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2016 (3) TMI 144 - ITAT CHENNAI

2016 (3) TMI 144 - ITAT CHENNAI - TMI - Penalty under section 271(1)(c) - gratuity payment claimed twice - Held that:- The assessee in this case claimed the above expenditure in the P&L A/c and once again claimed it as allowable expenditure in the statement of income which leads to double claim of the same expenditure. During the assessment proceedings, the assessee was questioned by the AO, it was stated that inadvertently the claim was made on the basis of which the penalty was levied by the A .....

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of Lanxess India Pvt. Ltd. (Successor of Bayer Indian Syntans Ltd.) v. ACIT reported in [2014 (12) TMI 571 - MADRAS HIGH COURT ]wherein held that the assessee should first show by cogent and reliable evidence that there was neither concealment of particulars of income nor furnished inaccurate particulars of income in order to repel penalty proceedings u/s.271(1)(c) of the Act. In view of this, we have no hesitation in confirming the levy of penalty u/s.271(1)(c) of the Act. - Decided against as .....

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6-07. 2. The only issue in this appeal is with regard to confirm the levy of penalty under section 271(1)(c) of the Act. 3. The brief facts of the case are that the assessee is engaged in the business of manufacture/trading of flavor essences, aromatic components, aromatic chemicals and food colour preparations and filed its return of income for the assessment year 2006-07 on 30.11.2006 admitting income of ₹ 64,47,82,010. Subsequently, assessment was completed u/s 143(3) on 13.11.2009 by m .....

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isputed the other two disallowances made by the AO before the CIT(A). It was observed by the AO that the assessee has claimed the above expenditure in the profit and loss account and once again claimed as an allowable expenditure in the statement of income which leads to double claim of the same expenditure during the subject assessment year. During the assessment proceedings, the assessee has agreed that the above amount was inadvertently claimed as deduction in the memo of income even though t .....

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he AO and requested the AO to ignore the claim made in the computation of total income. (ii) Merely because the appellant did not contest the disallowance of double claim before the ld.CIT(A), the appellant cannot automatically be held to have furnished inaccurate particulars of income. Relied on the decision of Hon ble Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd v. CIT(1 68 ITR 705) and decision of the Chennal Tribunal in the case of Southern Gas Fittings (P) Ltd v. .....

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Court in the case of CIT Vs. Sidartha Enterprises reported in (2009) 184 Taxman 460 and the Apex Court in the case of Price-Water house Copers P Ltd Vs. CIT (2012) 348 ITR 306. 5. The ld.D.R submitted that In this case, the assessee has given two explanations for double claim of gratuity payment (i) that this has happened inadvertentIy (ii) it has happened due to resignation of senior manager in-charge of accounts Except stating as above, the appellant has not given any further details to prove .....

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erstwhile senior manager was not known. In view of several unanswered questions as above, the AO has found that the explanation given by the appellant was not convincing and found to be false. The commonplace explanation that the mistake has happened inadvertently is not an explanation per se for the wrong claim, It does not reveal any material facts except the rhetoric. From the point of view of the appellant, the AO found that the assessee has offered an explanation but failed to substantiate .....

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claim in the return of income by which there is a benefit to the appellant it is sufficient to attract penalty u/s 271(1)(c). The. Apex court has held in delivering judgment in this case that the penalty leviable in loss of revenue is a civil liability for which the willful concealment is not an essential ingredient for attracting civil liability. The willfulness or mens rea is a subject mailer of another line of proceedings Le, prosecution u/s 276C of the Act. In the case of CIT v. Reliance Pe .....

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inaccurate particulars means, from the above decision, details supplied in the return which are not accurate, not exact or correct, not according to truth or erroneous . In the instant case when the appellant has made a double claim of the expenditure, whether it deliberately indented to have double tax benefit or not is not material but a wrong claim is wrong claim from the return of income point of view which means the assessee has a gain and revenue has a loss. The AO has also made an observa .....

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urr India P Ltd delivered by Madras High Court (supra), the court while holding that mens rea is not essential, the claim of the appellant should be bonafide. In the instant case except saying that the erstwhile senior manager has resigned, the ld.AR has not furnished any details to show how their financial activities have got paralyzed in the absence of erstwhile senior manager and left several unanswered questions as mentioned above. The decision of Hon ble Supreme Court in the case of Price-W .....

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ain contention of the assessee s counsel is that mistake is inadvertent and there was no malafide intention on the part of the assessee to claim double deduction for payment of gratuity and there is no scope for levy of penalty u/s.271(1)(c) of the Act and in support of this he relied on the judgemnent of Apex Court in the case of Price- Water house Copers P Ltd Vs. CIT (2012) 348 ITR 306(SC). He also placed reliance on the judgement of Supreme Court in the case of CIT v. Reliance Petroproducts .....

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ent for twice. The assessee in this case claimed the above expenditure in the P&L A/c and once again claimed it as allowable expenditure in the statement of income which leads to double claim of the same expenditure. During the assessment proceedings, the assessee was questioned by the AO, it was stated that inadvertently the claim was made on the basis of which the penalty was levied by the AO and confirmed by the CIT(A). The explanation given by the assessee for claiming the same expenditu .....

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gent and reliable evidence that there was neither concealment of particulars of income nor furnished inaccurate particulars of income. In our opinion, the plea taken by the assessee is only too general and does not give any acceptable explanation for such unsustainable computation of the income. The inaccurate claim of the assessee was found by the assessing authority only during the scrutiny assessment u/s.143(3) of the Act. The judgement of the Supreme Court in Price-Water house Copers P Ltd V .....

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in that case noticed the error nor was it noticed by the Assessing Officer who framed the assessment order. Therefore, the assessee came to hold that when the contents of the tax audit report were overlooked by all the persons concerned, it was a case of bona fide and inadvertent error and in that circumstance, the penalty order was set aside. Hence, the said decision is of no assistance to the assessee. Further, the assessee has strongly relied on the judgement of Supreme Court in the case of C .....

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