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The Income Tax Officer, Corporate Ward – 3, Coimbatore Versus M/s. Southern Sites India P. Ltd.,

2016 (1) TMI 708 - ITAT CHENNAI

Penalty u/s 271(1)(c) - disallowance of agricultural income - CIT(A) deleted the penalty - Held that:- It is an undisputed fact that the assessee has claimed any expenditure having incurred for carrying out the agricultural operation for earning agricultural income. During the course of assessment proceedings, the assessee was not able to produce any evidence of having engaged in agricultural activities and agreed to offer the said income for taxation. Once the assessee has agreed to pay tax for .....

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icultural income showing expenses towards earning of such agricultural income and agreed to pay tax. CIT(A) has failed to consider the facts in proper perspective and accordingly, we confirm the penalty levied by the Assessing Officer - Decided against assessee

Levy of penalty for the disallowance of development liability - CIT(A) deleted the penalty - Held that:- In the present case, the assessee has made an erroneous claim of deduction, which indeed pointed out by the Assessing Offi .....

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in hand. Accordingly, we find that there is no illegality in initiating penalty proceedings. In view of the above, we set aside the order passed by the ld. CIT(A) and confirm the penalty levied by the Assessing Officer.- Decided against assessee - I.T.A.No.26/Mds/2015, C.O. No.20/Mds/2015 - Dated:- 29-10-2015 - Shri Chandra Poojari, Accountant Member AND Shri Duvvuru RL Reddy, Judicial Member For The Department : Shri A.V. Sreekanth, JCIT For The Assessee : Shri A. Gopal Kanakaraj, C.A. ORDER P .....

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0/-. Initially, the return filed by the assessee was processed under section 143(1) of the Act. Consequent to the survey operation under section 133A of the Income Tax Act, 1961 [ Act in short], the assessment was reopened under section 147 by issuing notice under section 148 of the Act. Thereafter, the assessee s case was selected for scrutiny and notice under section 143(2) of the Act was served on the assessee. After following due process, the assessment was completed under section 143(3) r.w .....

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er section 142(1) of the Act, the assessee was asked to produce evidence for the agricultural income. However, the assessee has not produced complete evidence for the agricultural activities carried out by the assessee company. Further, the assessee has agreed to offer the agricultural income for taxation. Against the said addition, the Assessing Officer has initiated penalty proceedings by serving notice under section 271(1)(c) of the Act. After considering the explanation given by the assessee .....

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taxes were paid, however, the assessee has not discharged its onus to prove that agricultural operations were carried out to earn the income which is claimed as exempt. Since the assessee has not furnished proper evidence for the agricultural activities amounts to furnishing of inaccurate particulars, the Assessing Officer has levied penalty under section 271(1)(c) of the Act. 4. On appeal, the ld. CIT(A), after considering the submissions of the assessee, has deleted the penalty levied by the A .....

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Counsel for the assessee has strongly supported the order passed by the ld. CIT(A). The assessee has relied on the decision in 32 ITR 466 and 32 ITR 587 in the cross objection. 7. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The assessee company is a real estate agent and has acquired lands for conversion into plots and sale and declared an agricultural income of ₹.8,15,000/- on the ground that the assessee was regularly purcha .....

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evidence of having engaged in agricultural activities and agreed to offer the said income for taxation. Once the assessee has agreed to pay tax for the said income, the income so declared by the assessee under the head Agricultural Income has no locus standi and it is nothing but undisclosed income under section 68 of the Act claimed under the head Agricultural Income to evade tax. Any evidence furnished for having carried out agricultural operation by incurring any expenditure, the income so e .....

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ticulars, duly attracts penalty proceedings. The ld. CIT(A) has observed that considering the nature of business activities of the assessee company, the agricultural lands were also purchased with standing crops. After the lands were taken possession by the assessee company, it is possible that the agricultural income can be derived by harvesting of the standing crops. If we have to agree with the observations of the ld. CIT(A) that the assessee has derived agricultural income by harvesting of t .....

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y 32 ITR 466, wherein the Hon ble Supreme Court has elaborately considered about the agriculture and determined income earned as agriculture income. The assessee has shown expenditure incurred for earning the income. Further, in the case of Kameshwar Singh v. CIT 32 ITR 587, the issue pertains to whether the income earned out of forestry is agricultural income or not. Therefore, both the case law relied on by the assessee has no application to the facts of the present case. 9. During penalty pro .....

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as observed that the assessee company has debited a sum of ₹.1,05,50,000/- as provisions for development expenditure, out of which the actual expenditure incurred was only ₹.8,75,000/-. The net provision of ₹.96,75,000/- was added back to the returned income as this was only a provision for the expenditure to be incurred in future and nothing was incurred. The assessee has contended that these are future liabilities for the assessee company and these have been debited due to th .....

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which evidences were produced was allowed and the balance of ₹.96,75,000/- has been added back to the returned income. Against the above disallowance, the assessee has not contested before the first appellate authority. Subsequently, the Assessing Officer has initiated penalty proceedings under section 271(1)(c) of the Act. 11. During the course of penalty proceedings, in reply to the notice, the assessee has submitted that it was obligatory on the part of the assessee to maintain entries .....

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her during the year under consideration or in the future. He has also observed that the assessee has simply made the provision due to the fact that the income for the year stands reduced and could not prove any commitment made to its clients by way of any written agreement to support the claim that the accounting provision has to be made for the expenditure during the year under consideration. Since the provisions created in the accounts, which are not allowable under the Income Tax Act and, the .....

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the assessee. Further, he has submitted that since the Directors of the assessee company admitted before the ld. CIT(A) that they are not aware of the accounting method and they acted only on the advice of the professional Chartered Accountants cannot be a ground to delete the penalty. 14. On the other hand, the ld. Counsel for the assessee has submitted that the assessee was committed to create development liabilities and therefore, the provision was created to meet the expenses and prayed for .....

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lance of ₹.96,75,000/- has been added back to the returned income. Accordingly, the Assessing Officer initiated penalty proceedings against the disallowance. Since the assessee made a wrong claim, for which the assessee could not able to offer explanation, the Assessing Officer levied penalty. 16. The ld. CIT(A) has relied on the decision in the case of CIT v. Sankaran 241 ITR 825 (Mad), in the case of CIT v. Pachamuthu 295 ITR 502 (Mad) and in the case of CIT v. Saran Khandsari Sugar Work .....

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ered, for which the Hon ble High Court has held that penalty is not attracted. In the instant case, during the course of reassessment proceedings, the Assessing Officer has found that the assessee has furnished inaccurate particulars to reduce the taxable income in the return filed by the assessee to evade tax and when the assessee has no other go, the assessee has admitted that they acted only on the advice of the professional Chartered Accountants. 17. Further in the case of Pankaj Rathi v. CI .....

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sumption 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 shifts to the Department to show that the amount in question constituted income and not otherwise. Voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not .....

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