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2015 (10) TMI 810 - ITAT DELHI

2015 (10) TMI 810 - ITAT DELHI - [2015] 43 ITR (Trib) 279 (ITAT [Del]) - Penalty u/s 271(1)(c) - addition made u/s 43B - assessee furnished inaccurate particulars of income to reduce the taxable income and did not substantiate its claim of expenses - Held that:- Merely because there were some discrepancies, it cannot be held that the assessee intended to evade tax. The assessee had rectified the same and had accepted the mistake before the AO. The assessee also chose not to prefer appeal before .....

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date prescribed under the Employees’ Provident Fund Act and Rules made there under but before the due date for furnishing the return of income under sub sec. 1 of sec. 139 of the Act, are allowable under s.36(1)(va) read with sec. 2(24)(x) and sec. 43B of the Act.

This is not a fit case for levy of penalty u/s 271(1)(c) as there has been no concealment on behalf of the assessee. The error that was brought to the notice in respect of depreciation was a bonafide error, which was corre .....

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ed by the Hon’ble Supreme Court and jurisdictional High court in the case of of DCIT vs. Nepa Limited reported in (2015 (10) TMI 63 - ITAT INDORE) delete the penalty u/s 271(1)(c) of the Act levied by the AO and confirmed by the ld. CIT(A). - Decided in favour of assessee. - I.T.A .No. 1457/Del/2010 - Dated:- 7-9-2015 - SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For The Appellant by Sh. Salil Kapoor, Adv. Sh. Sanat Kapoor, Adv. For The Respondent by Sh. J.P. Chandr .....

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s of waterproofing projects, Date of Hearing 02.09.2015 Date of Pronouncement 07.09.2015 construction related to infrastructure projects, dismantling of existing buildings etc. 3. The assessee filed its return of income on 30.11.2006 declaring total income of ₹ 10,28,830/-. The same was processed u/s 143(1). Statutory Notice u/s 143(2) was duly issued and the representative of the assessee attended from time to time, to file necessary details and evidences and produced books of account. Th .....

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re the first appellate authority against the assessment order passed. Hence, the AO initiated the penalty proceedings u/s. 271(1) (c ) and finalized the penalty proceedings by levying penalty of ₹ 11,49,000/- by giving following reasons: 5. In the light of above observations, it is concluded that in all of the above issues the assessee furnished inaccurate particulars of income to reduce the taxable income and did not substantiate its claim of expenses. Therefore, by virtue of Explanation .....

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penalty order the assessee went into appeal before ld. CIT(A). The ld. CIT(A) confirmed the order of ld. AO. 6. The ld. AR submitted in respect of each addition made by the Assessing Officer under section 143(3) proceedings. It is submitted that the assessment order was passed on 30.12.2008 by making following additions: 1. Excess depreciation on Plant & Machinery ₹ 24,56,003 2. Non-capitalization of expenditure c) Custom duty ₹ 3,50,021 Shipping expenses ₹ 98,766 3. Unpai .....

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hich the ld. AR submitted vide letter dated 12.12.2008 and conceded the discrepancies. As a mistake in recording the figure. The assessee immediately revised the claim of depreciation to ₹ 47,60,903/- against the original claim of ₹ 72,16,906/-. It was submitted that due to the mistake, the value of Plant and Machinery was taken at ₹ 1,85,56,622/- instead of ₹ 18,55,862/-. 2) Addition in respect of custom duty and shipping expenses: The assessee in the revised return had .....

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k at page 58, it was pointed out that the same has been paid before the due date for furnishing the return of income of the previous year u/s 139(1). However, the AO included the said amount while computing the income for the year under consideration being in violation of sec.43B of the Act. 4) Addition on the basis of late deposit of employees contribution towards PF & ESI The AO added an amount of ₹ 1,94,244/- on the ground that the amount was not paid within the due date prescribed .....

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f the Act. Accordingly, the penalty proceedings were initiated by the AO as the assessee did not prefer any appeal against the quantum assessment. The ld. AR further pointed out that the penalty has been levied by the ld. AO for furnishing of inaccurate particulars of income and the ld. AO by virtue of Explanation 1 to Section 271(1)(c) has levied penalty. It is argued by ld. A.R that the AO has recorded the satisfaction for concealment of income and the penalty has been levied for furnishing of .....

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nvoked for the following reasons; (i) that the assessee has offered explanation to the AO at the time of assessment; (ii) that the explanation so offered by the assessee has not been found to be false by the Ld. A.O; (iii) that the assessee in bonafide belief has filed all the details and records in respect of the additions made were placed before the AO. 10. For the above submission, the ld. AR placed reliance on the judgment passed by the Hon ble Apex Court in the case of CIT vs. Reliance Petr .....

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her argued that the assessee had filed inaccurate particulars, which was brought to the notice of the assessee at the time of assessment proceedings and, therefore, there was a willful attempt to evade tax. 13. We have considered the rival submissions of both the parties, perused the material available on the record and the judgments relied upon by them. On merits it is observed that mistake of the assessee was bonafide which has been corrected by filing revised return before completion of asses .....

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do not find place in the return filed by the assessee (PB page 58). The delayed payment in respect of employees contribution to PF & ESI needs to be given liberal approach in view of the ratio laid down by the Hon ble Delhi High Court in the case of CIT v. P.M. Electronics Ltd., 220 CTR 635 (Delhi) while relying upon the decision of Hon ble Apex Court in the case of CIT Vs. Vinay Cement Ltd.,213 CTR (SC) 268 , concurred with the view taken by the Hon ble Madras High Court in Nexus Computer .....

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t proviso to section 43B of the Act by the Finance Act, 2003, operated, retrospectively, with effect from, April 1, 1988 and not prospectively from April 1, 2004. 14. The decision relied on by the DR of the jurisdictional High Court in the case of Arcotech (supra) are distinguishable on the facts because in the said case, the assessee had not substantiated the claims and thus had not discharged the onus and even the audit report was silent in respect of the facts which was not disclosed. The ass .....

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n 1 to Section 271(1)(c) of the Act. 16. For dealing with the above observation let us analyze the relevant provision u/s. 271(1)(c) Explanation 1, which is reproduced herein below: Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or f .....

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na fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. 17. From the said provision, it is apparent that, if the ld. AO in the course of assessment proceedings is satisfied tha .....

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