AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 833
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....u/s. 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as "Act"] dated 31.12.2021 for the Assessment Year [A.Y.] 2019-20. 2. The grounds of appeal are as under: 1. In the facts and circumstances of the case and in law, the Ld. National Faceless Appeal Centre (NFAC), CIT(A) has erred that appellant has concealed any income or particular of income and passed a penalty order determining a penalty of Rs. 16,97,141/- under section 271(1)(c). 2. On the facts and circumstances of the case, the penalty order passed by the learned AO under section 274 r.w.s 271(1)(c) is bad in law. 3. The learned CIT(A) has erred in law and on facts in not appreciating that penalty cannot automatically be levied when legall....
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....in view of the decision of the hon Apex Court in the case of Bharat Earth Movers vs CIT (2000) 245 ITR 428.He opined that the hon'ble Apex Court had admitted SLP filed by the Revenue against the above decision of the hon'ble Calcutta High Court. In the interim order passed by the hon'ble Apex Court in this case, the assessee was directed to pay tax as if section 43B(f) is in the Statute book. Hence, in view of the interim order of hon'ble Apex Court, section 43B(f) was clearly applicable to the case of the assessee. As such, the unpaid Leave encashment was liable for disallowance. In respect of the argument of the assessee that that the said disallowance was already mentioned in the Tax Audit Report (TAR) filed u/s. 44AB of ....
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....nt proceedings that all the facts material to the computation of income were not disclosed by the assessee. Hence, the conditions stipulated in the provisions u/s. 271(1)(c) were fulfilled in the instant case. In the case of CIT vs. Zoom Communication (P) Ltd. 327 ITR 510 (Del) it has been held that if assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim is not found to be bonafide, Explanation 1 to Section 271(1)(c) would come into play and assessee will be liable to penalty. He placed reliance on certain judicial decisions as well. 5. Before us,the ld.AR has submitted that as on 27.06.2007, the hon'ble High Court of Calcutta in the case ....
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.... required to be furnished u/s. 44AB is reported by the assessee and the auditor is required to give his opinion whether the prescribed particulars furnished by the assessee. Reliance in this regards is placed on the decision of hon'ble Supreme Court in the case of Price Waterhouse Coopers (P.) Ltd. v. CIT [2012] 348 ITR 306 (SC)wherein it was held that where in tax audit report filed by assessee, it was indicated that provision towards payment of gratuity was not allowable but assessee failed to add said provision to total income, no penalty could be imposed as it was a bonafide mistake. 6. We have perused the records and considered the matter carefully. The dispute herein is regarding allowability of deduction on account of Unpaid leave....
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....n the quantum appeal. 6.1 However, in so far as levy of penalty u/s 271(1) of the Act in respect of the above disallowance is concerned, we do not find any merit therein as the penalty has been levied solely on account of disallowance made in the assessment without establishing any concealment of income on the part of the assessee. The AO has not appreciated the fact that the assessment and the penalty proceedings are two separate proceedings. The findings given in the assessment proceedings cannot be conclusive in the penalty proceedings. Merely, because certain amounts have been disallowed and added to the total income of the assessee and no appeal has been preferred against this action such income will not ipso facto amount to conceal....
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....dered in the case of Price Waterhouse Coopers (supra) appears to be relevant to the facts of the case. In the present case also, in our considered opinion, the assessee has definitely committed a mistake of not disallowing the amount in respect of unpaid leave encashment and the information is very much available in the audited accounts and tax audit report and therefore, in our considered opinion, even after disallowance, it cannot be considered a concealment or filing of inaccurate particulars of income but the same has to be accepted as a bona fide mistake. Therefore, the judgment of hon'ble Apex Court rendered in Price Waterhouse Coopers (supra), is squarely applicable. 6.3 We further find that the above disallowance was confirme....