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2015 (12) TMI 613 - ITAT AHMEDABAD

2015 (12) TMI 613 - ITAT AHMEDABAD - TMI - Penalty under section 271(1)(c) - undisclosed payments - Held that:- The assessee has made payment of ₹ 70,000/- to Shri Dinesh Jethwa, meaning thereby, this party is a genuine party, it has relation with the assessee, otherwise has no occasion to make a payment of ₹ 70,000/- also. The assessee failed to substantiate the remaining payment. Therefore, in our opinion, the assessee has an explanation, which cannot be proved as a false by the AO .....

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an ad hoc disallowance at 10% of the total administrative expenses. He disallowed a sum of ₹ 73,31,295/-. Out of which, the disallowance upheld by the CIT(A) is ₹ 5,33,909/-. It is an estimated disallowance from a payment of ₹ 7.33 crores. This amount has been disallowed for the reason that complete bills and vouchers could not be produced by the assessee. In our opinion, genuineness of the assessee’s claim to the extent of 99% was not in doubt. Therefore, on this ad hoc disal .....

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before us against the order of the ld.CIT(A)-I dated 22.6.2011 for the Asstt.Year 2005-06. 2. The grievance of the assessee is that the ld.CIT(A) has erred in confirming the penalty of ₹ 38,07,784/- imposed under section 271(1)(c) of the Income Tax Act. 3. Brief facts of the case are that the assessee-company is engaged in the business of construction of infrastructure projects, mainly, water supply. It has filed its return of income on 24.10.2005 declaring a total income of ₹ 45,94, .....

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ract exp. 3,41,38,500 87,35,038 86,643 2. Addition of opening stock of WIP 1,30,50,500 Nil Nil 3. Disallowance out of the Mnfg. And Admn. Exps. 73,31,295 5,33,909 5,33,909 4. Disallowance out of transportation charges 31,78,606 11,36,949 Nil 5. A perusal of the above table would indicate that major additions made by the AO to the income of the assessee have been either deleted by the CIT(A) or by the ITAT. After the order of the ITAT , the only additions left are of ₹ 86,643/- and ₹ .....

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"271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) or C .....

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an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona 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 or such person as a result thereof shall, for the purposes of Clause .....

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under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deem .....

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tal income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing .....

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the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 8. In the light of the above, let us ex .....

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been disallowed. The reason for disallowance is that Shri Jethawa had denied payment from the assessee. The stand of the assessee is that, at the first instance, Shri Jethawa had contended that his books were destroyed in flood of 2006, and therefore, he has no details. The second amount is disallowance of ₹ 11,293/- which is in respect of sub-contractor, Pratik Construction. The assessee contended that meager amount was involved, therefore, it did not put much energy in locating this ass .....

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