AI Drafter 
TaxTMI 
TaxTMI 
2017 (11) TMI 1426
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....inimum guarantee realisation was upheld by the AAC and the addition was accepted by the assessee. In view of these facts, penalty of Rs. 6,46,588/- was levied under section 271(1)(c) of the Act. 2. The Commissioner of Income Tax (Appeals) cancelled this penalty on the ground that since the assessee had shown the balance income in his return for assessment year 1978-79 which was filed on 20th January, 1979, there was no concealment. However, on further appeal, the Tribunal restored the penalty. 3. The Tribunal assigned reasons and for restoring the penalty. The Tribunal held that non-availability of the agreement does not mean that the nature of the transaction cannot be disclosed. If the assessee had declared a loss, he thwarted his tax liability for two years by not declaring the entire receipts in the assessment year 1977-78. The tribunal recorded a finding that even after the set-off of brought forward losses, the current year's loss would have been converted into positive income with the inclusion of the balance receipt of the minimum guarantee amount. By declaring the balance amount in the subsequent year, the assessee certainly furnished inaccurate particulars of in....
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....s the assessee says that this was not a deliberate or intentional act, it is held so by the Commissioner of Income Tax (Appeals). He had rightly come to the conclusion that what was shown as deposit from M/s. Prakash Pictures was shown as income in the return for assessment year 1978-79 filed on 20th January, 1979. The re-opening of the assessment for the present year is on the basis of an audit objection dated 9th July, 1981. The assessee had a sizable carried forward loss as already assessed so that whichever way the assessee viewed this issue, there would be a negative income to be returned. The assessee, therefore, did not benefit in any manner by showing a part of this income as the income of the next year. This was declared by the assessee before any detection of the omission. The Commissioner of Income Tax (Appeals) also found from the record that the order was passed under section 264 for assessment year 1978-79, in which the income originally assessed on the basis of the earlier return of the assessee has been reduced by the same amount by which the income to this assessment year has been increased and treated as concealed income. 8. Ms. Sathe would invite our attention....
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....o bring the amount to tax. Mr. Chhotaray invited our attention to section 4(1) of the Income Tax Act, 1961 to submit that there is no liberty to manipulate but there is a positive obligation to disclose all particulars. 12. Mr. Chhotaray relies upon the following judgments and decisions in support of his arguments:- (i) Union of India vs. Dharmendra Textiles Processors and Ors., (2008) 306 ITR 277; (ii) Commissioner of Income Tax vs. Zoom Communication P. Ltd., (2010) 327 ITR 510; (iii) Mak Data P. Ltd. vs. Commissioner of Income Tax-II, Judgment in Civil Appeal No. 9772 of 2013, decided on 30th October, 2013 (Supreme Court). 13. For appreciating these contentions, one must peruse the order of the Assessing Officer. The Assessing Officer passed an order on 8th March, 1990. He held that though the assessee maintains that he has not concealed any particulars, but it is evident that there was increase in the income. The assessee pointed out that during the year, the income from one of the distributors was treated as advance. In the revised return, in response to notice under section 148, the income was shown on minimum guarantee basis and the mistake i....
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....n 142, or (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) in the cases referred to in clause (a); (a) in the case of a person referred to in sub-section (4A) of section 139, where the total income in respect of which he is assessable as a representative assessee does not exceed the maximum amount which is not chargeable to income-tax, a sum not exceeding one per cent of the total income computed under this act without giving effect to the provisions of sections 11 and 12, for each year or part thereof during which the default continued; (b) in any other case, in addition to the amount of the tax, if any, payable by him, a sum equal to two percent of the assessed tax for every month during which the default continued. Explanation. - In this clause, "assessed tax" means tax as reduced by the sum, if any, deducted at source under Chapter XVIIB or paid in advance under Chapter XVIIC; (ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum which shall not be less than ten per ....
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.... assessment year immediately preceding the year in which the receipt, deposit, outgoing or investment appears (such earlier assessment year hereafter in this Explanation referred to as the first preceding year) which is sufficient to cover the amount represented by such receipt, deposit or outgoing or value of such investment (such amount or value hereafter in this Explanation referred to as the utilised amount) shall be treated as the income of the assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished for the first preceding year; and where the amount so added or deducted in the first preceding year is not sufficient to cover the utilised amount, that part of the amount so added or deducted in the year immediately preceding the first preceding year which is sufficient to cover such part of the utilised amount as is not so covered shall be treated to be the income of the assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished for the year immediately preceding the first preceding year and so on, until the entire utilised amount is covered by the amounts so added or deducted in such ear....
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....enalty is a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, then notwithstanding anything contained in the other provisions of this Act, the penalty imposable under sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm. (3) Notwithstanding anything contained in this section, - (a) no penalty for failure to furnish the return of his total income under sub-section (1) of section 139 shall be imposed under sub-section (1) on an assessee whose total income does not exceed the maximum amount not chargeable to tax in his case by one thousand five hundred rupees; (b) where a person has failed to comply with a notice under sub-section (2) of section 139 or section 148 and proves that he has no income liable to tax, the penalty imposable under section (1) shall not exceed twenty-five rupees; (c) no penalty shall be imposed under sub-section (1) upon any person assessable under clause (i) of subsection (1) of section 160, read with section 161, as the agent of a non-resident for failure to furnish the return under sub-section (1) of section 139: ....
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....ge 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 Principal Commissioner or 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. Explanation 2. - Where the source of any receipt, deposit, outgoing or investment in any assessment year is claimed by any person to be an amount which had been added in computing the income or deducted in computing the loss in the assessment of such person for any earlier assessment year or years but in respe....
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....sought to be evaded shall be determined in accordance with the following formula- (A-B) + (C-D) where, A = amount of tax on the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions); B = amount of tax that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished; C = amount of tax on the total income assessed as per the provisions contained in section 115JB or section 115JC; D = amount of tax that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished: Provided that where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished on any issue is considered both under the provisions contained in section 115J....
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.... (1) such income is, or the transactions resulting in such income are recorded, - (i) in a case falling under clause (a), before the date of the search; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the said date; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in subsection (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income. Explanation 5A. - Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is....
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....e diligence. (1A)Where any penalty is imposable by virtue of Explanation 2 to sub-section (1), proceedings for the imposition of such penalty may be initiated notwithstanding that any proceedings under this Act in the course of which such penalty proceedings could have been initiated under sub-section (1) have been completed. (1B)Where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under clause (c) of sub-section (1), such an order of assessment or reassessment shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under the said clause (c). (2) When the person liable to penalty is a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, then notwithstanding anything contained in the other provision of this act, the penalty imposable under sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm. (3) ***** (4) If the Assessing ....
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....he assessee maintains that the amount was not to be realised fully, but it was inaccurate in the sense that the distributor M/s.Prakash Pictures was also assessed to tax. M/s. Prakash Pictures produced the record and which referred that the assessee before us was paid the same price of Rs. 13,70,000/-. M/s. Prakash Pictures debited this amount as the cost of acquisition of the picture. It is in these circumstances that we find that the assessee managed to thwart the tax liability as rightly held by the Tribunal. This finding of fact rendered by the Tribunal cannot be termed as perverse. The Commissioner of Income Tax (Appeals), namely, the first appellate authority was carried away by the fact that the sum of Rs. 13,70,000 was split in two parts, namely, Rs. 3,90,917/- and Rs. 9,79,083/- respectively shown as minimum guarantee receipt and as advance from the distributor. However, the explanation of the asessee was that there is no concealment and at the time the accounts were framed, the assessee did not have the agreement between the parties so that it was not clear as to what was the minimum guarantee commission and what was the advance. Thus, this was a technical error. This arg....
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....d his tax liability. It has also to be appreciated that when the assessee takes up the assessment for agreement year 1977-78, the return for assessment year 1978-79 and the particulars thereof cannot be expected to be before him. Even if the agreement for assessment year 1977-78 is taken up after furnishing of the return for A. Y. 1978-79, it cannot be expected by the AO to ascertain said mote that part receipts are declared in the subsequent year. Firstly, it may not be out of place to mention that M/s. Prakash Pictures had claimed the entire amount as MG during the year under consideration. Thus we have no hesitation in restoring the penalty of Rs. 6,46,588/- cancelled by the CIT(A)." 17. We are, therefore, of the opinion that none of the decisions relied upon by Ms. Sathe are of any assistance. 18. In the case of the Commissioner of Income-Tax vs. Manilal Tarachand (2002) 254 ITR 630, the Gujarat High Court was dealing with a case where the amount received by the assessee had been returned by the assessee in his return of income for the assessment year 1975-76. The Income Tax Officer initiated re-assessment proceedings based on this disclosure made by the assessee for asse....
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....ecorded for the simple reason that the assessee, an individual had been assessed to tax for assessment year 1973-74. However, in the re-assessment, the Assessing Officer brought to tax long term capital gains in relation to the compensation received in land acquisition proceedings, which, admittedly, the assessee had not disclosed in the income for the year under consideration. However, this amount received by the assessee in return of income for the assessment year was disclosed in the return of income for assessment year 1975-76. While re-assessing the income, the Income Tax Officer did not impose any penalty. The issue was, this penalty should have been imposed and to that extent, the Commissioner came to the conclusion that section 263 of the Income Tax Act, 1961 confer in him enough powers to direct the initiation of penalty proceedings. It is that peculiar aspect of the matter which led to the High Court holding that there was on facts also no penalty leviable for this was not a case where the assessee concealed the income or furnished inaccurate particulars thereof. We do not think that this decision is of any assistance. 20. In the case of Commissioner of Income Tax vs. ....
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....he provision towards payment of gratuity was not allowable. The assessee claimed a deduction thereon in its return of income. On the basis of the return and the statement, an assessment order was passed under section 143(3) of the Act on 26th March, 2003. The assessee claimed that through inadvertence, this deduction was claimed and it also seems to have been overlooked by the Assessing Officer. Much later, the Assessing Officer issued a notice to re-open the assessment and he did not indicate any reason why it was issued except to state that income for the assessment year 2000-01 had escaped assessment. In response to the notice, the assessee filed its return under protest on 16th February, 2004 and also requested for the grounds for re-opening the assessment. Since after the reasons were communicated, the assessee realised that he has committed a mistake and addressed a letter to the Assessing Officer stating that there was no willful suppression of facts by the assessee but that a genuine mistake or omission had been committed, which also appears to have been overlooked by the Assessing Officer before whom the tax audit report was placed. Accordingly, the assessee filed a revise....