TMI Blog2013 (7) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... position to discharge the burden that that lay on it under Explanation to section 271 (1) (c) of the act. (ii)Not appreciating/taking into consideration the detailed oral as well as written submission made before him. 1c.It is submitted that in the facts and the circumstances of the case, and in law, the order of the Assessing Officer levying penalty as well as the order of the CIT (A) are bad, illegal and void. Without Prejudice to the above 2.The CIT (A) erred in coming to the conclusion that the claim made in the Return of income was found to be incorrect or false resulting in concealment of income on its part and thereby confirming penalty levied by the Assessing Officer under section 271 (1) (c) of the act. 3.It is submitted that in the facts and circumstances of the case, and in law, no concealment penalty was leviable. 4.The assessee craves leave to add, delete and/or modify any of the grounds of appeal at the time of hearing. Effective ground of appeal filed by the assessee company is about penalty levied by the AO u/s. 271 (1)(c)of the Act that was later on confirmed by the First Appellate Authority(FAA). Facts of the case : 2.During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the liabilities in question shown as outstanding at the end of the year were really not existing and upheld the addition to the extent of ₹ 1,05,79,672. It rejected the alternate plea of the assessee that addition, if any, could be made in the earlier year as liabilities were coming from the earlier year on the ground that as per its own admission the liabilities existed in earlier years and they can be treated as income only in the year they ceased to exist. 2.1.1.Meanwhile,AO had issued a notice for levying penalty u/s.271(1)(c) of the Act for furnish - ing inaccurate particulars of the income and thus concealing income for the AY under considera - tion.After considering the submissions of the assessee held that two appellate authorities had confirmed that the liabilities had ceased to exist,that the assessee had shown non-existing liabilities which could be found out only after enquiry in course of the assessment,that the assessee had made wrong claim thereby furnishing inaccurate particulars leading to concealment of income.He, therefore, levied the minimum penalty of ₹ 38,71,366/-.Assesee preferred an appeal before the FAA.After taking in to consideration t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after considering the facts of the case, in quantum appellate proceedings, the assessee had not produced any evidence, that it was A.Os efforts that prove the non-genuineness of the transactions. 2.3.We have heard the rival submissions and perused the material on record.As far as facts of the case are concerned it is clear from the quantum order of the Tribunal that assessee had not filed any supporting evidence with regard to the liabilities.Out of the total liabilities of 1.26 Crores,AO found that in the following cases assessee had failed to produce any proof to prove the genuineness of the transactions: Karamchand Chunilal- Rs.85,41,829/- SSV Developers ₹ 5,75,000/- Outstanding expenses- Rs.12,49,499/- Bad delivery suspense- ₹ 1,32,093/- Travel Consultant- ₹ 50,000/- M/s Creditors- ₹ 29,051/- We are aware that penalty proceedings are different from the assessment proceedings and an addition in quantum ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as income u/s. 41(1).It has been explained that liabilities were pending due to disputes of clients with the custodian. The assessee has also raised dispute as to adequate opportunity of hearing or cross examination of the parties. 4.1.We first deal with the issue regarding opportunity/cross examination. We find from the records that the AO made inquiries regarding the creditors at the addresses given by the assessee and the results of enquiry were duly communicated to the assessee on 02.11.2007 on which date the assessee had been asked to prove the existence and genuineness of the credit liabilities. Time had been allowed till 16.11. 2007,but there was no response. The AO thereafter, vide letter dated 16.12.2007 had given final opportunity to prove the existence of the creditors in response to which the assessee had made certain submissions as mentioned in para 2.1 earlier without any supporting evidence to show that the liabilities were actually existIng.The assessee neither filed confirmations nor gave the current addresses of the creditors.It cannot thus said that the assessee had not been given adequate opportunity of hearing. The assessee has also raised the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d make inquiries in these cases. Conclusion has therefore to be drawn in such cases after considering the facts and the circumstances of the case.It is a settled legal position as held by the Hon ble Supreme Court in the case of Durga Prasad More(82ITR550) that Revenue authorities are entitled to look into surrounding circumstances to arrive at any finding of factual or real situation and the Courts have to judge the material placed before them by applying the test of probabilities. The surrounding circumstances and material on record do not support the case of the assessee that the liabilities were existing in these cases at the end of the relevant year. Had there been genuine liabilities the creditors would have definitely made the claim and raised disputes, but no such - material or any correspondences have been produced. It does not conform to normal human conduct that a creditor will not make efforts to recover money receivable from a person and that the person will not be aware of the present whereabouts of the creditor if genuine liabilities were pending.Neither before the lower authorities nor even at this stage any material has been produced to show that any bonafide dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity which was not denied by the other party.In our opinion the case of Nirmala Dye Chem is of no help to the assessee.In the judgment of Reliance(supra)Hon ble Supreme Court,it was held that if there was difference of opinion between the AO and the assessee about a claim then only on that basis penalty could not be levied.In the case under consideration question is not about allowabiltiy of certain expenditure.In the matter of Reliance (supra)assessee had produced all necessary evidence with regard to the claim.But,in the present matter,as discussed earlier,a claim for liability was made for which no evidence was produced.We find that during penal proceedings, assessee was issued a notice asking him why penalty should not be levied.After considering explanation filed by the assessee, AO reached at the conclusion that assessee had made non-bonafide claim and thus he had made himself liable for levy of penalty. During the course of hearing, two queries were raised by the Bench-one of them was about the assessment year from which the disputed amounts were pending.AR was directed to throw light on the sequence of events that proved that the tax authorities were informed about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to the Sovereign.As the penalty u/s.271(1)(c) is a civil liability,so, willful concealment is not an essential ingredient for attracting it as is the case in the matter of prosecution under section 276C of the Act.We find that twin conditions for levying penalty u/s.271(1) (c) of the Act;i)amount in question to be part and parcel of the income of the assessee ii)filing of inaccurate particulars/ concealing of particulars of such income;exist in the case under consideration.It is said that provisions of section 271(1)(c) have to be strictly applied in the larger interest of discipline in filing correct returns by the assessees. Assessees are entitled to claim various claims,but with a rider that same should be bona fide.Making a claim for a non existing liability,in our opinion,is an admissible evidence of furnishing of inaccurate particulars. A non genuine claim and debatable claim are two different concepts.When an unreal thing or untrue fact is projected or presented as true or genuine same is termed to bogus. Courts are unanimous that for a debatable claim assessee cannot be penalised,but when he make a bogus claim levy of penalty is justified.It is rightly said that a cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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