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DCIT, Circle 14 (1) New Delhi Versus Priyanka Overseas P. Ltd.

2015 (7) TMI 1013 - ITAT DELHI

Penalty u/s 271(1)(c) - assessee debited an amount under the head ‘other expenses', being loss on account of transactions in shares - AO treated this loss, as loss arising from speculative business - Held that:- The Assessing Officer (AO) in this case has not found, that the claim of the assessee that it had incurred a loss of ₹ 1,69,75,525/- in the business of purchase and sale of shares as either false or fabricated. He had infact accepted this figure of loss. All the transactions in que .....

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a debatable issue.

As decided in THE COMMISSIONER OF INCOME TAX & OTHS. Versus M/s MANJUNATHA COTTON AND GINNING FACTORY & OTHS. [2013 (7) TMI 620 - KARNATAKA HIGH COURT] the findings recorded in the assessment proceedings insofar as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment .....

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of the Ld.CIT(A)-XVII, New Delhi dated 22.8.2013 pertaining to the Assessment Year (AY) 2008-09. 2. Facts in brief:- The assessee is a company and is in the business of export, manufacturing and trading. It filed its return of income on 29.9.2008 declaring nil' income. The assessee debited an amount of ₹ 1,69,75,525/- under the head other expenses', being loss on account of transactions in shares. The AO treated this loss, as loss arising from speculative business, on the ground th .....

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ggrieved the assessee carried the matter in appeal. The First Appellate Authority held that the assessee had disclosed all particulars and the AO has not stated that the particulars furnished were not correct or were inaccurate. The Ld.CIT(A) further held that it is not the case of the AO that the claim of the assessee was false or fabricated and he accepted the claim of the assessee. Ld.CIT(A) was of the opinion that this case of difference of opinion on the issue as to whether the loss claimed .....

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ee that it had incurred a loss of ₹ 1,69,75,525/- in the business of purchase and sale of shares as either false or fabricated. He had infact accepted this figure of loss. All the transactions in question were disclosed by the assessee in the books of accounts. The Profit and Loss a/c was audited. The assessee had in its letter dt. 12.10.2010 furnished all the details to the AO. The details of STT paid along with photo copies of Certificates in Form no.10 DB, bearing code of transactions e .....

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. Lad and Sons, G.M. Exports (2013) 359 ITR 565 (Karn) in ITA Nos. 2564 of 2005, 2565 of 2005, 5020 of 2009, 5022 and 5023 of 2009, 5025 and 5026 of 2010 judgment dated 13th December, 2012 concluded as under. "(a) Penalty under Section 271(1)(c) is a civil liability. (b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. (c) Wilful concealment is not an essential ingredient for attracting civil liability. (d) Existence of conditions sti .....

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stitute concealment because of deeming provision. (g) Even if these conditions do not exist in the assessment order passed, at least, a direction to initiate proceedings under Section 271(1)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1 (B). (h) The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. (i) The imposition of penalty is not automatic. .....

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ax liability came to be admitted and if not it would have escaped from tax net and as opined by the Assessing Officer in the assessment order. (l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not 'bonafide, an order imposing penalty could be passed. (m) If the explanation offered, even though not substantiated by the assessee, but is found to be bonafide and all facts relating to the sa .....

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t the Assessing Authority. (p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income (q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. (r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basi .....

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; and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings." 8. The Ld.Counsel for the assessee relied on the decision of Delhi C .....

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