TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 1227
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.... the business of manufacturing drums and containers, filed its return of income on 10.12.1996 declaring Nil income after claiming depreciation of Rs. 3,68,82,042/-. A revised return was filed on 01.06.1977 declaring loss of Rs. 26,46,947/- after claiming depreciation of Rs. 3,05,93,292/- for the reason that it has withdrawn its claim of depreciation in respect of leased transaction of Bangalore Gases. The case was taken up for scrutiny and the assessment was completed under section 143(3) of the Act vide order dated 24.03.1989, wherein the loss was determined at Rs. 37,67,906/- in view of, inter alia, disallowance of entire lease rental expenses claimed as bogus and disallowance of notional interest @24% on loans advanced to various parties. On appeal, the learned CIT(A) allowed the assessee partial relief. On further appeal by Revenue, the ITAT, Mumbai vide order dated 17.05.2006 restored the matter back to the file of the Assessing Officer (AO) for fresh adjudication. 2.1.2 Subsequently, the AO completed the assessment under section 143(3) r.w.s. 254 of the Act vide order dated 13.12.2007, wherein the loss was determined at Rs. 24,33,060/- in view of disallowance of Rs. 1,59,80,....
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....,866/-. On appeal, the learned CIT(A)-20, Mumbai vide the impugned order dated 21.02.2011 has allowed the assessee partial relief; whereby the penalty levied under section 271(1)(c) of the Act was restricted/confirmed to the claim of hire charges amounting to Rs. 5,40,851/- to the extent of 100% of tax sought to be evaded thereon and the penalty levied on other items such as interest on loans and advances, prior period expenses and disallowance under section 43B of the Act were deleted. Both Revenue and the assessee are in appeal before us to the extent that the impugned order of the learned CIT(A) is against them. 3. Assessment Year 1996-97 3.1 The grounds raised by the assessee in this appeal are as under: - "On the facts and in the circumstances of the case and in law, the ld. C.I.T. (Appeals) erred in levying the penalty on depreciation, considering that penalty covered by clause (a) of Explanation 4 of section 271(1)(c) instead of clause (c) of the Explanation 4 of section 271(1)(c). The appellant pray that levy of penalty u/s 271(1)(c) on depreciation of Rs. 1,59,80,750/- should be deleted. The appellant craves leave to amend or alter ground or add new grounds." 3.1.....
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.... case and in law, the learned C.I.T.(A) erred in confirming the penalty levied u/s 271(1)(c) of Rs. 75,00,000 on amount of depreciation disallowed of Rs. 1,59,80,750 although penalty proceedings initiated are in respect of lease transaction which consists of 2 parts viz, lease rental offered of Rs. 1,27,91,004/- and depreciation allowance claimed of Rs. 96,92,000/- and therefore, the learned C.I.T.(A) failed to appreciate that only net amount can be considered for penalty and in the instant case, the rental income is more than depreciation allowance and hence no penalty ought to have been levied." 4. Assessment Year 1997-98 4.1.1 In its appeal the assessee has raised the following grounds: - "On the facts and in the circumstances of the case and in law, the ld. C.I.T. (Appeals) erred in levying the penalty on hire charges of Rs. 5,40,851/- under section 271(1)(c). The appellant pray that levy of penalty u/s 271(1)(c) on Rs. 5,40,851/- should be deleted. The appellant craves leave to amend or alter ground or add new ground." 4.1.2 Vide letter dated 12.07.2016, the assessee has filed the following additional grounds: - Additional grounds of appeal "1. On the facts and in....
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.... 2. The appellant prays that the order of the CIT(A) on the grounds be set aside and that of the Assessing Officer be restored. 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 4.3 In their application for filing additional grounds of appeal for both assessment years 1996-97 and 1997-98, the assessee has prayed for admission thereof as being legal grounds which go to the root of the matter and which would not require examination of facts and details not already a part of the record. It is submitted that the same were inadvertently omitted to be raised earlier and prayed that the same are admitted for adjudication. In this regard, reliance was placed on the decision of the Hon'ble Apex Court in the case of NTPC Ltd. vs. CIT (299 ITR 383) (SC). We have heard both parties and perused the additional grounds raised by the assessee for both assessment years 1996-97 and 1997-98. We are of the view that the additional grounds raised (supra), are legal grounds which go to the root of the matter in appeal before us and therefore, following the ratio of the Hon'ble Apex Court's decision in the case of NTPC Ltd. (supra), we a....
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....ance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC), (iv) CIT vs. Manjutha Cotton & Ginning Factory (2013) 359 ITR 565(Kar) 5.2.1 We have heard the rival contentions of both parties on the issues raised in these additional grounds and perused and carefully considered the material on record, including the judicial pronouncements cited. The issue for consideration before us is to examine whether or not penalty under section 271(1)(c) of the Act is exigible in the facts and circumstances of the case on hand as laid out above. In our considered view, proceedings under section 271(1)(c) of the Act can be initiated only if the AO is satisfied in the course of proceedings under the Act that any person has 'concealed particulars of income' or has 'furnished inaccurate particulars of income' and only then can he direct that such person shall pay by way of penalty the sum mentioned in section 271(1)(c)(iii) of the Act. 5.2.2 The expression 'concealed the particulars of income' and 'furnished inaccurate particulars of income', have not been defined, but refer to different acts on the part of the assessee. The Hon'ble Apex Court in the case of Dilip N. Shroff vs. JCIT (291 ITR 519 (SC....
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....ions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed 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. In Dilip N. Shroff Vs. Joint CIT [2007) 6 SCC 329, this court explained the terms "concealment of income" and "furnishing inaccurate particulars". The court went on to hold therein that in order to attract the penalty under section 271(1)(c), mens rea was necessary, as according to the court, the word "inaccurate" signified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1)(c) 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....
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....e words' and 'paragraphs' in the standard proforma of the notices issued under section 274 r.w.s. 271 of the Act as used by the AO were required to be deleted and the same not having been done, the impugned notices issues on 13.12.2007 for assessment years 1996-97 and 1997-98; then the fact the impugned notices/orders suffer from nonapplication of mind still holds good and is intact. This legal position has also been reiterated by the Hon'ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory (2013) 357 ITR 565 (Kar) and which has also not been interfered with by the Hon'ble Apex Court on the appeal filed against it by Revenue. Before us, no contrary judgement of the Hon'ble Apex Court has been cited or referred. We, therefore, while taking into consideration the facts and circumstances of the case on hand and applying the ratio and deriving support from the aforesaid decisions of the Hon'ble Apex Court (discussed supra), hold that the notices dated 13.12.2007 issued for initiation of penalty proceedings under section 247 r.w.s. 271 of the Act for levy of penalty under section 271(1)(c) of the Act for assessment years 1996-97 and 1997-98....