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2012 (11) TMI 131 - AT - Income TaxPenalty u/s 271 (1)(C) – additions u/s 68 - negative cash balance and advance receipts – alleged that cash introduced in the books by way of advances amounting to Rs. 16.25 lakh was only one component of unaccounted cash available with the assessee – Held that:- addition made by the AO had the effect of reducing loss to the extent the additions have been confirmed by the Tribunal. It may be mentioned that the explanation does not use the words "returned loss" or "assessed loss" but uses the word "has the effect of reducing loss". - Explanation 4 to section 271(1)(c). - Decided against the assessee. Validity of notice issued u/s 271(1)(c) - concealment of income - held that:- it is clear that the notice was issued for concealing particulars of income. The notice is not a stand alone document. It is based on the assessment order. Without finding regarding one or the other charge, the notice cannot be issued. However, if two are read together, it is clear that the notice has been issued in respect of concealment of particulars of income. In view of these observations, it is held that the notice is not vague. Intoroduction of cash - held that:- assessee failed to adduce any evidence regarding receipt of such advance or the job work actually done - assessee firm was in possession of unaccounted income by way of cash which was utilized in the course of business without paying tax thereon. Quantum of penalty - AO had made additions and initiated penalty on two grounds- (i) deficiency of cash of Rs. 8,79,204/- in the cash book, and (ii) advances for job work of Rs. 16.25 lakh. - CIT(A) combined the two additions and reduced the amount from Rs. 25,04,209/- to Rs. 18,48,039/-. - held that:- the levy of penalty should be levied on the amount of Rs. 16.25 lakh.
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