2020 (4) TMI 436

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....0/-. The learned Assessing Officer has passed an assessment order on 09.03.2015. He determined the total taxable income of the assessee at Rs. 8,31,581/-. In the present appeal, our concern relates to the inclusion of additional income in the return filed in response to notice under Section 148 of the Act as well as the additions made and sustained by the CIT(A). These amounts are as under:- "In this return, the assessee disclosed additional income under the following heads:- I) Donation expenses : Rs. 11,000/- II) Income-tax expenses : Rs. 28,076/- III) Excess depreciation : Rs. 4,706/-   Total   Rs. 43,782/- While completing the assessment u/s 143(3) r.w.s. 147, the Assessing Officer made further additions which have been sustained in first appeal and the same are as under: i) Commission income not disclosed : Rs. 9,526/- ii) Disallowance of advertisement expenses : Rs. 8,000/- iii) Interest u/s 244A not disclosed : Rs. 9,460/- iv) Disallowance of trade settlement expenses : Rs. 2,10,800/-" 3. The Assessing Officer has computed the penalty of Rs. 84,850/-....

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.... for the assessee, the items which have been considered for visiting the assessee with penalty on additional income declared by the assessee are concerned, those facts have already been brought by the assessee to the notice of Department before the initiation of reassessment proceedings. With regard to the additions made by the learned Assessing Officer are concerned, he pointed out that major items relate to disallowance of trade settlement expenses. The Assessing Officer made an addition of Rs. 3,55,010/-, out of which learned CIT(A) has deleted Rs. 47,567/- out of Rs. 1,47,567/- relating to J.K. Securities Pvt Ltd and similarly Rs. 96,641/- out of Rs. 1,96,641/- incurred through J.K. Securities Pvt Ltd. In other words, against the total disallowance of Rs. 3,55,010/-, learned CIT(A) has confirmed the addition to the extent of Rs. 2,10,800/-. This is an ad-hoc disallowance and no penalty deserves to be levied upon the assessee qua this addition. Others are also ad-hoc disallowances namely advertisement expenses, commission expenses and interest under Section 244A of the Act. Thus, learned Counsel for the assessee emphasized that no penalty ought to be imposed upon the assessee....

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....ssing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section are deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned ....

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....urnishing inaccurate particulars of income, I am of the view that the assessee does not deserve to be visited with penalty. The penalty proceedings were initiated for furnishing of inaccurate particulars of income. In the show-cause notice, the Assessing Officer has used both the options i.e. for concealment of income or for furnishing inaccurate particulars of income. So far as the show-cause notice is concerned, I am of the view that this defect is not fatal to the proceedings in view of the judgment of Hon'ble jurisdictional High Court in the case of Snita Transport P. Ltd. Vs. ACIT, (2014) reported 42 taxmann.com 54 (Guj) wherein the Hon'ble High Court has observed that for providing an opportunity to the assessee for explaining its position, the Assessing Officer may use expression "or" in between the 'concealment of income' and 'furnishing inaccurate particulars of income' in the show-cause notice; but for visiting the assessee with penalty, the Assessing Officer has to record a conclusive finding. The discussion made by the Hon'ble jurisdictional High Court in this regard in the case of Snita Transport P. Ltd. (supra), particularly para no. 9, reads as under:-- ....