TMI Blog2019 (10) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... en the intention of the assessee to make a full and true disclosure of its income, it would have filed a revised return of income before the issuance of the notice 143(2)/ 142(1) by the AO. AO has rightly held that the assessee has deliberately and consciously failed to furnish full and true particulars of income and attempted to conceal income. To hold otherwise would be to exalt artifice over reality and to deprive the statutory provisions in question all serious purpose. However, the penalty is not levyable on the disallowance of ₹ 49,791/- (disallowance u/s 14A) and ₹ 5,00,000/- (salary). The AO is directed to restrict the levy of penalty u/s 271(1)(c) to 100% of the difference between revised income (₹ 23, 92, 594/-) and original income (₹ 9,733/-). - Decided partly in favour of assessee. - ITA No. 816/MUM/2018 - - - Dated:- 30-9-2019 - Shri Mahavir Singh (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Mr. Biren Gubhawala, AR For the Revenue : Ms. Jyoti Lakshmi Nayak, DR ORDER PER N.K. PRADHAN, AM This is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whereas there was no tax payable while filing revised return therefore there was no loss to exchequer as TDS on the increased income was also not claimed in original return. The learned CIT(A) has failed to appreciate the fact that there was a genuine error and the income was inadvertently omitted to be considered in the computation and the appellant had filed the revised computation of income and there was no intent on the part of the appellant to conceal or furnish inaccurate particulars of his income as contemplated under section 271 (1) (c) of the Act. Therefore, the initiation and imposing of penalty proceedings is wrong, bad in law, invalid and void ab-initio and CIT (A) has not justified in confirming the penalty u/s 271 (1)(c) of the Act. 3. Briefly stated, the facts are that the appellant filed his return of income for the assessment year (A.Y) 2011-12 on 30.09.2011declaring total income of ₹ 9,733/-. The nature of business of the appellant is arranging finance for real estate developers. The case was selected for scrutiny assessment. Notice u/s 143(2) and 142(1) was served by the A.O on the appellant on 12.09.2019 and 15.09.2019 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 805/Del/2010) for AY 2005-06 by ITAT Delhi. 6. On the other hand, the Ld. DR submits that only after the issuance of notice u/s 143(2) dated 12.09.2012, the assessee revised return of income from ₹ 9,733/- to ₹ 23,92,594/-. Thus it is stated by her that in the original return of income filed on 30.09.2011, the assessee had suppressed the amount of income. Therefore, it is argued that the penalty of ₹ 7,55,811/- levied by the AO u/s 271(1)(c) and confirmed by the Ld. CIT(A) be upheld. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. In the assessment order dated 20.03.2014, the A.O initiated the penalty proceedings u/s 271(1)(c) for concealing the income and filing inaccurate particulars of income. Subsequently, the A.O issued notice under Sec.274 r.w.s 271 to the assessee stating that he has concealed the particulars of his income. As mentioned in the penalty order dated 23.09.2014, the AO initiated penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income. In response to the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r there was non-application of mind by the Income-tax Officer or the so-called ambiguous wording in the notice impaired or prejudiced the right of the assessee to reasonable opportunity of being heard. After all, section 274 or any other provision in the Act or the Rules, does not either mandate the giving of notice or its issuance in a particular form. Penalty proceedings are quasi-criminal in nature. Section 274 contains the principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the principles of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. The issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown by the assessee was 315. The Assessing Officer after detailed enquiry concluded that the assessee has not been able to prove the identity of creditors, failed to show creditworthiness of the creditors and genuineness of the creditors. The Assessing Officer inter alia made addition of ₹ 18,68,90,938/- u/s. 68 of the Act on account of unproved creditors. In first appellate proceedings, the CIT(A) restricted addition to ₹ 8,87,03,901/-. Thereafter, the assessee carried the matter in second appeal before the Tribunal. The Tribunal in ITA No. 866/PN/2009 for assessment year 2004-05 decided on 30-10-2013 further reduced the addition to 20% of the addition sustained by the CIT(A) i.e. 20% of ₹ 8,87,03,901/- (₹ 1,77,40,780/-). The Assessing Officer levied penalty of ₹ 64,91,794/- u/s. 271(1)(c) on account of furnishing inaccurate particulars of income to the extent of addition confirmed by Tribunal. Against the order passed u/s 271(1)(c) dated 13-08-2014, the assessee filed appeal before the CIT(A). The CIT(A) by placing reliance on the decision of Tribunal in assessee s own case for assessment years 2005-06 and 2006-07 deleted penalty in toto. The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above decision. In Nalwa Investments Ltd. (supra), the assessee filed its return of income on 25.10.2005 declaring total loss of ₹ 1,01,17,371/-. The return was accompanied by audited accounts and tax audit report. The assessment u/s 143(3) was completed on 24.08.2007 computing the total income at ₹ 6,16,980/-. The main reason for the difference in returned and assessed income was on account of disallowance u/s 14A. Penalty proceedings were initiated in the course of assessment proceedings. These proceedings were disposed off on 30.03.2009, levying a penalty of ₹ 39,27,976/-. The Tribunal dismissed the appeal filed by the Revenue on the reason that the questions of disallowance and its quantification are quite disputable and can lead to bona fide difference in opinion between the assessee and the authorities. In such a situation, the levy of penalty will not be justified . In the above case, the main reason for the difference in returned and assessed income was on account of disallowance u/s 14A and penalty proceedings were initiated in the course of assessment proceedings. In the instant case, there is a total difference in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndal. Let us examine the profit and loss account for the period under consideration filed along with the original return of income and the revised return of income. Profit and Loss account for the year ended 31.01.2011 filed along with the original return of income Profit Loss Account for the year ended 31 March 2011 filed along with the revised return of income In the instant case, in the original return filed on 30.09.2011, the assessee has declared total income of ₹ 9,773/-. The receipts were ₹ 22,10,715/- and expenses ₹ 22,00,942/-, thus resulting in a net profit of ₹ 9,773/-.As per the computation the tax comes to Rs. Nil. The date of receipt of notice u/s 143(2) by the assessee which was issued by the AO was 12.9.2012. The date of receipt of notice u/s 142(1) by the assessee which was issued by the AO was 15.9.2012. However, in the revised return of income filed on 25.09.2012, the assessee has declared total income of ₹ 25,22,599/-. The receipts were ₹ 1,08,01,725/- and expens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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