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2016 (6) TMI 847

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..... sting is found to be false. The assessee has to show the reason why he believed at the time he filed his balance sheet, it was true. No such attempt was even made. It was next contended that no claim was made in the return of income and therefore imposition of penalty under Section 271(1)(c) of the Act cannot be sustained. We are unable to appreciate the above submission. The fact is that in terms of Section 139 of the Act a return of income under the Act has to be filed along with the balance sheet and profit and loss account. In its absence the return of income is defective. Thus, same are to be considered as a part of the return of income. Further by showing a non existing liability as an existing liability, in the subject assessment yea .....

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..... neous considerations while ignoring relevant material and considerations ? 3. For the subject assessment year in the quantum proceedings, the Assessing Officer made an addition of ₹ 1.26 crores to the total income declared by the appellantassessee. This addition was in respect of trade liabilities which had ceased to exists and represented income in terms of Section 41(1) of the Act. Being aggrieved the assessee carried the issue in appeal to the Commissioner of Income Tax (Appeal), who confirmed the same. On further appeal, the Tribunal reduced the addition under Section 41(1) of the Act from ₹ 1.26 crores to ₹ 1.05 crores. The assessee carried the issue in further appeal to this Court. This Court by order dated 16t .....

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..... ppellant. 5. On further appeal, the Commissioner of Income Tax (Appeals) by order dated 3rd February, 2011 upheld the order of the Assessing Officer imposing penalty. It held that in quantum proceeedings it was held that trading liability ceased to exist during the subject assessment year. Thus the same led to ₹ 1.05 crores being taxed, under section 41(1) of the Act. By not disclosing the same, the assessee had furnished inaccurate/incorrect/false particulars of income leading to concealment of income. 6. Being aggrieved the assessee preferred further appeal to the Tribunal. The impugned order of the Tribunal recorded the fact that the respondentassessee was unable to prove genuineness of the amount shown as outstanding liabili .....

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..... s Court dated 16th December, 2010 from which a Special Leave Petition filed by the assessee before the Apex Court was also dismissed. Thereafter Mr.Joshi contended as under : (a) the penalty proceedings are different from assessment proceedings and addition in quantum proceedings will not ipso facto result in imposition of penalty; (b) the fact that liabilities was shown in their balance sheet was itself sufficient for purpose of establishing that the same was bonafide claim, consequently, no penalty is impossible; and (c) For invocation of Section 271(1)(c) of the Act to impose penalty the sine qua non is a claim being made in the return of income. It is stated that no claim was made in return of income, the disclosure of existing .....

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..... return of income under the Act has to be filed along with the balance sheet and profit and loss account. In its absence the return of income is defective. Thus, same are to be considered as a part of the return of income. Further by showing a non existing liability as an existing liability, in the subject assessment year, the attempt was to escape offering of the ceased liability as income obliged to do under Section 41(1) of the Act. Thus, not offering to tax, the above ceased liabilities would by itself amount to furnishing inaccurate particulars of income leading to escapement of income from tax. 9. Moreover, as noted above, in the appeal filed by the appellant from the order of Tribunal in quantum proceedings under Section 260A of th .....

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