TaxTMI 
TaxTMI 
2019 (2) TMI 788
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....) is bad in law and against the facts and circumstances of the case. iii. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in levying penalty u/s 271(1)(c) in as much as the impugned assessment order u/s 143(3) dated 26-09-2008 is also contrary to law and facts, void ab initio and not sustainable on various legal and factual grounds. iv. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in levying penalty u/s 271(1)(c) which is bad in law being beyond jurisdiction and barred by limitation and contrary to the principles of natural justice and has been passed by recording incorrect facts and findings and without giving adequate opportunity to the assessee and the same is not sustaining on various legal and factual grounds. v. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in imposing a penalty of Rs. 60,77,308/- that too without recording mandatory "satisfaction" as per. vi. That....
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....Rs. 3,64,15,637. Vide letter dated 7.7.08, assessee replied that assessee has not paid any applicable tax u/s 115JB. Summons u/s 131 dated 10.07.08 and 18.07.08 were issued to Sh. Girish Batra, MD of the assessee company to file details of payment of taxes u/s 115JB for A.Y. 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 and to explain the reason for non-payment of taxes. Sh. Girish Batra neither appeared in response to summons nor assessee filed any reasons for non-payment of tax u/s 115JB. On 27.08.08 Sh. Rajeev Sharma counsel appeared for the assessee but could not explain as to why taxes u/s 115JB of the Act have not been paid for all these years. On perusal of assessment record, the details of Income, deduction u/s 80IB and payment of tax u/s 115JB is hereby produced. A.Y. Gross Total Income Deduction u/s 80IB Taxable Income Tax payable as per MAT Shown by Assessee 2002-03 71,34,329 70,97,621 36,708 NIL 2003-04 11,04,978 11,04,978 NIL NIL 2004-05 88,77,733 86,38,298 2,39,435 NIL 2005-06 2,68,45,130 2,56,89,743 11,55,387 NIL 2006-07 3,64,15,637 3,44,56,419 19,59,218 NIL On p....
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....f assessment proceeding as well as appeal proceedings assessee has not given any submission/detail/evidence explaining the reasons for showing the book profit at Rs. Nil and also for non-payment of tax u/s 115JB which the assessee was required to pay before filing of return. 4. The discussion/finding on the issue as given in assessment order reads: "Vide order sheet entry 10.07.08 assessee was asked to explain as to why the assessee has not paid tax u/s 115JB and as to how the assessee has filed Book Profit of NIL in its return of income, when the company is having profit as per companies Act of Rs. 3,61,09,972 which includes Income from business as per Income tax Act of Rs. 3,44,56,419 and Income from other sources of Rs. 19,59,218 thereby showing. Gross total Income of the year of Rs. 3,64,15,637. Vide letter dated 7.7.08, assesses replied that assessee has not paid any applicable tax u/s 115J3. Summons u/s 131 dated 10.7.08 and 18.7.08 were issued to Sh. Girish Batra, MD of the assessee company to file details of payment of taxes u/s 115JB for A.Y. 2002-03, 2003-04, 2004-05, 2005-06, 07, 2007-08 and to explain the reason for non-payment of taxes. Sh. Girish Bat....
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....see was not able to substantiate its claim. Rather the fact of the matter is that no explanation, at all, has been offered by the assessee on this issue. 8. Almost every tax payer (except a few small taxpayers) is aware of the fact that only about 2% returns are taken up for scrutiny and this fact induces them to make such wrong/inadmissible claims with the intention of going scot-free, if the case is not taken up for scrutiny, which is apparent from the fact that assessment u/s 143(1) in the case has been made on returned income. Furthermore, disallowance/additions in sue a cases can be made only if the AO is having sufficient time 8s knowledge in catch hold of such deficiencies which is not possible in each and eve; v case. In the present-case, it can be safely inferred that assessee tried i n evade tax by making such inadmissible/wrong claim. Penal provisions a n meant only to have deterrent effect to dissuade tax payers for making sue a claims and will lose its impact if not applied in cases of such violation 8.1 The Hon'ble Delhi High Court in the case of Zoom Communication Pvt. Ltd. reported in 2010) 40 DTR (Del) 249, dated May 24, 2010 have observed as ....
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....d by the revenue. Similarly, Hon'ble Supreme Court in the case of CIT vs. Atul Mohan Bindal (2009) 225 CTR (SC) 248 has held that penalty u/s 271(1)(c) is neither criminal nor quasi criminal but, a civil liability, albeit a strict liability. Such liability being civil in nature, mensrea is not essential - Explanation appended to S.271(1)(c) indicates element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. Dillip N. Shroff has been held to be not laying down good law. 11. It view of this it is clear that assessee has furnished inaccurate particulars of its income in respect of the addition/disallowance ; s discussed above and accordingly, it is found to be a fit case for imposition of penalty u/s 271(l)(c) of the Act r.w. Explanations thereto. Here it is also noted that tax on book profit has not so far been paid by him assessee. It shows non cooperative and recalcitrant attitude of the assessee. Its conduct further shows that its intention to pay the due and correct taxes is not above doubt. Considering the facts of the case an l conduct (furnishing of the required information and payment of due taxes-.) of ....
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....igher than the minimum amount. ' 5.3 During the course of assessment proceedings the AO had noted that the appellant had not paid tax under 115JB. On a specific query being raised by the AO the appellant did not give any reasons for non payment of taxes u/s 115JB. Even during appellate proceedings the Ld. CIT(A) had stated that the appellate had not given any details nor any reason for not paying taxes u/s 115JB and had displayed malafide intentions to evade tax and conceal income. The appellant has stated that 115JB was liable only when the company was otherwise not liable to normal tax. 5.4 As per 115JB (1) & (2): "115JB. Special provision for payment of tax by certain companies.- (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the incometax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2011, is less eighteen per cent, of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on suc....
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.... was no fraud or neglect in filing correct income, which the appellant has failed to proved. 6.1 There was a deliberate attempt by the appellant to file incorrect return of income. The appellant has failed to substantiate its explanation, failed to prove that its explanation is bonafide, therefore, the penalty is clearly leviable u/s 271(l)(c) and the AO is fully justified in imposing the penalty. 6.2 After distinguishing the decision in CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 where Hon'ble Apex court decision was rendered because two views were possible in that case, Hon'ble Delhi High Court vs. Zoom Communication (P) Ltd. (2010) 191 TAXMAN 179(Delhi), have held: "It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income fo the assessee, but it cannot be disputed that the claim made by the assessee needs to be bonafide. It is the claim besides being incorrect in law is malafide, Explanation 1 to Section 271(1) would come into play and work to the disadvantage of the assessee. The Court cannot overtook the fact that only a small percentage of the Income Tax ....
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.... 6.7. In the case of B. A. Balasubramanium & Bros Co. vs CIT 236 ITR 977 (SC). It was observed that for "the assessee to prove there is no concealment". 6.8. In the case of Additional CIT vs. Jeevan Lai Shah 205 ITR 244 (SC), it was observed that "the burden remains on the assessee, unless discharged that failure to return correct income did not arise from fraud on willful neglect on his part". 6.9. In the case of CIT V Anwar Ali (1970) 76 ITR 696 (SC). It was observed that "finding given in the assessment proceedings is a good evidence". 6.10. The appellant has failed to prove that there was no concealment and that incorrect particulars were not filed. 6.11. The appellant has deliberately furnished inaccurate particulars of its income with a view to concealment of income. The explanation of the appellant is not bonafide. In view thereof, penalty of Rs. 60,77,308/-, imposed u/s 271(l)(c) on concealed income of Rs. 3,61,09,972 is confirmed. The ground of appeal is thus ruled against the appellant. 7. As a result, the appeal is dismissed." (2.2) Aggrieved, the Assessee has filed this appeal in Income Tax Appellate Tribunal ("ITAT", ....
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....etal & Chromiun Plater (P) Ltd. A copy of notice dated 26.09.2008, U/s 274 read with Section 271 of I.T. Act, was also filed from assessee's side. At the time of hearing before us, the Ld. Counsel for Assessee submitted that, in notice U/s 271(1)(c) of I.T. Act, the AO had not stated the specific charge against the assessee - whether the penalty proceedings were for 'concealment of the particulars of income' or for 'furnishing of inaccurate particulars of income'. For this purpose, the Ld. Counsel for Assessee referred to the aforesaid notice dated 26.09.2008. The Ld. Counsel for assessee also drew our attention to Assessment Order dated 26.09.2008, wherein, also the AO did not make specific charge against the assessee - whether the penalty proceedings were for 'concealment of the particulars of income' or for 'furnishing of inaccurate particulars of income'. The Ld. Counsel for Assessee further contended that the quantum addition in respect of which penalty has been levied U/s 271(1)(c) of I.T. Act was disputable and two views were possible. The Ld. Counsel for Assessee submitted that no penalty U/s 271(1)(c) of I.T. Act should be levied, when two views are possible - one being....
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....T. Act. The AO took the view, on the other hand, that this amount is to be added to Book Profit for the purpose of Section 115JB of I.T. Act. When the matter was carried by the assessee to the Ld. CIT(A), through appeal filed by the assessee, the Ld. CIT(A) confirmed the addition made to Book Profit, as far as the amount of deduction U/s 80IB of I.T. Act is concerned. Therefore, the Assessee is liable to pay taxes in accordance with the quantum addition made under special provision of section 115JB of I.T. Act. The question before us, however, is whether the assessee is also liable for penalty U/s 271(1)(c) of I.T. Act, in respect of quantum addition on account of addition to Book Profit U/s 115JB of I.T. Act. (4) The Ld. Counsel for Assessee has filed copy of judicial precedents in the case of M/s Neha Home Builders (P) Ltd. (supra), in which view was taken that the amount of deduction U/s 80IB of I. T. Act is not to be added to Book Profit U/s 115JB of I.T. Act. The Ld. Counsel for Assessee also filed copy of judicial precedents in the cases of ITO vs. Frigsales (India) Ltd (supra) [in which, view was taken that exempt income U/s 50 would remain exempted as per provisions o....
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....upport from the judicial precedents in the cases of CIT vs. Reliance Petroproducts 322 ITR 158(SC) [in which the Hon'ble Apex Court held that mere making of a claim which is not sustainable in law, by itself, does not amount to furnishing inaccurate particulars of income]; CIT vs. Samurai Techno Trading (P) Ltd. (2016) 389 ITR 357 [in which it was held that merely because assessee had made certain claims, which were not accepted or were not acceptable to Revenue, that difference would not attract penalty U/s 271(1)(c) of I.T. Act]; PCIT vs. Torque Pharmaceuticals (2016) 389 ITR 46 [in which it was held that mere disallowance of expenditure without bringing any adequate material against the assessee to prove that it had concealed the particulars of income or had furnished inaccurate particulars of the income would not leave to levy of penalty U/s 271(1)(c) of I.T. Act]; and CIT vs. Mastek Ltd. (2015) 53 taxman.com 142 (Guj.)[in which it was held that no penalty is to be levied to wrong claim of deduction u/s 10A if there was no concealment of income or furnishing of inaccurate particulars]. The reliance placed by the Ld. DR in the case of CIT vs. Escorts Finance Ltd. 328 ITR 44 (Del....