TMI Blog1988 (10) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for not disclosing the fact about the arbitration proceedings taken after the end of the previous year against the damages of Rs. 97,193 deducted by the Food Corporation of India and claimed by the appellant out of its income? (2) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the Explanation to s. 271(1) (c) was rightly applied by the ITO, though the assessee firm filed the return declaring loss of Rs. 57,657 and after reducing the bona fide claim of the assessee of Rs. 97,193 rejected by the ITO from the assessed income of Rs. 78,770, the result was still loss of Rs. 18,423? (3) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment made on 26th March, 1967 allowed a deduction of Rs. 97,182 as claimed by the assessee by observing as below: "As against this the assessee firm had claimed liability at Rs. 97,182 representing the deductions claimed by the FCI for damages caused to the grain bags during the rainy season on account of assessee firm's fault as per their allegations. However, the enquiry conducted by Shri. M. Subramanyam, Sr. Regional Manager, FCI supported assessee's contention and as per this firm is not liable to the above said penalty. The matter has been finally taken by the assessee in arbitration and the proceedings are going on before the Arbitrator. Accordingly this is allowed as a liability and as and when the award is given in assessee fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,771.05 . 56,624.70 Demurrage grain liability upto April, 1971 to July, 1971 1,35,507.95 Vharfage upto June, 1971 7,468.70 Demurrage from 8.71 to 2.72 8,479.90 . 2,15,698.50 The damage grain was sold for Rs. 45,000 and the final liability of the firm was worked out to Rs. 1,70,698. The matter was taken to court of arbitration. Out of the claim of Rs. 1,70,698 the assessee firm claimed Rs. 97,183 as deduction in the asst. yr. 1973-74. It is obvious that this amount of Rs. 1,70,698 nearly correspond to the amount of the award minus security of Rs. 52,470. In the context of this position the amount of Rs. 97,183 which was claimed as deduction is no longer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitration for Award on account of the damages suffered by him and the deduction for which was made by the principals. Still he chose to claim deduction at Rs. 97,180 and as such as covered under the Explanation. I am, therefore, satisfied that the provisions of s. 271(1) (c) r/w the Explanation are applicable to him and impose a penalty of Rs. 98,000 (Rupees ninety eight thousands only) being 100 per cent of the income sought to be evaded". 7. The assessee preferred an appeal to the CIT(A), who dismissed the same by a very brief order. The assessee then came to this Tribunal in the aforesaid appeal and challenged the levy of penalty on the ground that there was no concealment on the part of the assessee and that the levy of penalty was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even this amount exceeds the deduction of Rs. 97,193 claimed by the assessee in the year under question, yet we are unable to stretch ourselves to the possibility, which is totally remote in the facts and circumstances of the case, that the whole of the claim for the year in question was accepted in the award and thus formed part of the aforesaid net figure of Rs. 1,69,410 awarded to the assessee. Even the fact that the amount of damages claimed by the assessee had been deducted by the FCI, in our opinion, will not change the legal position and extend any help to the assessee as the deduction made by them, not having been settled and matter pending before the arbitrator was surely premature. The assessee, in our opinion, were bound to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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