TaxTMI 
TaxTMI 
2019 (5) TMI 1983
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.... coming from the Assessment Year 2012-13 which aggregated to Rs.155.35 crores. The assessee had availed various credit facilities from financial institutions and banks for setting up of the business and for operations. Unfortunately, there was a severe flood in factory area in August, 2011 due to cloud burst and since then assessee had suffered huge losses as operation could not be carried out and consequently the assessee was not in a position to pay the installment of the loan and interest on the loan borrowed by it. Thereafter Assessee Company had applied for restructuring of loan under 'Corporate Debt Restructure Scheme (CDR) with banks and financial institutions under which interest on the existing loan was to be funded from 'Fund Interest Term Loan' (FITL) and interest on FITL was only remained payable by the assessee. Accordingly, all banks sanctioned FITL for the payment of interest on the original loan. In the audited balance-sheet and P&L account for the year ending 31st March, 2014, signed on 28.11.2014, the assessee-company had disclosed this fact regarding the status of payment of interest in the following manner:- "As per CDR scheme overdue/irregular balance of work....
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....s. 11,86,66498/-. 5. Now on such disallowances, penalty has been levied by the Assessing Officer on the ground that, firstly, return has not been revised in time allowed u/s. 139(5) and; secondly, the assessee has made a wrong claim of expenses of Rs. 42,10,28,576/- in the original return of income. Hence, assessee had furnished inaccurate particulars of income. 6. After considering assessee's explanation and relying upon various decisions, he has finally levied the penalty of Rs. 14,31,07,613/- being 100% of the amount of tax sought to be evaded. 7. Ld. CIT (Appeals) too has confirmed the said penalty holding that assessee has revised the audit report and the return after receipt of notices u/s. 143(2) and 142(1). He further held that the reasoning and explanation given by the assessee for reducing the computation of income in the course of assessment proceedings on the basis of observation of the tax audit report is not convincing. The fact of funded interest term loan was well within the knowledge of the assessee company and the financial institution/bank through re-structured debt loan and offered term loan to the assessee to take care of unpaid interest. Such debt restructu....
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....." 9. Thus, from a bare perusal of the aforesaid notices, it can be seen that at no point of time, the Assessing Officer has raised any query with regard to claim of disallowance u/s.43B. He further drew our attention to the guidance note for revising the tax audit report and pointed out that auditors have given the explanation on disallowance of interest. He pointed out that there was a bona fide belief at the time of original tax audit report that, once the account of the assessee was restructured under CDR under which the interest on existing loan was to be provided by FITL, then the interest of FITL was only remain payable and the interest of the earlier loan was to be paid by FITL and thus, it was in this background the auditors had clarified that only disallowance u/s.43B for interest payable on FITL was to be disallowed which was Rs.6,08,64,843/-. He submitted that there were certain decisions of Hon'ble Gujarat High Court in the case of Gujarat Cypromet Ltd. which has now been reversed by the Hon'ble Supreme Court in February, 2019, reported in (2019) 262 taxman 93 (SC). Thus, at that time, there were decisions in favour of the assessee with regard to the claim. He....
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.... Assessing Officer, shall not be carried away by the plea of the assessee like 'voluntary disclosure', 'buy peace', 'avoid litigation', 'amicable settlement', etc. to explain away its conduct. * The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income. * The burden is then on the assessee to show otherwise, by cogent and reliable evidence. * When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the revenue to show that the amount in question constituted the income and not otherwise. [Para 7] * Assessee has only stated that he had surrendered the additional sum with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. * Statute does not recognize those types of defence under the Explanation 1 to section 271(1)(c). It is trite law that ....
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....ly, she relied upon the decision of Hon'ble Allahabad High Court in the case of Hamirpur District Co-operative Bank Ltd. vs. CIT wherein the Hon'ble High Court has held that where Assessing Officer having noticed that assessee, a co-operative bank, had debited amount of advance tax paid under head other expenditure and it had also debited a certain amount in profit and loss account as loss from sale of or dealing with non-banking business even though it was not an expense but an appropriation of profit disallowed said amounts and included same in income of assessee and also imposed penalty upon it under section 271(1)(c), penalty was rightly imposed. Thus, the penalty levied by the Assessing Officer should be confirmed. 12. We have heard the rival submissions, perused the relevant findings given in the impugned orders as well as material referred to before us. From the facts as discussed above, it can be seen that assessee had to pay huge interest on various loan and credit facilities taken from the financial institutions and banks on the loan taken for setting up of business and operation of business. Due to heavy losses from unfortunate natural calamity assessee was unab....
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....ove that the audit of the company made by the auditors on 29.11.2014 was not proper and not valid. Hence, the same cannot be treated as valid audit as per the provisions of law. Thus, there is failure on the part of your company to get the accounts of the company within the specified date in a proper manner u/s.44AB of the Income Tax Act, 1961. Therefore, you are required to explain why proceedings may not be initiated as per provisions of section 271B of the Act for imposition of penalty." 13. From the content of the above questionnaires raised, it transpires that it was only when the assessee had revised the tax audit report offering higher disallowance u/s.43B the Assessing Officer has raised the query. Thus, it cannot be held that revising of the tax audit report and offering of higher amount of disallowance u/s.43B was not voluntarily or the same was offered when assessee was cornered by the Assessing Officer at any point of time. Moreover, prior to the judgment of Hon'ble Supreme Court in the case of CIT vs. Gujarat Cypromet Ltd. vide judgment and order dated 21st Feb, 2019, there were many judgments of the Hon'ble High Courts taking different views. This controversy....