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M/s Associated Stone Industries (Kotah) Ltd. Versus The ACIT Circle-1, Kota

2016 (4) TMI 26 - ITAT JAIPUR

Penalty u/s. 271 (1) (c) - Held that:- As the record reveals assesse had filed all the relevant documents, information and events before ld. AO during the course of filing of return for AY 2006-07, assessment proceedings and in AY 2007-08 also. When the order of Hon'ble Rajasthan High Court approving the scheme of demerger was passed, the same was also duly and promptly filed by the assesse with ld. AO. These facts have not at all been disputed by the department in any manner.

The all .....

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roval of demerger scheme by Hon'ble Rajasthan High Court. So also in the return filed in response to notice u/s 148 as it is not disputed that assessee did not claim any set off of loss. Thus we see no justification in alleging that assesssee has concealed any fact or furnished inaccurate particulars in any returns of income.

A multitude of undisputed facts mentioned above clearly demonstrate that there were no effort much less intention to conceal any particulars or file any inaccura .....

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rely because revised return is not filed by the asssessee, it is desirable the all the surrounding circumstances, human conduct and assessee's explanation are to be considered in harmonious manner. Considering all the aspect we are not in agreement with authorities below that assessee concealed or filed inaccurate particulars of income so as to be liable for impugned penalty.

Having filed all the relevant details on several occasions whose veracity is not at all challenged by the reve .....

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turn in response to notice u/s 148. It is trite law that penalty u/s 271(1)(c) cannot be imposed by picking up one default, the levy is to be considered after carefully considering the entirety of facts, record, assessee's submissions, judicial precedents and applying proper discretion. Any penalty imposed without proper care and in an arbitrary manner has a propensity to become untenable.

There is no provision in the IT Act for levying concealment of income u/s 271(1)(c) for non-fil .....

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h Bhuta, CA For the Respondent : Shri Rajinder Singh, JCIT ORDER Per R P Tolani, JM The assessee has filed an appeal against the order of the ld. CIT(A), Kota dated 18-02-3013 for the assessment years 2006-07. 2.1 Sole ground raised by the assessee challenges imposition of penalty u/s. 271 (1) (c) of the Income-tax Act at ₹ 75 lacs confirmed by authorities below. 2.2 Brief facts are-Assessee i.e. Associated Stone Industries (Kotah) Ltd., was having Two Divisions viz; Mining Division and Te .....

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in distinct activities i.e. stone division and textile division. Regular books of accounts for both divisions duly are maintained and audited, there were no adverse observation in these reports. The assesse filed its return of income A.Y. 2006-2007 declaring a loss of Rs. (-) 6,44,82,042/- along with audited accounts as well as the tax audit reports. The enclosures clearly mentioned the facts about companies pending demerger and also the likely tax effect of pending demerger application before .....

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d a covering letter of the same date enclosed with 152 pages notes and enclosure containing all the facts and necessary record in this behalf. The assessment for AY 2006-07 was accordingly framed u/s 143(3) on 31-12-2010 pending High Court order by making some disallowances. Subsequently, as soon as the Hon'ble Rajasthan High Court passed the final order on 09.02.2007 approving the scheme, the assessee again submitted a copy of the order and High Court approved scheme before the A.O., vide i .....

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t, all the carried forwarded losses have been treated as the losses of the resulting company. On the basis of High Court order approving demerger and it's effects filed by the assessee, ld. AO recorded following reasons and issued notice u/s 148 reopening the assessment for AY 2006-07:- "Reasons for issue of Notice u/s 148 Assessment in the case of M/s. Vast Textiles Ltd., Neemrana for A.Y. 2006-07 was completed vide order u/s 143(3) dated 26-12-2008 by ACIT, Circle- 2, Alwar. It was in .....

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a loss of ₹ 8,47,06,864/-. Thus, as a natural consequence of the demerger, M/s. Associated Stone Industries (Kotah) Ltd., PAN AACCA 3549F should have get away with the losses etc. pertaining to the demergd unit and should have revised its return accordingly. But, on verification of facts, it is found that M/s. Associated Stone Industries Ltd., Kota, PAN AACCA 3549F has not revised its return for the A.Y. 2006-07 and continued to set off its profit from the losses of the demerged unit, for .....

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t of ₹ 8,66,64,904/- has escaped assessment in the case of M/s. Associated Stone Industries (Kotah) Ltd., Kota (PAN AACCA 3549F) Therefore, considering the above facts, I have reasons to believe that income of ₹ 8,66,64,904/- has escaped assessment in the A.Y. 2006- 07 and thus it is a fit case for issue of notice u/s 148 of the I.T. Act, 1961." 2.3 During the course of reassessment proceedings, ld. AO was of the view that from demerger order it emerged that assessee in original .....

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loss of ₹ 6,44,82,042/- . That loss also includes loss of resulting company. The loss related to resulting company cannot be claimed by the dmerged unit. Further, resulting company filed revised return of income and claimed the same losses. At the same time, the assessee company has to reduce losses related to resulted company. However company did not file any revised return which shows that the assessee has taken undue benefit of the losses of the resulting company. In this regard, assess .....

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red at the time of filing of original return on or before due date in absence of the final approval of the Hon'ble High Court for Scheme of Arrangement of Demerger and we also agreed to pay net actual income tax on the total income of the mining division only. We have filed original Income tax return as per the circumstances and statute prevailing at that time filing of original return and thereafter, on approval of Scheme of Arrangement for Demerger by Hon'ble High Court, we have also n .....

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., Kota (PAN AACCA 3549F) has not revised its return for the A.Y. 2006-07 and constituted to set of its profit from the losses of the demerged unit, for which it was not entitled." 2.4 As a result the originally assessed loss of ₹ 6,44,82,042/- u/s 143(3) vide assessment order dated. 31-12-2010 was converted into income of ₹ 2,21,82,042/- as a result of order Dtd. 31-12-2010 passed u/s 147. Ld. AO initiated penalty proceedings u/s 271(1)(c), the sum and substance of the assesse& .....

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ion of total income with necessary notes regarding demerger, original tax audit report, Balance sheet and other relevant documents has submitted earlier vide our letter No.7948 dated 03.12.2010 during the assessment proceedings u/s 143 (3.). 2. As in electronic filing of Income tax return there is no clause in ITR to mention the above position, we have intimated about the demerger in detail to the Income Tax Department by way of note in Computation of Total Income and by way of separate letter d .....

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the year 2005-06, three audited Balance sheets and Profit & Loss Account were prepared for Mining & Textile Division according to the requirement, the copy of Profit & Loss Account has already submitted earlier vide our letter No.7948 dated 03.12.2010 during the assessment proceedings u/s 143(3) and again enclosing as Annexure-F. 4. On receipt of the Hon'ble High Court order dated 09.02.2007, the company has also filed the copy of judgment alongwith Scheme of Arrangement of demr .....

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th you on 31.10.2007. The fact that assessee paid Income Tax of ₹ 224.74 lacs for the Asstt. Year 2007-08 itself demonstrate clear bona fide intension for not to use or adjust any brought forward losses of Textile Division. The relevant pages of Tax Audit Report alongwith Acknowledgement letter and schedule of CYLA, BFLA & CFL of ITR showing that assessee has not taken set-off of losses pertaining to Textile Division was submitted vide letter No.7948 dated 03.12.2010 during the assessm .....

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resulting company which could not been transferred at the time of filing of original return on or before due date in absence of the final approval of the Hon'ble High Court for Scheme of Arrangement of Demerger and we also agreed to pay net actual income tax on the total income of the mining division only. We have filed original Income tax return as per the circumstances and statute prevailing at that time filing of original return and thereafter, on approval of Scheme of Arrangement for Dem .....

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1) of the Income Tax Act, 1961, it is mandatory for every company to furnish a return of his income during the previous year on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.As demerger scheme was not sanctioned by the Hon'ble Rajasthan High Court before the due date of filing of Income tax return, and at the time of filing of return we could not assumed that whether High Court will sanction t .....

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10 above. While filing of Income tax return we have neither concealed any income nor furnished any inaccurate particulars of such income, we have just filed the ITR based on the status of the company and the provision of Income Tax Act applicable at the time of filing of return. Therefore, our case is not the case of imposition of penalty u/s 271(1)(c).of the Income Tax Act. 12. Explanation 1 of 271(1)(c) - Where in respect of any facts material to the computation of the total income of any pers .....

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he 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. For the application of clause (B) to explanation 1, the following three conditions must cumulatively be satisfied: (1) The assessee fails to substantiate the explanation offered by it and (2) The assessee fails to prove that such explanation is bona fide and (3) The assessee fails to disclose all the f .....

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able imposition of penalty u/s 271(1)(c).of the Income Tax Act. For the application of clause (B) to explanation 1to sec. 271(1)(c), the following three conditions must cumulatively be satisfied: (1) The assessee fails to substantiate the explanation offered by it and (2) The assessee fails to prove that such explanation is bona fide and (3) The assessee fails to disclose all the facts relating to the same and material to the computation of his total income. The Madras High Court, in A.V. Thomas .....

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, in A.V. Thomas & Co. (India) Ltd v. CIT (1966) 59 ITR 499 (Mad) analysed that when particulars of income furnished in the return of income are not correct resulting in understatement of income, it may be a case of inaccurate particulars of income. In furnishing its return of income, as assessee is required to furnish particulars and accounts on which such returned income has been arrived at. Any inaccuracy made in such books of account or otherwise which results in keeping off or hiding a .....

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It does not extend to subjective areas such as the taxability of income, admissibility of a deduction and interpretation of law. The making of an incorrect claim does not amount to furnishing inaccurate particulars. Both the expression and 'concealment of income' and "furnishing of inaccurate particulars" indicate some deliberation on the part of the assess, though the word "deliberately" and the word willfully are no longer part of statute. Mere omission or negligen .....

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amp; Loss Account for the year 2005-06, was prepared on dated 15.06.2006, without considering the effect of demerger of textile division and put up a note in Notes to the Accounts of statutory Audit report to that effect. - In absence of sanction from High Court for demerger before the due date of filing of Income tax return, It can not be presumed that whether Demerger Scheme will be sanction by the High Court or not or will be sanction with or without the any change. - Due to mandatory provisi .....

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arate letter from time to time. We have disclosed all the facts relating to not considering the demerger in the computation of total income. - While filing of Income tax return assessee neither concealed any income nor furnished any inaccurate particulars of such income, we have just filed the ITR based on the status of the company and the provision of Income Tax Act applicable at the time of filing of return. - The intension of the company was bona fide and not to avail any brought forward loss .....

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and circumstances disclose sufficient cause or reflects a bona fide belief on the part of the offender in the matter of the commission of the breach of the provisions of the Act, then a liberal attitude towards the assessee is necessary. In CWT v. Kumari Kavitha Goenka (1979) 119 ITR 974, 978-9 (Mad.) No penalty unless there is a deliberate attempt: Mere omission on part of assessee does not amount to concealment and if no supportive evidence are available to prove that it was a deliberate attem .....

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of the transaction of the income and under ignorance of the provisions of the Act of 1961 has not offered that amount of tax, in such cases, penalty should not be imposed. In such cases rather it is the duty of the Assessing Officer to ask for further details and tax the income if it is liable to tax. In the instant case, the assessee had shown long-term capital gain and claimed exemption, but the transaction had been disclosed in the return. There was no concealment of income and penalty could .....

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ry case of nonpayment or short payment of duty regardless of conditions exclusively mentioned in the section for its application." - The Mumbai Tribunal in its another decision on 20.03.2009 in the case of VIP Industries v. ACIT 21 DTR Mum Tri 153 : AIT-2009-122- ITAT, has held that mere confirmation of addition in quantum proceedings cannot, perse, lead to confirmation of levy of penalty. The Dharmendra Textile Division is confined to conclude that mens era is not essential for invoking pe .....

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ry obligation u/s 139(1) is to give correct and complete information with the return of icome. If this is complied with then there is no contravention which can attract even a civil liability. The fact that additions and disallowance are made by the A.O. does not mean that there is a breach of obligation. The proposition that just because penalty u/s 271(1)(c) is a civil liability, it must mean the penalty can automatically be levied on the basis of any addition to income, is not correct. - Dhar .....

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ncealment of income committed at the time of filing of original Income Tax Return and as per the law on the date of filing of return. Whereas the penalty u/s 271(1)(c) cannot be imposed in our case as demerger scheme was not sanctioned by the Hon'ble Rajasthan High Court before the due date of filing of Income tax return, and at the time of filing of return we could not assumed that whether High Court will sanction the demerger or not? and it was mandatory for us to file Income Tax Return be .....

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have furnished inaccurate particulars of income while filing the original income tax return. The law applicable is law as it stood on the date of filing of the return and not on the date of passing the penalty order - Jain Bros. V. Union of India (1970) 77 ITR 107 (SC). The Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC) has held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceeding, a .....

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minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Mere technical breach should not ordinarily attract penalty: Penalty will not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure .....

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CIT v Harsiddh Construction Pvt. Ltd. (2000) 244 ITR 417 (Guj.)). 2. It has not been disputed by lower authorities that assessee was not intimated by the resulting company that they have filed Revised Income Tax return after the demerger effect and also our Manager (Accounts) inadvertently forgot to file the revised Income Tax Return. Therefore, during the assessment proceedings we have accepted and agreed to buy the peace with the department that the losses pertaining to Textile Division may be .....

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Court) : It has been held that penalty U/s 271(1)(c) is not mandatory penalty its to be levied only when concealment of income and inaccurate furnishing of particulars are proved. We want to cite here a very important recent judgement of the Hon'ble Supreme Court wherein it has been decided that merely making a not sustainable claim in law does not lead to furnishing incorrect particulars. The argument of the revenue that submitting an incorrect claim for expenditure would amount to giving i .....

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e penalty u/s 271(1)(c). That is clearly not the intention of the Legislature. Further reliance is placed on: J.K. Jajoo Vs. CIT (1980) 181 ITR 410 (MP) 083 CTR (MP) 041 : Held from the mere fact that a claim for certain expenditure is rejected it cannot be held; that the claim for expenditure made by the assessee was false or inaccurate to his knowledge or was as a result of gross negligence. Therefore the tribunal was not justified in holding the assessee was guilty of concealing the particula .....

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leness of expenditure does not amount to concealment. CIT v. Cafco Syndicate Shipping Co. (2007) 294 ITR 134 (Mad.): Mere addition of income by disallowing expenses is not concealment of income - 2.5 Ld. AO, however did not accept the reply of the assesse and imposed the impugned penalty by following observations: "Submission of assessee has been considered however, it is not acceptable in view of following discussion. Assessee relied upon various decisions of Hon'ble Courts, however, t .....

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f income, whether the resulting company informed or not about claim of losses shows that company deliberately concealed true income, therefore, penalty is inevitable in this case on the issue of loss related to demerger, further assessee company said that company claimed loss only for the relevant year, in the next year company reduced loss of resulting company, however it is relevant to say that in the next year company not offered any additional tax on account of losses claimed in assessment y .....

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concealed income nor filed inaccurate particulars of income, however, it is worthwhile to mention that on the date of notice, isued u/s 148, assessee was liable to file revised return, however, company did not file revised return of income. It shows that if reassessment was not done in the case of assessee, company never pay tax on loss related to resulting company. In this case, it is very clear that assessee hide true particulars of income. Hence, explanation of the assessee is neither bona f .....

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essors (2008) Taxman 65 (SC). Penalty u/s 271(1) ( c ) is civil liability and for attracting such civil liability, willful concealment is not an essential ingredient. Also, it is held that in the case of Raghuveer Soni vs. ACIT (2002) 258 ITR 239 by Rajasthan High Court that if in addition to failure to substantiate the explanation, the assessee also fails to prove that the explanation furnished by him was bona fide and that he has disclosed all material facts necessary for assessment then Expla .....

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2/- Maximum penalty leviable @ 300% of tax evaded ₹ 22400256/-" 2.6 Aggrieved assessee preferred 1st appeal challenging the imposition of penalty and contended that: There has been complete and full disclosure of all relevant facts and documents by the assessee, even before the assessment was taken up for scrutiny. The most important aspect of the entire matter is that it is not even the case of the A.O. that the return of income filed by the assessee for A.Y. 2006-2007-which has to b .....

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have concealed the income / filed inaccurate particular of income vis-a-vis the return of income filed by him. Any subsequent conduct of an assessee cannot change the position in this regard. Just as any act on the part of the assessee post filing of his return of income-whether by way of surrender of income or otherwise - does not absolve him from the charge of this penalty if, in the return of income filed, he had concealed income / filed inaccurate particular of income, similarly, an act of .....

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circumstances, it is clear that there was no concealment / filing of inaccurate particulars vis-a-vis the return of income so filed. Another important aspect is that neither any fact has been found to be untrue nor A.O. has discovered any new fact. In other words, the penalty has been levied on the basis of the facts which were brought on record by assessee only, before even the assessment or reassessment proceedings were initiated. The facts clearly depict that there was neither any attempt no .....

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. This negates any probability of the intention to conceal income / file inaccurate particulars of income. Even after initiation of the assessment proceeding, the assessee again put all the facts on record in details. The assessee also gave reasons / explanation for non-filing of a revised return due to inadvertence. Upon realizing the unintentional omission, the assessee readily and immediately accepted the mistake. The explanation of the assessee is supported by host of direct and circumstanti .....

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hing was on record filed by none other than the assessee himself. Reliance was placed on: Ms. Madhushree Gupta vs. Union of India 317 ITR 107 (Del)] CIT vs. Rampur Engineering Co. Ltd. 309 ITR 143 (Delhi)(FB)] CIT vs. Ram Commercial Enterprises Ltd. 246 ITR 568 (Del)] Global Green Co. Limited vs. DCIT {I.T.A 1390/Del/2011] It is undisputed that on the date of filing the return, the assessee had completely and accurately disclosed all the particulars of its income. Addl. CIT v. Prem Chand Garg 24 .....

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306 (SC)] CIT v/s. Reliance Petroproducts P. Ltd. [(2010) 322 ITR 158 (SC)] T. Ashok Pai v/s. CIT [(2007) 292 ITR 11 (SC)] Mahadeswara Movies vs. CIT (1983) [144 ITR 127 (KAR)]} (iii) The assessee had disclosed all the material information relating to the computation of income. Further, there is no independent finding on the part of the AO. In fact, he has relied completely on the disclosures made by the assessee in its return and submissions. 2.7 Ld. CIT(A) however confirmed the penalty by fol .....

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effective from 16- 10-2005. (iii) The Hon'ble High Court of Rajasthan approved the scheme vide its order dated 09-02-2007. (iv) The assessee had time to file revised return till 31-03- 2008. However, no revised return was filed. (v) The assessee informed the AO on 31-1-2006 that as soon as the scheme of demerger was approved it would file revised return. However, no revised return was filed. (vi) The assessee submitted a copy of letter intimating the A.O. alongwith copy of order of Hon'b .....

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ee cannot be treated as an assessee who has concealed particulars of income or concealed its income. The facts of the case requires a different approach as this is not a simple case where we can decide the issue on the basis of original return itself. This is a case of demerger and as soon as the scheme is approved by the Hon'ble High Court, the assessee was required to complete various formalities before various authorities e.g. Registrar of Companies etc. The assessee was also required to .....

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o escape penalty u/s 271(lj(e).[in case it was caught] and not to pay taxes by filing revised return. In my opinion, the assessee has deliberately avoided filing of revised return and payment of taxes, and therefore its a fit case for levy of penalty u/s 271(l)(c) of the I.T. Act. The penalty of ₹ 75,00,000/ (roughly 100% of tax sought to be evaded) is confirmed. The assessee also raised the issue of recording "satisfaction" before initiating penalty proceeding. In view of sec 27 .....

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essee concealed anything or furnished inaccurate particulars of income. Relevant details were filed in physical form as well as notes in e return wherever possible for the assesse. Thus there is no issue on the undisputed facts that assessee made complete and full disclosure of all relevant facts, circumstances and documents even before the assessment was taken up for scrutiny. 2. The entire basis for imposition of penalty hinges on one aspect that assesse did not file the revised return; this i .....

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inaccurate particulars. 3. It is a fundamental requirement of law that allegation about concealment penalty or imposition thereof and filing of inaccurate particulars is always related to the particulars disclosed along with return of income filed by assesse. It has been hold so by various Hon'ble Courts by way of plethora of judgments. In other words, for levy of penalty it should be demonstrated by ld. AO that assessee in the return of income filed by it has either concealed the income or .....

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n on the part of the assessee cannot, attract concealment penalty, if all the relevant facts, information and record is supplied by the assesse in returns of income for AYS 2006-07, 07-08. Besides when the scheme is approved by High Court the representative of the income tax department is also heard. Thus the entire proceedings related to demerger scheme were in public domain, within the knowledge of the department by way of copious quantity of documents which were filed not on one occasion but .....

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ny income or file any inaccurate particular of income taking into account preponderance of probability, human conduct, surrounding circumstances or reasonable logic. 7. More importantly, it is nowhere alleged that assessee has taken any undue advantage as it has not claimed any set off of such losses in the subsequent year i.e A.Y. 2007-2008. Since the assesse desired to close the issues it has paid all the due tax demand in this behalf. Thus there is no loss whatsoever to revenue and out right .....

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)(a), which is neither initiated nor attracted. Thus the penalty has been imposed for not filing a return and unfounded allegation that assessee filed inaccurate particulars in return of income dtd. 27-11-06 is baseless as all the details about pending demerger application were furnished and mentioned. There can be no mistake in this return as the demerger was not approved by the time of filing of return or the assessment. Having offered a satisfactory explanation in this behalf, assessee had di .....

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roceedings time and again. 9. A legal plea is also taken that proper satisfaction has not been recorded by ld. AO in while initiating the penalty proceedings as in terms of section 271 (1) (c): (i) Neither assessment order nor the show cause notice mentioned as to with respect to what item of addition / disallowance the penalty proceedings were initiated. (ii) There was no proper recording of satisfaction , within the meaning of section 271 (1) (c) and as laid down by courts. (iii) There is vagu .....

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ncealment / filing of inaccurate particulars (iv) It is undisputed that on the date of filing the return, the assessee had completely and accurately disclosed all the particulars of its income. Addl. CIT v. Prem Chand Garg [(2009) 24 DTR 513 (TM) (Delhi) The assessee has offered all the necessary explanations with substantive evidence before the A.O. from time to time, the veracity of which have not been doubted. The sole contention of the A.O. is that the assessee failed to file a revised retur .....

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f income. Further, there is no independent finding on the part of the AO. In fact, he has relied completely on the disclosures made by the assessee in its return and submissions. (vii) Reliance was placed on: Dilip N. Shroff V/S. JT. CIT [(2007) 291 ITR 519 (SC)] Kanbay Software India (P) Ltd. vs Dy. CIT 22 DTR 481 (Pune) No satisfaction within the meaning of section 271 (1) (c) Ms. Madhushree Gupta vs. Union of India 317 ITR 107 (Del) In this case, the constitutional validity of section 271(1B) .....

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held that the satisfaction of Assessing Officer that case may deserve imposition of penalty should be discernible from order passed during course of assessment proceedings. CIT vs.Rampur Engineering Co. Ltd. 309 ITR 143 (Delhi)(FB)] The High Court held that the power to impose penalty under section 271 of the Act depends upon the satisfaction of the Income-tax Officer in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded his satisfact .....

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ngs u/s 271(1)(c) would be withoutjurisdiction. CIT vs. Dajibhai Kanjibhai [1991] 189 ITR 41 (Bom) CIT vs. Vikas Promoters Ltd. [2005] 277 ITR 337 (Del) CIT vs. Ram Commercial Enterprises Ltd. 246 ITR 568 (Del) The High Court held that merely because the penalty proceedings have been initiated, it cannot be assumed that such a satisfaction was arrived at in the absence of the same being spelt out by the order of the assessing authority. Where the assessment order did not record the satisfaction .....

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ed a word that there was furnishing of inaccurate particulars or concealment of income. He made the addition merely on the ground that the assessee was not able to produce any evidence for writing off of the amount in the books of account. As the satisfaction that the assessee had concealed income or furnished inaccurate particulars of such income is not discernible from the assessment order, the penalty order suffers from lack of jurisdiction to impose penalty. For concluding whether there was .....

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ly it is with reference to the return of income and at that time it is to be seen whether there was concealment of income or furnishing of inaccurate particulars thereof in the return of income chargeable to tax. No penalty when a bonafide claim is rejected It is also a fundamental principle of penalty that no penalty can be levied just because a claim preferred by the Assessee is disallowed. Reliance, in this regard, is placed on the following decisions, among others: (1) PWC Pvt. Ltd. vs. CIT .....

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absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. (2) CIT v/s. Reliance Petroproducts P. Ltd. 322 ITR 158 (SC)] Section 271 (1) (c) applies where the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income . The words inaccurate particulars mean that the details supplied in the return are not accurate, not exact or correct, .....

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the income of the assessee. If the contention of the Revenue is accepted then in case of every return where the claim made is not accepted by the AO for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intent of the Legislature. (3) T. Ashok Pai v/s. CIT [(2007) 292 ITR 11 (SC)] If an explanation given by the assessee with regard to the mistake committed by him has been treated to be bona fide, the question of his failure to discharge his burden in te .....

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with return of income. This mistake readily accepted by assessee as inadvertent one. No attempt was made by the assessee to suppress any material facts. Further, in the past no such mistake had occurred was a relevant circumstance to be taken into consideration, and there was nothing improbable in the explanation that the mistake was due to inadvertence. Therefore, the levy of penalty was not justified. IF THE ASSESSEE DISCLOSES ALL MATERIAL INFORMATION OF HIS INCOME, HIS ONUS STANDS DISCHARGED. .....

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Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income. Kanbay Software India (P) Ltd. vs Dy. CIT 22 DTR 481 (Pune)] As long as the information given in the income tax return is correct and complete to the best of assessee's knowledge and belief, it cannot be said that the statutory obligation under section 139(1) is contravened which, even for a civil liability fo .....

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he issues in question. There is no provision u/s 271(1)(c) for imposing penalty for not filing a revised return qua which all the particulars are times and again filed by the assesse and are in the possession of the department. Besides the facts have not been disputed. None of the authority below in any way demonstrated much less even indicated that assesse furnished any inaccurate particulars or concealed any income. There is no scope of this penalty given the undisputed facts, circumstances an .....

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filing of return for AY 2006-07, assessment proceedings and in AY 2007-08 also. When the order of Hon'ble Rajasthan High Court approving the scheme of demerger was passed, the same was also duly and promptly filed by the assesse with ld. AO. These facts have not at all been disputed by the department in any manner. ii. The allegation of concealment or inaccurate particulars has not been established by the ld. A.O. on discovery of any new fact, information or inquiry. The entire adverse infer .....

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not claim any set off of loss. Thus we see no justification in alleging that assesssee has concealed any fact or furnished inaccurate particulars in any returns of income. iii. a multitude of undisputed facts mentioned above clearly demonstrate that there were no effort much less intention to conceal any particulars or file any inaccurate particular of income by assessee testing it on the touchstone of preponderance of probability, human conduct, surrounding circumstances or reasonable logic. iv .....

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considered in harmonious manner. Considering all the aspect we are not in agreement with authorities below that assessee concealed or filed inaccurate particulars of income so as to be liable for impugned penalty. v. Having filed all the relevant details on several occasions whose veracity is not at all challenged by the revenue, the sole issue remains whether the impugned concealment penalty is legally or factually leviable for not filing of a revised return which was undertaken by assesse. In .....

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idering the entirety of facts, record, assessee's submissions, judicial precedents and applying proper discretion. Any penalty imposed without proper care and in an arbitrary manner has a propensity to become untenable. vi. There is no provision in the IT Act for levying concealment of income u/s 271(1)(c) for non-filing of a return. The relevant provision is sec. 271(1)(a), which is neither initiated nor attracted. Thus the penalty has been imposed for not filing a return and unfounded alle .....

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