TaxTMI 
TaxTMI 
2019 (6) TMI 706
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....ymade garments to Europe and U.S. Subsequently, net profit was determined at Rs. 50,48,792/- being 6.33% of the total turnover of Rs. 7,93,83,533/-. Consequently, the penalty u/s. 271(1)(c) has been levied. 3. We have gone through the details available on record and find that the business affairs of the assessee have been concealed from the eyes of the Income-tax Department and no returns have been filed pertaining to the profits relating to this business income. It was argued before the Revenue authorities that the profits have been the part of the AOP which has been disproved by the Revenue. During that time, a copy of the agreement of AOP claimed to have been prepared on 30.03.2005 effecting the AOP from 01.04.2004 has been rightly proved to be invalid, as the Advocate who notarized the deed has confirmed that the notarization has not been executed by him. Even the PAN of the AOP has been obtained in March, 2017 subsequent to the survey action by the department. Hence, this income do not form a part of income of the AOP as claimed by the assessee. Before the ld. CIT(A), the assessee has relied on the judicial pronouncements in the case of Manunatha Cotton and Ginning Factory ....
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.... found to be false, penalty may not be leviable,- (a) such explanation is bona fide. (b) the Assessee had made available to the Assessing Officer all the facts and materials necessary in computation of income It is seen that in the instant case, at the time of survey on 09.01.2007, statement of Sh. Gunjeev Saluja and Sh. G.S.Saluja was recorded and they admitted that assessee was the proprietor of M/s AVI Impex, but no books of accounts were found to be maintained and the income was not included in the ITR filed. However on 19.03.2007, Sh. Gunjeev Saluja changed his statement and claimed that M/s AVI Impex was an AOP of M/s Gunjeev saluja and others and came into existence on 22.11.2003. To substantiate the claim, a copy of the agreement of the AOP was prepared on 30.03.2005 and it was claimed before the AO that AOP was effective from 01.04.2004. It was also submitted that above agreement was notorized by one Sh. Harish Girotra, Advocate. But when enquiry was made by the AO, it was gathered that Sh. Harish Girotra, Advocate did not notarize the document executed on 30.03.2005, and he became the notary only on 27.09.06. It has further been established by t....
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.... to establish his innocence and righteous conduct. It is held in the case of Kanbay Software India (P) Ltd. Vs. DCIT Circle 8, Pune (2009) 31 SOT 153 that, even when the liability under section 271(1)(c) is viewed as a civil liability, while the onus is certainly not on the tax authorities to establish mens rea of the assessee, the explanation of the assessee is still to be examined by the adjudicating authority on its own merits. Considering this ratio, in the instant case, it is established beyond doubt that assessee has no explanation duly supported with documentary evidence to explain the source of deposit of Rs. 10,77,905/- in the bank account maintained with PNB. 4.1.5 Keeping in view the totality of the facts and circumstances of the case, I would like to mention here the recent Hon'ble Apex Court Judgment. Hon'ble Supreme Court in the case of MAK Data P. Ltd. vs CIT, 1 SCC 674 [Civil Appeal No. 9772 of 2013 arising out of Special Leave Petition (Civil) No. 18389 of 2013] has pronounced the judgment in respect of section 271(1)(c), which has again raised the vexed issue of levy of penalty u/s 271 (1)(c). In this case, Apex court has laid down that even if income sur....
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.... 3.Surrender of income cannot be termed as "voluntary", as it was offered for taxation after detection was made by the AO in the search proceedings conducted on sister concern of assessee. If assessee's intention was to declare correct income, it would have done so at the time filing return of income. 4.1.6 The above judgment is important in the sense that it lays down a ratio that, assessee cannot circumvent the provisions of section 271 (1Kc) merely by making voluntarily disclosure in assessment proceedings. Even if all the particulars are disclosed and there is no discrepancy in the particulars disclosed in return of income to that with books of account, onus is still on the assessee to substantiate why a particular income or expenses was treated in a specific way in return of income, which is different from the way A.O. is treating. 4.1.7 Thus in the first instance, it recognizes the burden on the part of assessee for advancing the explanation for all the claims made in return of income and only after assessee is able to substantiate his claim with cogent and reliable evidence, burden shifts on revenue. Further, Court also lay down that Assessee....
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....l ingredient for attracting civil liability as is the case in the matter of prosecution u/s 276C. After distinguishing the decision in CIT vs. Reliance Petroproducts Pvt. 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 in CIT v. Zoom Communication)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 of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect, in law, is mala fide the Explanation l to section 271(1) would come into play and work to the disadvantage of the assessee. [Para 19] The Court cannot overlook the fact that only a small percentage of the income-tax returns are picked up for scrutiny. If the assessee makes a claim of the appellant which is not only incorrect in law, but is also wholly without any basis and the explanation furnished by the appellant for making such a claim is not found to be bonafide, it would not be difficult to say that....
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....-clause (A) applies when the assessee fails to furnish any explanation or when an explanation is found to be false. In the present case, sub-clause (A) would not be applicable as assessee has furnished an explanation, and the explanation has not been found to be "factually" false. The assessee had made a wrong claim for deduction under Section 80IA and, therefore, had furnished inaccurate particulars as the claim was not admissible. Sub-clause (B) of the explanation is, therefore, applicable and we have to examine the two conditions whether: (I) The assessee has been able to show that the explanation was bonafide; and (2) Facts and material relating to computation of his income had been disclosed. 9 .Onus of establishing that the assessee satisfied the two conditions is on him i.e. the assessee. We shall examine the first condition i.e. whether the explanation of the assessee was bonafide. The second condition is satisfied. 10. In the present case, we note that Tribunal has proceeded on the premise that the claim for deduction under Section 80IA of the Act was duly supported by the Chartered Accountant's Certificate and prescribed forms signe....
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....s farcical or farfetched. Dubious and fanciful claims under the garb of interpretation, are a mere pretence and not bonafide. 13. It is not the case of the respondent assessee that there were conflicting decisions of High Court or there was a recent decision of the Supreme Court which had escaped attention or was not understood or an appeal or review etc. was pending before the Supreme Court. The explanation added was clear and categorical. The Tribunal has not referred to the Explanation to. Section 80IA as to why and on what basis divergent interpretations were possible. Absurd or illogical interpretations cannot be pleaded and become pretence and excuses to escape penalty. "Bonafides" have to be shown and cannot be assumed. In the present case, the respondents have not been able to discharge the said onus and establish that they had acted bonafidely." 4.1.9 Further, the decisions relied on by the A/R are not applicable in the instant case. In the case of CIT v. Reliance Pertoproducts Pvt. Ltd. [2010] 322 ITR 158 (SC) it was held that penalty was not imposable because two views were possible in that case. In the instant appeal it is clearly established that the ....