TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 444
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....t is pertinent to note that Smt.Champaben V. Gajera (wife of the assessee) had taken loan from ICICI Bank for purchase flat no.21 and 22 at Suraj Apartment, Mumbai. Later on she has transferred these flats to the assessee vide her "Vasiatnama", hence, the assessee has become owner of these flats. The assessee has claimed that these flats were possessed by him and not rented out. According to the AO for self-acquired property the assessee cannot claim interest expenditure exceeding Rs. 1.50 lakhs as contemplated in section 24(b) of the Act. When this aspect was confronted to the assessee, he did not file any reply, but ultimately has accepted the disallowance of Rs. 17,27,520/- out of the claim of Rs. 18,77,520/-. In other words, the AO has allowed deduction of Rs. 1.50 lakhs on account of interest expenditure and disallowed the balance. Similarly, the assessee had a refund from Income Tax Department amounting to Rs. 13,40,740/-. It contained interest component of Rs. 32,700/-. The assessee failed to include this interest component, and accordingly, it was added to the income of the assessee. The ld.AO initiated penalty proceedings on the ground that the assessee has furnished inacc....
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....e to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits: 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 CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and ....
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....explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 9. In the light of the above, let us examine the contentions raised by the ld.counsel for the assessee. As far as first fold of contention that the AO has not specified charges which is to be levied against the assessee is concerned, we find that in the assessment order while recording satisfaction for initiation of penalty,....
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.... penalized. Thus, penalty proceeding in this point kindly may drop......" 11. The letter dated 4.2.2013 has not been placed on record by the ld.counsel for the assessee. This show cause notice has been replied by the assessee and a perusal of the reply would indicate that the assessee was duly confronted with specific charges of furnishing inaccurate particulars. Therefore, on the strength of the judgment referred to by the ld.counsel, the assessee cannot draw any benefit on facts. The charge was specific and from the reply of assessee it is not discernable that there was confusion in his mind while preparing his defense. As far as bona fide mistake is concerned, the ld.counsel for the assessee made reference to the decision of the Hon'ble Supreme Court in the case of Price Waterhouse Coopers P.Ltd. (supra). We find that the Hon'ble Supreme Court has considered explanation of the assessee as to what has operated in the mind of assessee while filing return which goaded the assessee to commit mistake. In that case, according to the assessee, in the audit report under section 44AB there was a specific mention that provision for gratuity will not be allowable. However, while filing r....