TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 849
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....f any penalty for concealment u/s 271(1)(c) of Income-tax Act, 1961. 3. That all the facts relating to statutory deduction was on record and claim of statutory deduction was only in the computation and as such there is no case of furnishing of inaccurate particular of income and imposition of penalty. 4. The order of lower authority are not justified on facts and same are bad in law." 1.1 In ITA No. 3953/Del/2013 for asstt. year 2006-07 the following grounds have been raised :- 1. "That on the facts and circumstances of the case, CIT(A) was not justified in confirming penalty of Rs. 15,20,262/- on the alleged ground of furnishing of inaccurate particulars of income in the context of statutory claim u/s 80-1B. 2. That in any case, mistake if any was on account of bona fide causes and assessee having filed the revised return /revised statement of income, there could be no case of any penalty for concealment u/s 271(1)(c) of Income-tax Act, 1961. 3. That all the facts relating to statutory deduction was on record and claim of statutory deduction was only in the computation and as such there is no case of furnishing of inaccurate particular of income and imposition of p....
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....n of return for asstt. year 2006-07 will not absolve the assessee of the purview of penalty proceedings under the provisions of section 271(1)(c) of Income Tax Act. Penalty proceedings were initiated by Ld. AO for asstt. year 2006-07 also u/s 271(1)(c) of I.T. Act. 2.1. During penalty proceedings u/s 271(1)(c) for asstt. year for asstt. year 2005- 06 the assessee neither appeared before the Ld. AO nor filed any reply to the show cause notice issued by Ld. AO to the assessee company. The AO levied penalty amounting to Rs. 10,35,008/- u/s 271(1)(c) of I.T. Act with the following observations :- "4.1 From the above discussions it is clear that the assessee company was itself aware that it did not fulfilling the conditions specified in section 8018 of the I.Tax Act and filing the revised return was also not correct. Further in the event of penalty proceedings, it did not offer any explanation, regarding disallowances of deduction u/s 8018 and imposition of penalty. The case of the assessee, therefore, squarely falls under explanation 1 & 4 to section 271(1)(c) of Income tax Act, 1961. Reference can also be made to the case law of CIT vs. Escorts Finance Ltd. (2009) 226 CTR 105 (Del)....
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....otherwise payable by scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have". 2.1.1. The assessee filed appeal before Ld. CIT(A) against levy of penalty u/s 271(1)(c) of I.T. Act amounting to Rs. 10,35,008/- for asstt. Year 2005-06. The assessee submitted before Ld. CIT(A) that at the time of preparing the income tax return for asstt. year 2007-08 it came in the knowledge of the assessee company that such deduction was not available to the assessee. The assessee claimed before the Ld. CIT(A) that withdrawal of claim u/s 80IB of I.T. Act was a conscious disclosure from the assessee company itself. However the assessee company failed to provide any explanation or information / particulars about eligibility criteria on the basis of which deduction u/s 80IB of IT Act was claimed and how or on what basis it was realised (at the time of filing of return for asstt. year 2007-08) that such deduction was not available. Ld. CIT(A) held in his order dated 19.3.2013 that the assessee has furnished inaccurate particulars of income on account of ineligible deduction claimed u/s 80IB of I.T. Act and confirmed the levy of penalty u/s 271(1)(c) of I.T.....
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....Ld. CIT(A) that it was a conscious disclosure from the assessee company itself and that such withdrawal did not amount to furnishing of inaccurate particulars of income in its original return of income filed on 01.11.2006. The assesee submitted before the Ld. CIT(A) that withdrawal of claim made by the Assessee Company was solely on account of different views taken on the same set of facts and therefore, they could, at the most, be termed as difference of opinion but nothing to do with the concealment of income or furnishing of inaccurate particulars of such income. The Ld. CIT(A), vide separate order dated 19.3.2013 for asstt. year 2006-07, upheld the levy of penalty u/s 271(1)(c) and dismissed assessee's appeal relying on the following decisions :- 1. K.P. Madhusudhanan v. CIT (2001) 118 TAXMAN 324 (SC) 2. Ravi & Co. v. ACIT (2005) 143 TAXMAN 287 (MAD.) 3. M. Sajjanraj Nahar v. CIT (2006) 155 TAXMAN 536 (MAD.) 4. CIT, Delhi-IV v. Escorts Finance Ltd. *(2009) 183 TAXMAN 453 (DELHI) 5. CIT v. Zoom Communication (P.) Ltd. (2010) 191 TAXMAN 179 (Delhi) 3. Now the assessee is in appeal before us for both asstt. year 2005-06 and 2006- 07. We have heard both sides carefully. ....
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....ion u/s 80IB was not available to the assessee ; the assessee has also not provided any explanation or information / particulars as to on what basis it realised at the time of filing income tax return for asstt. year 2007-08 that deduction u/s 80IB of I.T. Act was not available to the assessee. The assesee submitted that claim was earlier made and later withdrawn on account of difference of opinion. However, at no stage has the assessee provided any explanation or information/ particulars about what was the difference of opinion. In these facts and circumstances we hold that the assesee has not been able to substantiate the explanation furnished by it ; and has failed to prove that the explanation is bonafide. In these facts and circumstances we also hold that facts relating to the explanation furnished by the assessee and material to the computation of assessee's total income have not been disclosed by the assessee. Thus, the assesee is clearly hit by explanation 1(B) of S. 271(1)(c) of I.T. Act, even on strict and narrow construction of S. 271(1)(c) of I.T. Act and two reasonable views are not possible. Hence the case of Virtual Soft System Ltd. vs. CIT (supra) does not help the ....
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....come of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect, in law, is mala fide the Explanation 1 to section 271 (1) would come into play and work to the disadvantage of the assessee. [Para 19] The Court cannot overlook the fact that only a small percentage of the income-tax returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271 (1)( c ). If one takes the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to the unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assess....
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.... to show the ticket. But once a ticketless passenger is confronted by the Ticket Collector and asked to show ticket, (just as in the cases before us, the Ld. AO vide questionnaire dated 04.7.2007 asked the assessee to clarify why exemptions and deductions claimed by it should be accepted) the ticketless passenger cannot get away merely by paying the normal fare. He has to also pay penalty in addition to the normal fare unless he can show that he had a legitimate basis to begin the journey without a valid ticket. In the cases before us, the assessee has not furnished any satisfactory explanation regarding what legitimate basis it had to claim deduction u/s 80IB of I.T. Act at the time of filing of original returns of income for asstt. year 2005-06 and asstt. year 2006-07. Also, the assessee did not withdraw the claims u/s 80IB of I.T. Act for asstt. year 2005-06 and asstt. year 2006-07 immediately after the case was selected for scrutiny for asstt. year 2005-06. Claims u/s 80IB of I.T. Act were withdrawn by the assessee much after the Ld. AO issued questionnaire dated 4.7.2007 asking the assessee to clarify why exemptions and deductions claimed by it should be accepted. By that time....