TaxTMI 
TaxTMI 
2018 (2) TMI 45
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....ereby raising a tax demand of Rs. 12,05,73,210/- on which the assessee did not prefer any appeal and paid due taxes and penalty was levied on the addition made which actually resulted in evasion of taxes. " ii) "Whether on the facts and in the circumstances of the case, the Ld. CIT-(A) erred in deleting the penalty levied by the AO thereby ignoring the fact that the assessee company adopted a dubious method of avoidance of taxation on its book profits by making a patently ineligible and inaccurate claim under clause (vii) below Explanation (1) to sub-section (2) of Section 115JB of the Act. " iii) "Whether on the facts and in the circumstances of the case, the Ld. CIT-(A) erred in deleting the penalty levied by the AO without appreciating the factual findings given by the AO in Para No. 2 to Para 4 of his penalty order and Para 3 of his assessment order which clearly bring out the fact that the assessee had adopted a colourable and dubious method to a avoid payment of due taxes. " iv) "Whether on the facts and in the circumstances of the case, the Ld. CIT-(A) erred in deleting the penalty levied by the AO without appreciating that the assessee had made a ....
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....(A). The CIT(A) after considering the case of both the parties had allowed the appeal filed by the assessee and deleted the penalty u/s. 271(1)(C) of the Act. 4. Aggrieved by the order of Ld. CIT(A), revenue has preferred the present appeal before us on the grounds mentioned here in above. 5. At the very outset our attention was drawn towards application filed by the assessee for seeking admission of additional evidences under Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. The Ld. A. R, pointed out that Tribunal is highest and last fact finding authority, therefore assessee the documents in the shape of various correspondence with government authorities which are at serial no. 16 to 25 of the paper book, be admitted as additional evidences and adjudicated upon. On the other hand, the Ld. D. R, appearing on behalf of the revenue refuted the claim of the assessee for seeking admission of additional evidences. 6. We have heard the counsels for both the parties on this application. Ld. AR during the course of hearing submitted that only the order dated 31. 05. 10 passed by the Board for Industrial and Financial Reconstruction (BIFR), be admitted as additional evide....
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.... book profit under clause (vii) below Explanation (1) to sub-section (2) of Section 115JB(2) of the Act. Our attention was drawn by Ld. D. R, towards the order of A. O dated 31. 07. 2013, passed by the u/s. 143(3) of the I. T. Act, 1961. 10. On the other hand, the Ld. A. R appearing on behalf of the assessee relied upon the orders passed by Ld. CIT(A) and further submitted that the notice dated 31. 1. 2013, issued u/s. 274 r. w. s. 271 of the I. T. Act is defective and hence no penalty can be levied in pursuant thereto. On this point, a question was put by the bench to the Ld. A. R as to whether this ground has been raised by the assessee before Ld. CIT(A), and in the absence thereof, whether such a new ground could be allowed to be raised by the assessee in the appeal filed by the revenue before the Tribunal. On this specific query raised by the bench, the Ld. A. R submitted that a legal ground can be raised at any stage of the proceedings and moreover the power of the tribunal are similar to the power of appellate court under the civil procedure code and in this respect, reliance was placed upon the judgment of jurisdictional High Court in the case of B. R Bamasi vs. CIT 83 IT....
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....Court in the case of CIT vs. Aleo Manali Hydro Power (P) Ltd. (2013) 38 Taxmann. com 288 wherein the enalt u s 2711 c has been deleted while dealing with identical facts. The relevant part of the order in the case is reproduced here as under:- "8. The Delhi High Court held that in respect of company in question on the basis of normal provision income was assessed at negative i. e. on loss of Rs. 36,95,21,018/-. The company was MAT company and that the assessment under Section 115-JB resulted in calculation of profit at Rs. 4,01,63,180/-. The income of the assessee was thus assessed u/s. 115JB and not under normal provision. It was held "no doubt, there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed u/s. 115JB which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed u/s. 115JB. Hence, when the computation was made u/s. 115 B the concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasio....
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....nce in the Director's Report as placed at page 1 of the Paper Book, in the Profit and Loss Account along with the Schedule of other income as placed at pages 13 and 18 of the Paper Book and in the Notes to accounts at page 24 of the Paper Book. This fact was also brought to the notice of the AO in the course of assessment proceedings vide its letter dated 15. 10. 2012 18. In view of the above the facts disclosing waiver of loan by Daewoo Electronics (Mauritius) Ltd, during the previous relating to assessment year 2010-11 as well as that it no longer remained a sick industrial company was brought to the notice of the AO in its Annual Accounts, Computation of income as well as the Income-tax return. It has not been pointed out which particulars furnished by the assessee before the AO was inaccurate justifying commission of the default of furnishing of inaccurate particulars of income by it. Hon'ble Apex Court in CIT v. Reliance Petro Products Pvt. Ltd. 322 1TR 158 in paragraph 8 at pages 163 and 164 has observed ". . . . . However, the learned counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate....
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....rated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deduction knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; ft) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves* were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept it's claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(l)(c). If we accept the contention of the Revenue then ....
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....ermore, if any default is committed under SICA, it is not open to the Income-tax department to penalise the assessee for the same. 22. Further, clause (vii) of Explanation-1 below section 115JB(2) of the Act becomes applicable from the assessment year commencing on and from the assessment year relevant to the previous year in which the said company has become a sick industrial company under section 17(1) of SICA and this benefit is available upto the year in which the entire net worth of such company becomes equal to or exceeds the accumulated losses. In the present case, the assessee became a sick industrial company in the previous year relevant to assessment year 2008-09 and its net worth exceeded its accumulated losses in the previous year relevant to assessment year 2009-10. Therefore, assessee was having sufficient reason to believe that it would be entitled to the benefit of clause (vii) of Explanation-1 below section 115JB as a sick industrial company for assessment year 2009-10. The Assessee genuinely and bona fidely believed that it is entitled to the benefit under the said clause as: (a) It was an undisputed position that assessee had become a sick industrial ....
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.... relied on by the assessee, has held that such a notice, as has also been issued in the case on hand, is invalid and the consequential penalty proceedings are also not valid. The relevant portion of their Lordships judgement at paras 59 to 62 thereof are extracted hereunder for reference: - "59. As the provision stands, the penalty proceedings can be initiated on various ground set therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under Section 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Explanation-1 or in Explanation-1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in Section 271 should be made known about the grounds on which they intend imposing penal....
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.... penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing....
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.... confusion and to the point. In the present case, neither the assessee nor anyone else could make out as to whether the notice u/s. 274 r. w. S. 271 of the Act was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet with the case of the Assessing Officer. There are a catena of judgments highlighting the necessity for identifying the charge for which the assessee is being visited and in all those decisions, Hon'ble Courts have repeatedly held that where the jurisdictional notice is vague, similar to the one in the present case, the consequent levy cannot be sustained. 26. In this connection, reliance is first placed upon the judgment of the Hon'ble Karnataka High Court In the case of CIT v. Manjunatha Cotton and Ginning Factory & Ors. and Veerabhadrappa Sangappa and Co. (359 ITR 565, 577, 601, 603-604) in which the facts are similar. In those bunch of tax appeals, several assessee and several issues were involved. In so far as I. T. A. No. 5020 of 2009 was concerned, one of the substantial questions on which the appeal was filed by the revenue was: "Whether the notice issued under section 271(1)(c....
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....of the aforesaid law, we are of the view that the Tribunal was justified in holding that the entire proceedings are vitiated as the notice issued is not in accordance with law and accordingly justified in interfering with the order passed by the appellate authority as well as the assessing authority and in setting aside the same. Hence, we answer the substantial questions of law framed in this case in favour of the assessee and against the Revenue." 30. The aforesaid judgment was unsuccessfully challenged by the revenue before the Supreme Court, as it was rejected vide Petition for Special Leave to Appeal (C) No. 13898/2014 dated 11. 07. 2016. Reliance was next placed upon another judgment of the Hon'ble Karnataka High Court in the case CIT v. SSA'S Emerald Meadows (Income Tax Appeal No. 380 of 2015 decided on 23. 11. 2016). In this case also s similar situation arose in as much as the Hon'ble Court was required to adjudicate on the following substantial question: (1) Whether, omission of assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalt....
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....ataka High Court in the case of Menjuneth Cotton and Ginning Factory (supra). 8. In view of the above, the question as framed do not give rise to any substantial question of law Thus, not entertained" 34. The Hon'ble Supreme Court in Dilip N. Shroff v/s JCIT, [2007] 291 ITR 519 (SC), has observed that while issuing the notice under section 274 r/w section 271, in the standard format, the Assessing Officer should delete the inappropriate words or paragraphs, otherwise, it may indicate that the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or had furnished inaccurate particulars of income. This, according to the Hon'ble Supreme Court, deprives the assessee of a fair opportunity to explain its stand, thereby, violates the principles of natural justice. As held by the Hon'ble Supreme Court in CIT v/s Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC), the aforesaid principle laid in Dilip N. Shroff (supra) still holds good in spite of the decision of the Hon'ble Supreme Court in UOI v/s Dharmendra Textile Processors (2008) 306 ITR 277 (SC). The Hon'ble Jurisdictional Hi....