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2016 (3) TMI 862 - ITAT AHMEDABAD

2016 (3) TMI 862 - ITAT AHMEDABAD - TMI - Penalty u/s. 271(1)(c) - outstanding excise duty - Excise Department has carried out an inspection on the premises of the assessee - Held that:- The stand of the assessee is that invoice value shown by it was of ₹ 9,33,500/-. This invoice value has been revised by the Excise Authorities to the figure of ₹ 15,69,724/-. It puts a tax liability of ₹ 1,03,832/-. Keeping in view the smallness of the amount involved the assessee did not litig .....

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d against the assessee on the basis of information collected from Excise Authorities.

The nature of that information has never been analyzed for the purpose of making addition to the income of the assessee. That type of evidence cannot be relied upon for the purpose of visiting the assessee with penalty. The degree of evidence ought to be of a little higher standard, because the penalty proceedings could expose the assessee with prosecution also. Merely the assessee did not dispute w .....

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favour of assessee - ITA No. 1189/Ahd/2015 - Dated:- 10-2-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Assessee by : Shri P.M. Mehta and Shri GM Thakor, AR For The Revenue by : Shri Vilas V. Shinde, DR. ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: The assessee is in appeal before us against the order of the learned Commissioner of Income-tax (Appeals)-3, Ahmedabad, dated 19.02.2015 passed for Assessment Year 2006-07. 2. The grounds of appeals taken by th .....

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claring total income at ₹ 2,53,076/-. An assessment order was passed u/s 143(3) on 04.12.2007 determining the total income at ₹ 2,76,980/-. On perusal of the assessment records, the learned Commissioner has harboured a belief that the assessment order is erroneous and prejudicial to the interest of Revenue; therefore, action u/s 263 of the Income-tax Act was taken. The learned Commissioner has set aside the assessment order vide his order dated 17.03.2010 with a direction to reframe .....

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o pay excise duty at ₹ 1,03,832/-. The assessee has contended before the Assessing Officer that Excise Authorities have taken the invoice value on the basis of rough noting and jottings made by the employees. The assessee was not interested to involve in the litigations; therefore, did not dispute the payment of excise duty, but that does not mean that the assessee has actually received something over and above the one disclosed in the books. The learned Assessing Officer was not satisfied .....

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arrived at on the basis of certain noting made by the employees. The acceptance at the end of the assessee for payment of excise duty would not automatically authorize the Assessing Officer to visit the assessee with the penalty. The Assessing Officer in the original assessment proceedings verified the books of accounts of the assessee and did not make any addition. In the set aside assessment order, the Assessing Officer has simply relied upon the information collected from Excise Authorities, .....

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hrough the record carefully. 8. Section 271(1)(c) of the Act has a direct bearing on the controversy and, therefore, it is salutary upon us to take note of the relevant provisions of section 271(1)(c) along with Explanation 1 which read as under: "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1). If 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)***** .....

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furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1.- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers 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 .....

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ned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed 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 deemin .....

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der the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeals); and, (b) where in respect of any fact, material to the computation of total 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 a .....

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e his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of 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 relate .....

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