9911796707
TMI Blog2010 (3) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... f was filed of the assessee claiming the expenditure of Rs. 10 lakhs paid to Shri Prabhakar Reddy of M/s. Tirupati Traders for allegedly withdrawing from the bidding for obtaining the contract from GMDC for earth removing. It was claimed by the assessee that there were 3 bidders for obtaining contract from Gujarat Mineral Development Corporation (GMDC) for earth removing. The first was M/s. J. B. Fabricator who had given the lowest rate of Rs. 22.91 per cubic metre. The next was M/s. Tirupati Traders represented by Mr. V. Prabhakar Reddy who had quit and finally it was the assessee who has quoted the rate of Rs. 24.95 per cubic metre. J. P. Fabricator withdrew because it did not have adequate plant and machinery for the work. M/s. Tirupati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. Against this the learned authorised representative for the assessee submitted that merely because addition is confirmed does not mean that the claim made by the assessee which is disallowed by the Assessing Officer was incorrect or false leading to inference that the assessee has filed inaccurate particulars of income. There is evidence submitted by the assessee in the form of bank statement indicating transfer of money from the account of the assessee to Tirupati Traders on February 13, 2001 and February 23, 2001. Prior to this there is a letter written by Mr. Prabhakar Reddy to GMDC indicating his intention to withdraw from the bid. It also indicated that Prabhakar Reddy would work with GMDC only at the rate of Rs. 23.95 per cubic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of withdrawing from the bid. Both are in close proximity which may give a prima facie indication that the assessee might have paid the money for permitting Tirupati Traders to withdraw from the bid and thereby enabling him to grab the contract from GMDC. It is undisputed position of law that penalty proceedings are different from the assessment proceedings and the assessee is entitled to render fresh explanation and the appellate authorities are required to appraise the explanation and material available on record in order to find whether main provision of section 271(1)(c) are attracted or whether the case of the assessing authority is covered by the Explanation to section 271(1)(c). 9. A reading of penalty order of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation 1(A) is not attracted because assessee has in fact furnished Explanation which has been referred to by the learned Commissioner of Income-tax (Appeals) in his order as under : "Work of over burden removal at GMDC Rajpardi Mines was to be awarded to two bidder namely J. P. Fabricator, V. Prabhakar Reddy and Dholu Contracts Co., being first, second and third lowest bidder, that GMDC decided to award the above work to J. P. Fabricators, M/s. V. Prabhakar Reddy being the second lowest bidder was getting chance to work at Rs. 22.91 rate, that Dholu Contract Co. could have above work at Rs. 22.91 only if V. Prabhakar Reddy refused to work, that the matter was discussed with M/s. Prabhakar Reddy and it was concluded that M/s. Reddy wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(B) cannot be levied. In the present case, the assessee had offered an explanation to the effect that he had paid a sum of Rs. 10 lakhs for grabing contract and money has actually passed on to M/s. Tirupati Traders. To this extent he has substantiated the claim. Because of the fact there is no written agreement between the assessee and Tirupati Traders for withdrawing from the bid there is nothing else which was required to be furnished in order to substantiate the claim. To this extent we may say that the first ingredient of Explanation 1(B) is satisfied against the assessee. Regarding the second ingredient there is nothing in the record to suggest that explanation of the assessee was not bona fide. Surrounding circumstances and conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X
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