TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 217
X X X X Extracts X X X X
X X X X Extracts X X X X
....s accounting year has already been subject to regular scrutiny & transfer pricing checking hence the case relied upon by the learned AO & learned CIT (particularly Zoom Communication) is not strictly applicable in the case. 5. The penalty confirmed by learned CIT is against is against law & facts. 2. Briefly facts of the case are as under: (i) The assessment under section 147/143(3) of the Act was completed on 31/03/2008 at assessed income of Rs. 24,41,88,630/- as against income of Rs. 24,09,12,462/- after making following additions: 1. Addition on account of disallowance u/s 14A Rs. 25,27,167/- 2. Disallowance u/s 94(7) Rs. 1,20,304/- 3. Disallowance of prepaid expenses Rs. 5,61,200/- 4. Disallowance of excess expenses claimed Rs. 67,500/- (ii) Before the Ld. CIT(A), the assessee challenged addition under section 14A of the Act, which was deleted by the Ld. CIT(A) in his order dated 18/02/2013. The assessee had not challenged the other three additions mentioned above before the Ld. CIT(A). (iii) The learned Assessing Officer after providing opportunity of being heard to the assessee, levied penalty under section 271(1)(c) of the Act for default of furn....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 5. We have heard the rival submission of the parties on the issue in dispute. The Ld. CIT(A) has upheld the penalty observing as under : "{6.1} Ground 2 is directed against penalty on account of short term capital Loss u/s 94(7) of Rs. 120304/- and excess claim of expense of Rs. 64500/-. Ground 3 is directed against penalty on account of prepaid expenses of Rs. 5,61,200/- 1 have carefully considered the penalty order and submissions of the appellant in this regard. It is apparent from the assessment order that the issue of addition u/s 94(7) of Rs. 1,20,304/- on account of short term capital loss incurred by the appellant has been wrongly claimed and was surrendered before the Assessing Officer during the course of scrutiny proceedings after making specific query by the Assessing Officer regarding adjustment of loss. The Assessing Officer has clearly mentioned in the assessment order that appellant has claimed dividend income of Rs. 73,11,218/- which includes dividend receipts from certain shares, on sale of which losses have been booked by the appellant which is not allowable u/s 94(7) of the Act. The provisions of section 94(7) states as under. "Where (a) Any person ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The other amount on which penalty was imposed by Assessing Officer was the addition made by the Assessing Officer on the ground that appellant has made incorrect claim of Rs. 5,61,200/- on account of Corporate Entrance Fee for 5 years and after making a specific query by the Assessing Officer on this issue appellant has surrendered this amount which is disallowable as per the mercantile system of accounting followed by the appellant. During the penalty proceedings before Assessing Officer, appellant vide letter dated 20.04.2012 has claimed that this was due to an oversight and clerical mistake. During the appellate proceedings, the appellant has explained that two views were possible on account of entry fee expense in view of the decision of Gujarat High Court in the case of Gujarat State Export Corporation Ltd. 209 ITR 49 wherein it was held that entry fee is a revenue expenditure and allowable in the year of payment. The reply of the appellant was considered, however, it is found that before the Assessing Officer in the penalty proceedings appellant vide letter dated 20.04.2016 has conceded that this mistake was a clerical mistake before Assessing Officer and due to oversight....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring the course of appellate proceedings the appellant has changed the stand and claimed that the appellant has corrected the calculation mistake on his own accord which was observed by the appellant & CA while checking the account of fee and subscription before submitting the same before Ld. Assessing Officer during the course of assessment proceedings. Plea of the appellant was considered and found not acceptable as when specific query was made to the appellant to produce the details of fee and subscription account, this mistake was corrected and clearly this was not a bonafide correction on its own accord as claimed by the appellant. Hence, there is no merit in the submission of the appellant that the Act was suo-motu. The reliance by the appellant in the case of CIT vs. Reliance PetroProducts (SC) is not applicable on the facts of the case as in this case on Hon'ble Supreme Court has held that " It was an admitted position in the instant case that no information given in the return was found to be incorrect or inaccurate. It was not as if any statement made or any details supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d be assessed on the basis of self assessment under section 143(1) of the Income-tax Act, 1961 and even if their case is selected for scrutiny, the can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by a malafide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are. not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have at of the company" Hence, it is apparent that the observations of the Hon'ble High Court in the above mentioned case is squarely applicable where the appellant was guided by a good team of auditors and has failed to point out who has erred in making such wrong claim in the return of income before Assessing Officer during assessment and penalty proceedings and before me during appellate proceedings. The decision of the case of Zoom Communications is again reiterated by Hon'ble' Delhi High Court in the case of Escort Finance Ltd. (328 ITR 044). Besides this in this very case the appellant has accepted the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... those types of defences under the Explanation 1 to section 271(l)(c). It is trite law that the voluntary disclosure does not release the assessee from the mischief of penal proceedings under section 271(l)(c). The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. [Para 7] Further, Hon'ble' 1TAT Delhi Bench has also given similar view in the case of NG Technologies Ltd. (57 taxmann.com 389) and held that Where against basic principle of; accountancy, assessee claimed capital loss on sale of fixed assets in profit and loss account and had not revised return voluntarily, penalty for concealment of income was justified Hon'ble' ITAT in para 20 has held as under- "Therefore, it is clear to us that the assessee had not filed revised return voluntarily but had filed the revised return after the Assessing Officer confronted the assessee and they were asked to explain how and why the loss on account of sale of fixed assets was claimed in the profit and loss account. The said loss, capital in nature and could not have been claimed in the profit and loss account". The case of NG Technologies ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Fee and subscription account found the two incorrect and excess claim of Rs. 27,000/- and Rs. 40,500/-, totalling to Rs. 67,500. On being pointed out, the assessee admitted that in voucher entry reference No. 6 dated 31/12/2007, the amount of fees and subscription was wrongly calculated at Rs. 63,000/- instead of Rs. 36,000/- and similarly in voucher entry reference No. 7, dated 31/12/2007, the amount of fee and subscription was wrongly calculated at Rs. 57,375/- instead of Rs. 16,875/-. 6.2 Similarly, the Assessing Officer observed one-time payment of Rs. 6,73,440/- on 30/05/2007 to M/s. Jaypee Greens for corporate entrance fee for five years from June, 2007 to May, 2012. The prepaid amount of Rs. 5,61,200/- was not allowable as per the Mercantile system of accounting followed by the assessee. The assessee admitted that it has wrongly claimed deduction of the whole of the amount of Rs. 6,73,440/- instead of Rs. 1,12,240/- pertaining to the year under consideration. 6.3 The contention of the assessee in all the three cases is that, the error was unintentional and was due to calculation error, and tax thereon has been offered voluntarily for taxation. The contention of the Reven....