TaxTMI 
TaxTMI 
TaxTMI 
2005 (2) TMI 94
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....instant case and thus the penalty levied is liable to be upheld? II. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the claim for deduction made by the applicant was a false claim so as to attract the provisions of section 271(1)(c) of the Act? III. Whether, on the facts, the Tribunal was justified in holding that there was no evidence of payment made by the applicant company to the other company to justify the claim, when adequate materials were furnished in the course of the appellate proceedings?" 2. The assessee-company filed a return of income on January 13, 1981, for the assessment year 1980-81 declaring an income of Rs. 700. The assessee claimed deduction of Rs. 12 lakhs being ....
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....se rent, vide order dated February 27, 1989. Aggrieved by this order of the Commissioner of Income-tax (Appeals), the assessee filed a second appeal before the Income-tax Appellate Tribunal (the "Tribunal" for short) in I. T. A. Nos. 968, 969 and 970 of 1989 and the same came to be rejected. Hence, the reference at the instance of the assessee. 4. Sri Parthasarthi, learned counsel for the assessee, contends that the assessee in its return has neither concealed the particulars of the income nor furnished inaccurate particulars. There is no mala fide motive on the part of the assessee in avoiding the payment of legitimate tax dues. Merely because the Income-tax Officer disallowed a claim of the assessee shall not result in levy of penalty un....
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....e terms and conditions. The assessee invested some money and ran the factory of the licensor for a period of 10 days only, i.e., between January 1, 1980 to January 10, 1980. The licensor was heavily indebted to the bank. The bank brought an action and got a receiver appointed through the court. The receiver took possession of all the assets including the factory premises in question on January 10/11 1980. Consequently, the assessee cannot make use of the plant and machinery. The assessee contends that under these circumstances, they settled the issue with the licensor and cancelled the entire agreement dated December 29, 1979, by paying a sum of Rs. 12 lakhs to the licensor as lease rent in full and final settlement on March 30, 1980. The a....
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.... of any person under this Act, (A) such person fails to offer an explanation or offers an explanation which is found by the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) to be false, or (B) such person offers an explanation which he is not able to substantiate, 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: Provided that nothing contained in this Explanation shall apply to a case referred to in clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanatio....
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....Alternatively treating the Explanation as dealing with both the ingredients (i) and (ii) above, where the circumstances do not lead to the reasonable and positive inference that the assessee's explanation is false, the assessee must be held to have proved that there was no mens rea or guilty mind on his part. Even in this view of the matter, the Explanation alone cannot justify levy of penalty. Absence of proof acceptable to the Department cannot be equated with fraud or wilful default. As we find no material difference between the original Explanation 1 and Explanation 1 as substituted, in our opinion, it has to be so construed as to harmonise it with the basic principles of justice and fairness as in the case of the original Explanati....