TaxTMI 
TaxTMI 
2018 (9) TMI 1008
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....by the Assessing Officer u/s 68 of the Income Tax Act, 1961 of Rs. 75,00,000/- alleging the same as unexplained share application money. It is submitted that the said amount representing share capital and share premium of Rs. 75,00,000/- was properly explained and on the facts and in the circumstances of the case, the addition is wrong and not in accordance with law. It is therefore, prayed that the said addition requires to be now deleted." 2. Briefly stated facts are that the case of the assessee pertaining to the assessment made u/s 143(3) of the Income Tax Act (hereinafter called as "the Act") framed vide order dated 30.12.2009. While framing the assessment, the A.O. observed that the assessee has received share application money from 5 different entities amounting to Rs. 75 lakhs. The A.O. was not satisfied with the explanation of the assessee, therefore, invoked the provisions of section 68 of the Act for addition of the share application money. The A.O. observed that these notices issued u/s 133(6) of the Act were returned with remark "not found". The A.O. thus made addition of entire amount of Rs. 75 lakhs in the income of the assessee. 3. Aggrieved by this, the assessee....
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.... in upholding addition made by the Assessing Officer u/s 68 of the Income Tax Act, 1961 of Rs. 25,00,000/- alleging the same as unexplained share application money. It is submitted that the said amount of Rs. 25,00,000/- was properly explained and on the facts and in the circumstances of the case, the addition is wrong and not in accordance with law. It is therefore, prayed that the said addition may very kindly be now deleted. That the learned CIT(A) erred in upholding the A.O's action of disallowing Rs. 87,157/- u/s 14A holding that the assessee has utilised borrowed funds for non-business purposes. It is submitted that on the facts and in the circumstances of the case, the said addition is patently wrong and uncalled for and in any case is highly excessive and requires to be deleted/considerably reduced." 8. For Ground No.1, the Ld. Counsel for the assessee has adopted the same argument as were in ITA No.404/Ind/2012 for the assessment year 2007-08. 9. Ld. D.R. has opposed the submissions and adopted the arguments which were in ITA 404/Ind/2012. 10. Taking into consideration the assessment year 2007-08, the A.O. is directed to delete the addition. This ground of appeal ra....
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....Counsel for the assessee that there was no exempt income during the year under appeal, therefore, respectfully following the decision rendered by Hon'ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT-IV in ITA No.749 of 2014 dated 2.9.2015 and the decision held by Hon'ble Allahabad High Court in the case of CIT Vs. Shivam Motors (P) Ltd. in ITA No.88 of 2014 dated 5.5.2014, we direct the A.O. to delete the disallowance. 19. In ITA No.961/Ind/2012 pertaining to the assessment year 2011-12, the assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case, Ld. CIT(A) erred in confirming addition of Rs. 828721 out of "Interest" u/s 14A of the Act. 2. On the facts and in the circumstances of the case, Ld. CIT(A) erred in confirming the disallowance of Rs. 758272 on account of "Defrayed payment of Employee contribution to ESI and PF". 3. On the facts and in the circumstances of the case, Ld. CIT(A) erred in confirming disallowance of Rs. 58259 of "Interest" paid on late deposit of taxes. 4. Appellant reserves right to add, alter or amend any of the grounds of the appeal. 20. Ground No.1 is against addition made by i....
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....l Commissioner of Income Tax, Jaipur-2 Vs. M/s. Rajasthan State Beverages Corpn. Ltd.) decided on 4.8.2016 wherein Division Bench observed as under: "5. So far as the question relating to privilege fees amounting to Rs. 26.00 Crores in the instant year as well as the deduction of claim of Rs. 17,80,765/- on account of Provident Fund (PF) and ESI is concerned, the Court has extensively considered the aforesaid two questions in assessee's own case vide judgement and order dated 26.5.2016 referred to (supra) and has held that the privilege fees being a revenue expenditure, is required to be allowed as a revenue expenditure. This court in the aforesaid case has also allowed the claim of the assessee, in so far as payment of PF& ESI etc. is concerned, on the finding of fact that the amounts in question were deposited on or before the due date of furnishing of the return of income and taking in consideration judgement of this Court in Commissioner of Income Tax Vs. State Bank of Bikaner & Jaipur and Commissioner of Income Tax Vs. Jaipur Vidyut Vitaran Nigam Ltd. (2014) 363 ITR 70 (Raj.) and accordingly both the questions are covered by the aforesaid judgement and against the revenue. ....
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....find that in para 5.1 of the impugned order, Ld. CIT(A) has given finding of facts as under: "5.1 The Assessing Officer has disallowed the interest of Rs. 58,259/- paid on late deposit of TDS and DDT. As these are statutory liabilities of the assessee the same should have been discharged within the stipulated time. This interest has been paid as the assessee is in default. The assessee is not entitled to deduction of tax deducted at source per se, as such the interest paid for the default in payment of tax deducted/deductible at source also does not qualify for deduction. The interest charged on account of late deposit cannot be therefore be allowed. Ground No.3 is dismissed." The above finding of fact is not controverted by the Ld. Counsel for the assessee. The interest has been charged as per the law as the assessee was required to deposit the tax within the stipulated period, any default thereon attracts levy of interest. Such interest cannot be termed as a business expenditure since same would form part of tax. Therefore, we do not see any reason to interfere with the finding of the Ld. CIT(A). Same is hereby confirmed. Ground No.3 is dismissed. 30. Ground No.4 is general ....
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....ts and in the circumstances of the case, Ld. CIT(A) erred in confirming the penalty of Rs. 50,00,000/- imposed by the Ld. Assessing Officer u/s 271(1)(c) of the Act." 37. Briefly stated facts giving rise to this ground of appeal are that u/s 143(3) of the Act, the A.O. made addition of Rs. 75 lakhs in respect of share application money and also initiated penalty proceedings thereon. Subsequently, the A.O. imposed the penalty u/s 271(1)(c) of the Act vide order dated 25.3.2014 of Rs. 50 lakhs. Against this, assessee preferred appeal before the CIT(A). After considering submissions the CIT(A) has dismissed the appeal of the assessee. Now the assessee is in appeal before this Tribunal. Ld. Counsel for the assessee submitted that the penalty so imposed is not sustainable as the notice issued u/s 271(1)(c) of the Act does not specify the charge. Ld. Counsel reiterated the submissions as made in the written synopsis. The synopsis of the Ld. Counsel for the assessee is reproduced as under: "In the case of Industrial Filters and Fabrics vs ACIT 2(1), Indore Assessment Year Appeal No. Appeal Type 2007-08 752/Ind/2016 Penalty Appeal u/s 271(1)(c) 2008-09 753/Ind/2016 Penal....
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.... furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi\High Court in the case of Virgo Marketing P. Ltd.,171Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non application of mind. Your kind attention is also invited to the decision of the Bombay High Court in the case of CIT vs. L&T Finance Ltd. where it is held that merely using the words that there has concealment of income and / or furnishing inaccurate particulars of income is not sufficient. The same should be particularized by the AO with a finding as to what particulars of income have been concealed or what particulars of income are inaccurate. The words 'concealment' or giving 'inaccurate particul....
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....ision of the Supreme Court in case of CIT v. Reliance Petroproducts Pvt. Ltd. (322 ITR 158) wherein it is held that the argument of the revenue that "submitting an incorrect claim for expenditure would amount to giving inaccurate particulars of such income" is not correct. By no stretch of imagination can the making of an incorrect claim in law tantamount to furnishing inaccurate particulars. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. If the contention of the Revenue is accepted then in case of every Return where the claim made is not accepted by the AO for any reason, the assessee will invite penalty u/s 271(1)(c). That is clearly not the intention of the Legislature. B. Where two views are possible, penalty cannot be levied: At the outset it is submitted that the investment made in the company from Javda India Impex Limited and other companies has been held to be genuine and identity of such investors has been accepted in following ITAT decisions * ITO vs. Pyramid Realty P. Ltd. (ITA 3579/M/17) * Komal Agrovat vs. ITO (ITA 437/Hyd/16) * Bairagara B....
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....any facts relating to income. If at all there is any concealment, it can be only of fact and it cannot be of law. Under such circumstances, no penalty should be levied. For this proposition reliance is placed on the following cases: * Impulse India (p.) Ltd. vs. ITO (40 ITD 36) (Delhi); * ITO vs. RBGM Modi and Others Ltd. (31 TTJ 550)(Delhi); * Yasmin Properties Ltd (46 ITD 331); * DM Dahanukar v CIT (65 ITR 280) and * ITO vs. Bakul Cashew & Co. (28 ITD 197)(Coch) Further, the Hon'ble Ahmedabad Tribunal in case of Himat Vallanji Karia (36 ITD 76) has held that "Concealment can only be of facts and not of the conclusion" E. Other legal submissions: We submit that in respect of additions made, all particulars were on record and on the basis of this only, the disallowance was made and it cannot be said that we have concealed any particulars or furnished inaccurate particulars of income. Hence, in view of the foregoing, as can be seen, there was no fraud or willful neglect on our part. We further crave leave to rely upon the decision of the Hon'ble Bombay High Court in the of case CIT Vs. Shivlal Desai & Sons (1978) (114 ITR 388) in which the Hon'ble Court....
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....n it was held that merely because an addition is confirmed does not ispo facto attract penalty u/s 271(1)(c) of the Act and the onus to prove that there was concealment of income with a view to evade tax is on the Department and that levy of penalty is not automatic and the department has to establish a foolproof case of attracting the penalty. In the recent decision of M/s Jyothy Laboratories Limited Vs DCIT (ITA No. 5447/Mum/05), the Mumbai Tribunal held that where the assessee has claimed expenditure after putting all particulars on record and after interpreting section and using the favorable decision in support of same, the assessee cannot be said to have furnished inaccurate particulars or concealed particulars of income and hence, penalty was deleted. Thus, in view of the above, we most humbly submit that correct and accurate particulars of income has been furnished in the Return of Income, there is neither any furnishing of inaccurate particulars nor are the explanations offered by us are found to be false or unsustainable. Hence we most respectfully submit that the impugned penalty cannot be levied." 38. The Ld. Counsel also drew our attention to the notice u/s 271....
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....as fixed on 18.03.2014" The relevant para for the A Y 2009-10 reads as under: " .. .Hence another show cause notice u/s 271 (l)(c) was issued to the assessee on 22.01.2014 asking as to why penalty should not be levied for furnishing inaccurate particulars of income within the meaning of section 271 (1) (c) of the IT Act. The date of hearing was fixed on 29.01.2014. " It can this be seen that charge (i.e. furnishing of inaccurate particulars) was learly specified before levying the penalty. 4. That on perusal of the Assessment order for the A Y 2008-09 it can be seen that while initiating penalty on the additions made uls 68 on account of unexplained cash credits in the form of share application money received the charge was clearly mentioned while recording satisfaction for initiating penalty. The relevant para no. 2.9 of the assessment order reads as under: 5." Since inaccurate particulars of income furnished penalty proceedings u/s 271 (l)(c) are initiated for which notice is being given separately" 6.Similarly while initiating penalty on the addition made uls 14A vide para 7.11, the Assessing Officer has recorded as under: 7." Since inaccurate particulars of....
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....case, ld. CIT(A) erred in confirming the penalty of Rs. 1600000/- imposed by the Ld. AO u/s 271 (J)(C) of the Act" 15. That before the Ld CIT(A) also no such ground was raised by the appellant. 10.That in view of the above it may be submitted that the decisions relied upon by the Ld. Counsel of the appellant are not applicable in the facts and circumstances of the case and penalty initiated and imposed deserve to be sustained. 11. That in the case of Mahseh M Gandhi, the Hon'ble ITAT Mumbai Bench (ITA No. 2976/Mum/2016 AY 2011-12 dated 27.02.2017) had an occasion to discuss the findings of the decision of Hon'ble Karnataka High Court rendered in the case of Manjunatha Cotton(supra). The Hon' ble ITAT held that "Merely because AD has mentioned alternate charges at the stage of issue of notice u/s 274 r.w.s. 271 (l)(c ) of the Act which is a preliminary stage of initiating penalty proceedings, the proceedings cannot be held to be vitiated, as in the instant case, the AD has clearly recorded detailed satisfaction after application of mind in the assessment order dated 20.02.2014 .................. By no stretch of imagination it can be held that the assessee was n....
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....to why it should not be done. Mere mistake in the language used or mere non-striking off of inaccurate portion cannot by itself invalidate the notice. Entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context useful reference may be made to the following observation in the case of CiT v. Mithila Motors (P) Ltd. [1984] 149ITR 751 (Pat.):" 14. "Under section 274 of the Income-tax Act. 1961 all that is required is that the assessee should be given an opportunity to show-cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings." (p. 751) 15. That in view of the above it is averred that the impugned penalty appeals may be heard on merit. 16. The Ld. Counsel of the assessee has cited various decisions in his support however they relate to inaccurate claim, cases where two views are possible, there is some law point involved and hence do not apply to the facts of the present case. 17. That in the instant case the penalty was....
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....;ble jurisdictional High Court in the case of PCT vs. Kulwant Singh Bhatia (ITA 9 of 2018). The Hon'ble court has held as under: "10. It is submitted that the provision of Section 271(1)(c) together with Explanation 5(A) brings the assessee liable for imposition of penalty in respect of additional income, which has been offered following the search and the Assessing Officer is satisfied that it is a fit case for initiation of penalty proceedings under section 271(1)(c) and 271(AA) of the Act of 1961. The learned Tribunal has committed an error in allowing the appeal and setting aside the well reasoned order of penalty. She also submits that the ITAT erred in not considered the satisfaction recorded by the Assessing Officer. She during the course of the arguments very specifically admitted that tax effect in this case is only Rs. 2,84,090/- for the assessment year 2002-03. The total amount of penalty for the assessment year in all these appeals for the assessment years 2002-03 to 2007-08 is Rs. 24,39,753/- and the learned ITAT has decided all these3 appeals by composite order dated 11.8.2017. It is covered in para 5 of the Circular No.21 of 2015 dated 10.12.2015 and, therefore....
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....otice under section 22(4)/23(2) of the India Income Tax Act, 1961 or under section 142(2)/143(2) of the hearing fixed on 16.11.2007. *Have concealed the particulars of your Income or ................. furnished inaccurate particulars of such income. You are hereby requested to appear before me at 11A.M. on 22.01.2010 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961 if you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271. Seal Sd/- Ram Kumar Yadava Assistant Commissioner of Income Tax 5(1) Indore 44. As per the assessing officer, a notice dated 10.3.2014 was served. Copy of that notice is not placed on record by the revenue. Under these facts and circumstances and in view of the binding precedent of the Hon'ble jurisdictional High Court in the case of PCIT Vs. Kulwant Singh Bhatia (supra), we hereby set aside the order of Ld. CIT(A) and restore the issue to his file for deciding the facts in the light ....