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The W.B. State Co-Opt. Marketing Federation Ltd Versus D.C.I.T., Circle-36, Kolkata

2015 (6) TMI 642 - ITAT KOLKATA

Penalty u/s 271(1)(c) - CIT(A) partly allowed the appeal of the assessee and sustained the penalty in respect of addition made due to provision for sundry debtors and provision for suspense - Held that:- In the case of the assessee, we noted that the assessee has returned the income at ₹ 1,32,45,460/- and the income has been assessed at ₹ 1,32,45,460/-, even though there has been addition made by the AO in respect of provision for sundry debtors and provision for suspense, for which .....

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Decided in favour of assessee. - I.T.A. No.85/Kol/2013 - Dated:- 10-6-2015 - Shri P.K.Bansal & Shri Mahavir Singh, JJ. For the Petitioner: Shri Miraj D. Shah, FCA For the Respondent : Shri Kanhiya Lal Kanak, Sr.DR ORDER Per Shri P.K.Bansal, A.M. This appeal has been filed by the assessee against the order of the CIT(A)-XX, Kolkata dated 05.11.2012 for the assessment year 2008-09, by which the CIT(A) partly allowed the penalty imposed on the assessee by the AO vide order dated 27.06.2011. 2. .....

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come of ₹ 1,32,45,463/- on 03.11.2009. The assessment was completed on the returned income of ₹ 1,32,45,460/- by making certain disallowances and allowing the set-off of the business loss for the assessment years 2003-04 and 2004-05 in the following manner: Income from business ₹ 5,66,06,763/- Add: Provisions for Audit Fees Rs. 30,000/- Provisions for Sundry Debtors (Jute Products) Rs. 2,43,00,000/- Provisions for closing stock suspense Rs. 61,60,000/- Provisions for H/Transpor .....

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al Income Rs. 1,32,45,463/- R/off Rs. 1,32,45,460/- 2.1 The assessee had not gone on appeal in respect of the disallowances made, as, according to him, he has to make certain provisions in accordance with the West Bengal State Cooperative Act. The assessee has added back the provisions for FBT, depreciation on WIP in its computation of income but did not add back other disallowances. The AO initiated the penalty under section 271(1)(c) for concealment of income and for furnishing of inaccurate p .....

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or filing of inaccurate particulars. The assessee has duly disclosed all the particulars. The provision has been made by the assessee, as per the suggestion of the government auditor, vide their report dated 20.06.2008. The assessee is not aware of and while making the computation, the profit has not to be taken as per the audited profit & loss a/c. and therefore, a bona fide mistake has been committed by the assessee but that bona fide mistake does not envisage the penalty as there was pro .....

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assessee, neither net loss declared in the return was reduced nor the loss has been converted into the income. Reliance was placed on the decision of the Hon ble Supreme Court in the case of CIT-vs- Reliance Petro Products Pvt. Ltd. 322 ITR 158. 3.1 The ld. DR, on the other hand, relied on the order of the tax authorities below. 4. We heard the rival submissions and carefully considered the same. We have also gone through the case laws as well as relevant provision of section 271(1)(c). We noted .....

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imes, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or furnishing of inaccurate particulars of such income. This is an undisputed fact that the provisions, which have been disallowed by the AO, are not deductible, while computing the total income, as per the provisions of Income-Tax Act. These provisions might have been made on the suggestion of government auditors but will not become an allowable expenditure under the Income-Tax Act. If those pr .....

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expenditure which may or may not be allowable under the Income-Tax Act as is in the case of claim of interest by the assessee in the case of Reliance Petro Products Pvt. Ltd. (supra), the decision as relied on by the assessee, in our opinion, will not assist the assessee. The assessee in this case has claimed the deduction of the provisions, which, he was fully aware of, that the provisions are not deductible under the law. It is not the plea of the assessee that the assessee has committed a bon .....

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er Explanation 4, which reads as under: Explanation 4. - For the purposes of clause (iii) of subsection, the expression the amount of tax sought to be evaded ,- (a) In any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, means the tax that would have been chargeable on the income in respect of which particulars have been .....

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income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished. 4.2 The AO, we noted in the instant case, has levied the penalty by applying Explanation 4(a). From the reading of Explanation 4(a), it is apparent that this clause defines the amount of tax to be evaded. The tax that would have been chargeable on the income in respect of which particulars have been concealed or the inaccurate particulars have been furnis .....

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(A) but the addition so made does not affect either reducing the loss declared in the return or converting the loss declared in the return into income. The assessee has not declared loss in the return. Therefore, in our opinion, explanation 4(a) on the basis of which, the penalty has been imposed and confirmed by the CIT(A), will not apply. The clause (b) and (c) of explanation 4, even though defines the amount of tax sought to be evaded but they are also not applicable in the case of the assess .....

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