Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 710 - ITAT DELHI

2016 (5) TMI 710 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - disallowance or setting up of the business of manufacturing and export of garments - Held that:- By applying the parameters laid down by Hon’ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton & Ginning Factory ( 2013 (7) TMI 620 - KARNATAKA HIGH COURT ), it appears that there was full disclosure by the assessee, however the expenditure claimed was inadmissible in law. Respectfully following the ratio laid down above we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome from House Property” and further claimed depreciation. The assessee in such a situation has filed wrong particulars of income, which is apparent from the face of the record. We, therefore, confirm the penalty levied by the ld. AO on the disallowance of the depreciation. - Decided partly in favour of assessee - I.T.A .No.6128/DEL/2013 - Dated:- 8-4-2016 - SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Appellant : Shri V.P. Bansal, FCA For The Respondent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ore or at the time of hearing. 2. Brief facts of the case are as under: 2.1. The assessee was engaged in the business of manufacturing and exports of Readymade Garments. The return of income for the A.Y. 2008-09 was filed on 30.09.2008 declaring an income of ₹ 3,63,484/-. The same was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and the assessment was completed u/s 143(3) vide order dated 30.11.2010 by the AO at the income of ₹ 10,08,934/-. The AO .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tivity during this period too. The assessee has booked certain expense in its P&L account, including depreciation of ₹ 2,80,521/- on the building let out for rent, which in any way is allowable as per provisions of the I.T. Act, 1961. The ld.AO disallowed the claim of business loss when no business activity has been performed during the year and the depreciation claimed on the let out building. 2.3. During the assessment proceedings, the AO initiated penalty proceedings u/s 271(1)(c) f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d that penalty u/s.271(1) (c ) has been levied on two grounds which are; (i) the assessee had claimed expenses under the head business since the company was formed with the object of setting up of unit of manufacturing and export of readymade garments. The AO disallowed the expenses so claimed on the basis that the project could not be implemented; (ii) assessee had claimed depreciation against a property from which rental income was earned for the year under consideration. 6.1. The ld. AR submi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aimed the rental income earned from the immovable property under the head Income from House Property . He thus submitted that claiming of depreciation on the immovable property could not be treated as a bonafide mistake. The ld. DR placed reliance on the decision of Hon ble Supreme Court in the case of Union of India (UOI) vs. Dharmendra Textile Processors reported in 306 ITR 277. Ld. DR submitted that the explanation appended to section 271(1)(c) of the Act indicates a strict liability on the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provision u/s. 271(1)(c), is reproduced herein below: Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or Explanation 1.-Where in respect of any facts material to the computation of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

him, then, the amount added or disallowed in computing the 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. 8.1. From the said provision, it is apparent that, if the ld.AO in the course of assessment proceedings is satisfied that, any person has concealed the particulars of income or furnished inaccurate particulars of such income, then he may levy pena .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hown the income in its return or in its books of accounts. 8.2. Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton & Ginning Factory, reported in 359 ITR 565 has discussed the circumstances in which the section 271(1) (c ) could be levied. Hon ble Court held that; …………… After insertion of Explanation 1 to section 271(1)(c ), the law on concealment and penalty has become stiffer. The Explanation as it stands now is a complete code having the f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Therefore, Explanation 1 understood in the proper context, in particular, clause (c ) of sub-section (1) of section 271 makes the intention of the Legislature manifest. It clearly sets out when penalty is leviable and when penalty is not leviable. The condition precedent for levying the penalty is the satisfaction of the authority that there is a concealment of the particulars of the income or inaccurate particulars are furnished to avoid payment of tax. 9. Let us analyse the disallowance made .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version