interest on housing loan has not recorded his satisfaction and thus has not initiated penalty proceedings on the disallowance made in the assessment order as per law. 5.3 In respect of disallowance on credit card expenses, Ld. A.R. submitted that the assessee had not claimed any such expenses in his return of income. Therefore, no penalty can be levied on any addition so made. He also submitted that in respect of credit card expenses, the Assessing Officer has not recorded his satisfaction and thus has not initiated penalty proceedings on the disallowance. 6. On the contrary, Ld. D.R. referred to the written submissions before us in support of h....
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....visions of Explanation 1 to Section 271(1)(c) which reads as under. "Explanation 1. - Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, Then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 2.2 During assessment proceedings, the assessee has admitted for the addition after detection by the Department. It can be seen that the reply has not offered any valid explanation. Therefore, case of assessee is covered under sub clause (A). 2.3 In fact, during the penalty proceedings also, the assessee st....
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....he case is squarely covered by the ratio of co- ordinate bench of ITAT Mumbai in case of S H R Trading Pvt. Ltd. Vs. Deputy Commissioner of Income- tax [2014]-TIOL-1348- ITAT-MUM. (ii) In para 7, the Hon'ble ITAT has held that there is a basic and fundamental difference between a debatable claim and an inadmissible claim i.e. a patently wrong or false claim. In the case of first kind of claim, there can be two opinion as to whether or not the assessee could make such a claim on the basis of certain facts of that particular year. Provisions of the Act do not disentitle the assessee to make such claim. But, in the second type of claim, there is clear and emphatic bar in the Act- assessees are not entitled to claim such expenditure/deduction/rebate/ exemption. Absence of a valid basis for making any claim of deduction, resulting in low tax or no tax, is like going against the letter and spirit of the law. In other words, claims made under the second category have no legs of their own to stand, because such claims are tenable neither legally nor factually. Courts are of the view that disputable claims and inadmissible claims are to be treated differently. (iii) In para 12, th....
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....se payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have" (vi) After analyzing the judgments mentioned in sub- para(iv)above, the Hon'ble ITAT held (in para 24) that the Courts are distinguishing between the debatable claims and patently wrong/inadmissible claims. They(courts) are of the firm view that if an assessee claims any deduction, he has to substantiate the claim by producing positive evidence- otherwise it cannot escape the rigor of the penal provisions. In other words, penalty u/s 271(1)(c) cannot be imposed because an assessee takes a particular legal stand. But, this does not mean that it can claim wrong deductions or claim without any basis or foundation, because, false, spurious and mendacious claims do not fall under the category of a legal stand. (vii) In para 26, the Hon'ble ITAT has held that just because something is mentioned in the return of income does not prove that the claim made in it is justified and allowable. Filing of return does not tie down the hands of an AO. A final decision d....
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.... of the professionals and tax experts in day to day affairs and particularly for tax matters. Hence, it has to presumed that the assessee was aware of the correct position of law settled by the judgment of Hon'ble SC in case of Madras Industrial Investment Corporation Limited (supra). B. The case of Reliance Petro products Pvt. Ltd. [2010] 322 ITR 158 (SC) = 2010-TIDL-21-SC- IT Does not help the case at hand. The facts of the Reliance Petro products Pvt. Ltd. are not applicable to the facts of the case under consideration. In the matter of the Reliance Petro products Pvt. Ltd., the assessee had made a claim of deduction u/s. 36(1)(iii) of the Act in respect of interest. This deduction had also been claimed by the assessee in the earlier year and the First Appellate Authority (FAA) had allowed the deduction, while the ITAT had restored the issue back to the file of the AD. Deciding the appeal, Tribunal held that the assessee had duly filed an explanation giving the reasons for making a claim, that once the assessee offered an explanation the onus would shift on the Revenue to prove that the explanation offered by the assessee was false, that bonafides of the explanation were ....
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....alty for failure to carry out a statutory obligation is the result of a quasicriminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. From the ROI filed by the assessee, it has been demonstrated that the assessee has failed to claim the TDS deducted by the earlier employers. The conduct of the assessee supports the explanation tendered and therefore, a deliberate omission to include the salary received from previous employer cannot be established. 7.2 We, therefore, respectfully following the decision relied upon by the assessee in the case of Price Water House Coopers Pvt. Ltd. (TS-731-SC-212), are of the opinion that assessee's conduct cannot be said to be a deliberate act so as to warrant levy of penalty. Accordingly, we delete the penalty levied by the Assessing Officer in respect of omission to disclose the salary received from the previous employers on which TDS had already been deducted by them. 8. Regarding interest on housing loan, it is observed that the Assessing Officer has made addition....