TMI Blog2006 (9) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 143 (3) was completed by the AO ata reduced loss of Rs.11,38,27,726/- vide his order dated 3.3.2004 AO also initiated proceedings for concealment of income and the assessee was held guilty of furnishing inaccurate particulars of income under section 271 (1) ( c) of the Act vide order dated 30.9.2004 and a penalty of Rs.1,33,03,000/- was imposed on it. A perusal of the order of the AO shows that penalty was imposed on the assessee in respect of disallowances made by the AO in the relevant assessment year and also as because assessee had filed revised return of income deleting some of the losses/ expenditure. 4.The assessee in the revised return had deleted the following expenditures:- "A. Items in respect of which the assessee revised its return of income: Rs (i)Advertisement and brand promotion expenses 48,30,927.00 (ii)Compensation paid to Gemini Distilleries Private Limited 10,80,000.00 (iii)Depreciation on vehicles, plant etc. . 42,418.00 (iv) Foreign Exchange loss 83,81,000.00" 5.The assessee had claimed an expenditure of Rs. 2 crores in the relevant year as it had paid a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn filed by the assessee also contained self explanatory notes. A perusal of these explanatory notes shows that the assessee had given reasons as well as reference to judicial pronouncements for claiming the expenditure. It could not be said that the claims made by the assessee, which ultimately came to be rejected, suffered from any suppression of facts or deliberate concealment of income or particulars. There was no finding in the assessment order of the AO that the assessee did not offer complete particulars or details whenever called for. It was not a case of non disclosure of any material which was considered necessary by the AO. As far as bonafides in filing revised returns was concerned, Tribunal observed that an appeal of the assessee involving similar expenditure in relation to earlier assessment year 1998-1999 was pending before CIT(A) and an order in respect of all four issues was passed by CIT(A) in 2002. The assessee accepted the order of CIT(A) on the four issues and revised its returns on 28.3.2003. The bonafides of the assessee can be seen from the fact that the assessee had made an application on 4.2.2003 to the assessing authority seeking permission to rectify t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62) REPORTED in 44 ITR 739 (SC), in absence of satisfaction recorded by the AO the penalty proceedings were bad in law. 9.Even on merits Tribunal observed that there was no justification for imposing penalty when assessee had disclosed all facts. The payment of ESI and provident funds was made within the extended grace period and there was no adequate reason to disallow the amount. Claim of assessee of Rs. 2 crores as expenditure was bonafide and disallowance of Rs.1.75 crore was due to difference in opinion between assessee and AO. 10.We have heard learned counsel for the parties and perused the record. It is argued by Ms.Prem Lata Bansal, counsel for the appellant that filing of a revised return was not a mitigated factor to exonerate the assessee from penalty provisions. An assessee is supposed to file a correct return of income at first instance and any incorrect return of income claiming false deductions which are disallowed by the AO, should be considered as concealment of income. A revised return withdrawing the false claims amounted to an admission on the part of the assessee of furnishing incorrect particulars of its income. The Tribunal was wrong in holding that suo-m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied. It is submitted that in the present case the Assessing Officer at the foot of Assessment Order had clearly indicated that penalty proceedings under section 271 (1) (c ) of the Act were being initiated separately. This pre-supposes that the Assessing Officer had arrived at necessary satisfaction. Support is sought from Angidi Chettiar case (supra). 12.It is submitted that mere disclosure of the information by the assessee in the audited does not mean that the assessee has disclosed all particulars. The assessee is supposed to show his income correctly and is not allowed to claim frivolous expenditure. 13.The respondent on the other hand has taken support from the order of CIT-ITAT and argued that the penalty was rightly struck of. There was no concealment of income by the assessee. It is submitted that the assessee had filed income tax return for 1998-1999, 1999-2000 and 2000-2001 claiming certain expenses as admissible deductions. The assessment order in respect of 1996-1997 was received by the assessee after his filing original return for years upto 2001-02, in which some of the expenses were disallowed. On receiving this order, the assessee sought rectification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter Oxford Dictionary III Edition, Vol-I is "in law the intentional suppression of truth or fact known, to the injury or prejudice of another". Supreme Court further observed that mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income, unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assess to hide or conceal the income so as to avoid imposition of tax thereon. In order that a penalty under section 271 (1) (iii) may be imposed, it has to be proved that assessee has consciously made the concealment or furnished inaccurate particulars of his income. 15.It is clear from the law laid down by the Supreme court that concealment must be accompanied with the intention of the assessee to evade his tax liability. The assessee in this case had uniformly claimed expenditure against four heads in three assessment years. When the appeal against the order of Assessing Officer before CIT (A) in respect of assessment order 1998-1999 failed the assessee instead of prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases where an expenditure is disallowed by the Assessing Officer and it is allowed by the CIT (A). It is again disallowed by the ITAT and in appeal allowed by the High Court and may be disallowed by the Supreme Court. Merely because there is difference of opinion for allowing or disallowing the expenditure between the assessee and Assessing Officer, it cannot be said that assessee had intention to conceal the income. The filing of the revised return excluding some of the disallowed expenditure and claiming expenditure of Rs. 2 crores which was actually spent by the assessee in the relevant assessment year as deduction, does not amount to concealment or furnishing inaccurate particulars. The assessee had given all particulars of expenditure and income and had disclosed all facts to the Assessing Officer. It is not the case of the Assessing Officer or the appellant that in reply to the questionnaire of the Assessing Officer, some new facts were discovered or Assessing Officer had dug out some information which was not furnished by the assessee. 17.We find that appeallant's contention of concealment of income by the assessee or furnishing of false particulars by the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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