TaxTMI 
TaxTMI 
2020 (4) TMI 218
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.... u/s.271(1)(c) of the Income Tax Act 1961 being 300% of the tax sought to be evaded by claiming that the assessee has concealed or furnished inaccurate particulars of its income. 2. On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in levying a penalty of Rs. 32,64,84,460/- u/s.271(1)(c) of the Income Tax Act 1961, without appreciating the fact that the proceedings against the quantum order is pending before the Hon'ble ITAT. 3. On the fact and circumstances of the case as well as in Law, the Learned Assessing Officer has erred in levying a penalty without creating charge whether it is for concealment of income or furnishing inaccurate particulars of income. 4. On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in levying a penalty u/s.271(1)(c) of the Income Tax Act 1961 instead of u/s.271AAA of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 5. On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred i....
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..... addition towards bogus purchases, disallowance u/s. 80IB of the Act, addition towards undisclosed income and expenditure as the assessee could not substantiate the allowability of its claims. Ld. DR submits that Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act and levied penalty for the concealment of income or furnishing inaccurate particulars of income. Ld. DR submits that on appeal the Ld.CIT(A) sustained the penalty considering the submissions of the assessee and the averments of the Assessing Officer in the penalty order. Ld. DR vehemently supported the orders of the authorities below in levying and sustaining the penalty u/s.271(1)(c) of the Act. 5. Heard Ld. DR on merits and perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), we find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order, penalty order and following various judicial pronouncements upheld the action of the Assessing Officer in levying penalty u/s. 271(1)(c) of the Act. While holding so, the Ld.CIT(A) observed as under: - "4.3.2 From the abo....
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.... amount to furnishing of inaccurate particulars of income. For example, in case of businessmen, if a. particular transaction of sale is not shown in the books, it would amount to concealment of particulars of income while sale is shown but at a lesser value, it would amount to furnishing of inaccurate particulars of income. 4.3.3(c) It is pertinent to note that thrust of the legislature is upon the particulars of income which are cither concealed or furnished inaccurately by the appellant. Therefore, one must understand the meaning of the words 'particulars of income'. The Hon'ble ITAT had to consider the meaning of the expression 'furnishing of inaccurate particulars of income appearing in Sec. 271(1)(c) in the case of Kanbay Software India (P) Ltd, 122 TTJ 721 (Pune). It was held that the expression particular refers to facts, details, specifics or the information about some or something. Thus, the details or information about the income would deal with factual details of income and cannot be extended to areas which are subjective such as status of the taxability of an income, admissibility of a deduction and interpretation of law. Accordingly, it was held that mere rejection ....
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.... Apex Court in the case of Reliance Petroproducts (supra), to the effect that mere rejection of legal claim would not invite, the penalty would also apply where the charge against the appellant is concealment of particulars of income. Concealment lakes place on the date when return is filed without disclosing the particulars of income of that year as held by the Apex court in the case of Brijmohan Vs. CIT - 120 ITR 1 SC It is further held that the law which prevails on the date of filing such return would be applicable for levy of such penalty. Impliedly, it would mean that offence of concealment cannot be said to have committed before filing of the return. 4.3.3 (e). Explanation 1 to Sec. 271(11(c) cannot be applied where charge against the appellant is furnishing of inaccurate particulars of income, since it provides a deeming fiction qua concealment of particular of income only and consequently cannot be extended to a case where charge against the appellant is On the other hand, where charge furnishing of inaccurate particular of income. against the appellant is concealment of particulars of income, the AO has to establish either that appellant has not disclosed the particula....
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....sed on a particular income. The decision of the Apex Court was based on the provisions as they were originally enacted. The view taken by the division bench in the case of Dilip N. Shroff was doubted and overruled in UOI-Vs. Dharmendra Textile Processors, 306 ITR 277 (SC) by holding that penalty under the above provision is a civil liability and therefore willful concealment is not an essential ingredient for attracting the civil liability. It was pointed out that the division bench in the case of Dilip N. Shroff failed to notice conceptual and contextual difference between Sec. 271(1)(c) and Section 271C. Further, it approved the other decision of the division bench in the case of Chairman SEBI (2006) 5SCC 361. 4.3.3(g). The Honble Delhi High Court in the case of CIT Vs. Zoom Communication Pvt. Lid. (2010) 40 DTR (Del) 249 observed that the Courts cannot overlook the fact that only a small percentage of the IT returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bonafide, it would be difficult to say that he would s....
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.... law that each and every explanation by the assessee must be accepted. It must be acceptable explanation, acceptable to a fact-finding body," Viewed in this perspective, just because appellant has an explanation- whatever be its worth and credibility, it does not cease to be a case in which concealment penalty is to be levied. In our considered view, and bearing into mind entirety of the case, the explanation of the appellant does not merit acceptance. 4.3.3(i). The Hon'ble Supreme Court in the case of CIT Vs. Durga prasad More, 1973 CTR (SC) 500 (1971) 82 ITR 540 (SC), the taxing authorities are not required to put blinkers while looking at the documents produced before them and. that they are entitled to look into the surrounding circumstances to find out the reality of recitals made in those documents". Their Lordships further observed that science has not vet invented any instrument to test the reliability of evidence placed before a Court or Tribunal and therefore, the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. In our considered view, it is contrary to human probabilities that merely in view of invoice and....
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....which, in the esteemed views of the Large bench did not take into account the correct scheme of things as these were - more particularly post-insertion of Expln I to Section 271(1)(c). Indeed, even on the first principles and as seen in the above light, while this view is in accordance with the scheme of the section and the amendment brought about in the scheme of the section by insertion of Expln. 1 to Section 271(1)(c), it does not bring about any radical change to the main scheme of section 271(1)(c) itself. 4.3.3(l) In the case of CIT vs Morgan Finvest Pvt. Ltd reported at 2012-TIOL- 1008-DEL-IT, the assessee is a private limited company engaged in the business of investment. It had filed its ROI declaring 'nil' income. During assessment, AO noticed that assessee had claimed depreciation in respect of a property in New Delhi. It was purchased on 29.4.2004 for Rs. 3.5 crores, on which stamp duty and taxes of Rs. 25 lakhs were also paid. It appeared that the assessee had raised a loan in order to acquire the property The property was sold by the assessee on 18.9.2004 to a company for a consideration of Rs. 4,5 crores. An agreement of sale was executed, however the poss....
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....the property, which it had acquired with the use of borrowed funds, an intention to make a quick profit on the property deal cannot be ruled out. In this background, and considering the fact that there is no evidence to show use of the property during the relevant previous year for the purpose of the assessee's business, it is clear that the claim of depreciation was not bona fide. Moreover, it is not denied that while claiming depreciation, the cost of the land was also included, contrary to the provisions of the Act under which no depreciation is allowable on land. This position is well settled after the judgment of the Supreme Court in CIT vs. Alps Theatre. This also shows that the claim was far from bona fide. The complete lack of any evidences to show that the property was used for the purpose of the assessee's business and the attempts made by the assessee to show to the contrary are indicative of the frivolous nature of the claim, It was further held by the High Court that this is not a case where all the correct particulars relating to the claim were furnished and a claim for relief or allowance was made on that basis, which was not accepted by the AO who did not qu....
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.... on assessee in penalty proceedings to show that the amount was not the concealed income. 4.3.4. As regards issue whether penalty can be imposed on the amount of tax sought to have been evaded on account of bogus purchases of Rs. 86,522/- it may be mentioned here that similar facts and similar issue was there in A.Y. 2008-09 and A.Y 2009-10 where the penalty imposed by the A.0. u/s 271(1)(c) has been upheld by me in CIT(A) order dated 18.09.2017 and 27.09.2017 respectively and decided against appellant, therefore, since the facts and ratio of the case remain the same in the present assessment year, for the reasons and facts as well as judicial pronouncements mentioned in my order dated 18.09.2017, the issue in present appeal is decided against the appellant and this part of penalty imposed u/s 271(1)(c) by the A.O. is upheld and the appellant's ground no.2 related to imposition of penalty is Dismissed. 4.3.5. Coming to the another component of penalty imposed by the A.O. with regard to the disallowance u/s 80IB being incorrect/wrong claim u/s 80IB of the I.T. Act amounting to Rs. 31,73,34,449/-, it may be referred that similar issue was examined by me in A.Y. 2008-09 and ....
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.... the hands of the company. The detail break up of Rs. 17 crore is found in para 3.3 as well as para 3.4 of the assessment order, Further, it is seen from para 3.5 of the assessment order that after reconciling the various figures there was a balance of Rs. 26,12,000/-. The A.O. has also mentioned that out of Rs. 17 crore disclosure, the appellant company had gone to Income Tax Settlement Commission in case O.C.R.P.L and offered Rs. 7,19,00,000/-, Another amount of Rs. 9,52,00,000/- was explained to be pertaining to Mr Ravi Kiran Agrawal (A.Y. 2010-11). As per the assessment order para 3.4, the A.O. has categorically mentioned that out of Rs. 7,19,00,000/- in the hands of 0.C.R.P.L (A.Y. 2005-06), the appellant offered only Rs. 1,50,00,000/- in the Return and "balance sum of Rs. 5.69,00,000/- has not been offered in the Returns filed u/s 153AC. From the assessment order dated 27.12.2011, para 3.4 read with total chart of addition in para 9 of the assessment order, it is not clear whether the amount of Rs. 5,69,00,000/- which "has not been offered in the Returns filed u/s 153AC", what action was taken by the A.O. either in the hand of present appellant company or 0.C.R.P.L i.e. (" Or....
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....against the same. This amount of Rs. 26,12,000/- is part of disclosure of Rs,17 crore by Mr. Pujit Agrawal in the capacity of Managing Director of the appellant company and which was found to be on the basis of incriminating documents which has been referred and discussed in para 3.3 of the Assessment order in the table/chart given by the A.O. Therefore, I am of the considered opinion that this part of Rs. 26,12,000/- is also concealed income and penalty on this amount is justified and upheld. Accordingly, the appellant's ground of appeal is dismissed. 4.3.8. The appellant in its ground of appeal no.1 in general and partly in ground nos.2, 3, 4 and 5 has objected to the imposition of penalty by the A.O. @ 300% of the tax sought to be evaded by the appellant company. in this regard it may be mentioned that in earlier para, I have already upheld the issue of imposition of penalty by the A.O. on various account. In so far as percentage of penalty is concerned, Section 271(1)(c) the Act provides as under: 271. If the Assessing Officer or the Commissioner Appeals or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that an....
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.... 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten percent of the undisclosed income of the specified previous year. (2) Nothing contained in sub section (1) shall apply if the assessee (i) in the course of the search, in a statement under sub-section (4) of section 132. admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived, and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation-For the purposes of thi....