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M/s Chambal Fertilisers and Chemicals Limited Versus Assistant Commissioner of Income Tax, Circle-2, Kota (Raj.) and Vica-Versa

2015 (9) TMI 173 - ITAT JAIPUR

Penalty U/s 271(1)(c) - CIT(A) deleted part addition - Held that:- Explanation-1 to Section 271(1)(c) of the Act raises a presumption of concealment when a difference is noticed by the Assessing Officer between the reported and assessed income. The burden is then on the assessee to show otherwise by cogent and reliable evidence. When the initial onus placed by the explanation has been discharged by him, the onus shifted to the department to show that the amount in question constituted income and .....

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course of assessment itself and deemed to constitute satisfaction. The Hon'ble Supreme Court in the case of Union of India Vs. Dharmendra Testile Processors [2008 (9) TMI 52 - SUPREME COURT] has held that willful concealment is not an essential ingredient for attracting civil liability. The assessee intentionally claimed the capital expenditure as revenue expenditure on new project (i.e. cement), which was separate activity of the assessee company from the existing business i.e. production of fe .....

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05. The grounds of assessee s as well as revenue s are as under:- Ground of ITA No. 528/JP/2012 1 That the ld. Asst. Commissioner of Income Tax, Circle-2, Kota erred in imposing the penalty U/s 271(1)(c) of the Income Tax Act and the ld CIT(A) Kota further erred in partially maintaining the penalty of ₹ 67,46,313/- under the facts and circumstances of the case. Hence the penalty of ₹ 67,46,313 imposed U/s 271(1)(c) of the Income Tax Act should be deleted. Ground of ITA No. 557/JP/201 .....

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ter referred as the Act). The ld Assessing Officer observed that the return for A.Y. 2004-05 was filed by the assessee company on 29/10/2004 declaring total income of ₹ 125.91 crores. The case was scrutinized U/s 143(3) of the Act and income was assessed at ₹ 165.65 crores as against the returned income of ₹ 125.91 crores. While purpose of MAT U/s 115JB of the Act, the income was assessed at ₹ 189.18 crores. The ld Assessing Officer initiated penalty proceedings U/s 271(1 .....

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by the ld CIT(A). The second addition was on account of new project expenses incurred at ₹ 2.46 crores. The expenses were essentially capital in nature, which was being claimed as revenue expenditure. Accordingly, the ld Assessing Officer made addition in the income of the assessee. The assessee preferred appeal before the ld CIT(A), which has been confirmed by him by observing that the assessee s claim as capital expenditure and subsequently abandoned that project (cement project) does no .....

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by the Assessing Officer and observed as under:- * AR s request for keeping the penalty proceedings in abeyance till the order of the ITAT cannot be acceded to in view of the presently effective provisions of section 275 of the IT Act, 1961. * AR s long discussion on the merits of the additions is not relevant here as, after due consideration, the relevant additions have been confirmed by ld. CIT(A) who has also made strong observations while deciding the issues against the assessee. * AR s obje .....

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CIT(A) clearly suggest that there has been a volatile application of the legal provision by the assessee company for the purpose of reducing the incidence of tax. It is further held that on the basis of above finding, it is a fit case of levy of penalty U/s 271(1)(c) of the Act. Accordingly, he imposed 100% penalty at ₹ 88,08,614/- of tax sought to be evaded. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the .....

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of mining right i.e. intangible assets then such cost may be considered to be deducted against the sale of mining rights in A.Y. 2009-10. The ld CIT(A) held that ₹ 1,73,53,860/- were claimed capital expenditure was really revenue expenditure. Thus, the assessee tried to evade payment of taxes on the same. The assessee stated that the Assessing Officer had initiated penalty proceedings without recording satisfaction, however, after the insertion of subsection (1B) to Section 271 there is n .....

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its business but were related to new project. These expenses were also capital in nature but claimed as revenue. Therefore, he confirmed penalty U/s 271(1)(c) of the Act at ₹ 67,46,313/- and deleted the penalty of ₹ 20,62,301/-. 4. Now both are in appeals before us. The ld AR of the assessee reiterated the arguments made before the ld Assessing Officer as well as Ld. CIT(A) and argued that the difference between the returned income and assessed income was on account of additions mad .....

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such expenditure cannot be classified as a capital expenditure. For allowability of expenditure in relation to expansion or extension of a new business in the inter-connection, inter-lacing and interdependence from the point of view of finance management and control. So long as there is unity of control, management and finance the two businesses would be treated as part of the same business and any expenditure incurred will have to be allowed as a revenue expense unless specifically capital in n .....

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both the parties and perused the material available on the record. The assessee claimed revenue expenditure which were claimed as capital expenditure in the books of account under the head new project expenses in relation to cement project, which did not ultimately materilise and same had been debited in the account for the year under consideration. The assessee filed explanation on expenses claimed that the assessee has not concealed any particulars of income. There was a mere disallowance of .....

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enditure. Where the expenditure is prima facie inadmissible in law and claimed by the assessee bonafide believe that it is deductible cannot be accepted without any evidence in support. Since the law that it is inadmissible is well established. The penalty U/s 271(1)(c) is liable to be imposed as held by the Coordinate Bench of Delhi ITAT in the case of Chadda Sugar P. Ltd. Vs. ACIT (2012) 17 ITR (Trib) 316. Similar view has also held by the Hon ble Delhi High Court in the case of CIT Vs. Zoom C .....

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