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2016 (7) TMI 244 - ITAT INDORE

2016 (7) TMI 244 - ITAT INDORE - TMI - Penalty u/s 271(1)(c) - inaccurate particulars of income by claiming expenses of inadmissible in nature and not showing income under proper head of income - Held that:- In assessment year 2002-03, we find that the assessee has claimed in the return of income that he has inherited this capital from his mother Smt. Sajjanbai. The assessee has added this amount in his capital account. The AO and the ld. CIT(A) has confirmed the same, but the I.T.A.T. has restr .....

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d the amount and he has inherited this capital from his mother. The assessee could not prove that he has inherited ₹ 5,49,542/-, but the Tribunal has accepted the fact that the assessee has inherited the capital from his mother. Therefore, we are of the view that the assessee has made his claim in his return of income and explained the facts. The same were not accepted by the authority, but the assessee’s claim was bona fide. Therefore, the claim has been accepted partly. Therefore, we are .....

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lty, because the assessee had agreed to this addition and surrender was made. When the assessee has surrendered this income, penalty has to be levied as per the decision of Hon'ble Supreme Court in the case of Mak Data Private Limited [2013 (11) TMI 14 - SUPREME COURT ]. Therefore, if the assessee agreed to surrender the income for mental peace, the penalty has to be imposed. Therefore, we confirm the order of the penalty on account of bogus expenses against interest income from M/s.Tirupati Sta .....

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Dated:- 2-5-2016 - Shri D. T. Garasia, Judicial Member And Shri B. C. Meena, Accountant Member For the Appellants : Shri Ravi Sarda, Advocate For the Respondent : Shri R. A. Verma, DR ORDER Per D. T. Garasia, J. M. This appeal by the assessee is directed against the consolidated order of CIT(A)-I, Indore, dated 05.02.2015 for the assessment years 2002-03, 2003-04 & 2004-05. 2. The brief facts of the case are that the assessee has filed return for assessment years 2002-03, 2003-04 and 2004- .....

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ts, he has claimed expenses and has reflected loss of ₹ 32,974/-, ₹ 49,488/- and ₹ 49,084/-. Such claim of the deduction was found to be inadmissible in nature and not deductible from such receipts. Penalty proceedings u/s 271(1)(c) were initiated after satisfaction on the grounds for furnishing inaccurate particulars of income by claiming expenses of inadmissible in nature and not showing income under proper head of income. 3. During the penalty proceedings, the show cause not .....

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nd any finding in the matter. In fact assessee has been-adopting this practice of preparing income & expenditure account right from beginning and showing income on that basis. None of the predecessors of the AO ever took objection on the assessee's practice of keeping such an account and disclosing income on that basis. A perusal of the said income & expenditure a/c will show that all expenses claimed therein are business expenses and none of them is either of capital nature or perso .....

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i Synthetics vs. CIT-(2008) 302 ITR 126 Guj Page 33-36 Any order passed in defiance of the law laid down by the Apex Court of country is nothing but only an illegal order liable to be quashed. Under article 141 of the Constitution of India, the law declared by the Supreme Court is binding on all within the territory of India. By judicial precedents, the law declared by the Higher Courts is to be followed by everyone subordinate to it and they cannot ignore it in initiation proceedings or decidin .....

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surrenders inadmissible nature expenses an agreed to include same in income and to pay tax on it and also requested your honours not to initiate penalty proceedings on the same. Surrender/agreed addition of income to buy peace or for other reason cannot constitute evidence of concealment of income with in the meaning of Section 271(1)(c) penalty proceedings and it is liable to be dropped. Relied on:- , (1) CIT vs. S. V. Electricals - (200S) 2741TR 334 MP . (2) CIT vs. Beta Napthol- (2005) 272 IT .....

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e to the extent of ₹ 99,719/- , ₹ 79,244/- and ₹ 80,965/-. 5. In the assessment year 2002-03, the assessee has submitted the statement of affairs, wherein he has shown the liability of ₹ 5,49,542/- payable to Smt. Sajjanbai. During the assessment proceedings, the assessee has admitted that Smt. Sajjan Bai was his mother. She has expired on 31st December, 1990. The assessee did not have any documentary evidence to show that his mother had any income. The matter travelled u .....

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ed to submit the details of gifts received. Shri Vinod Bangar attended on 20.11.2006 and stated that he does not have any capacity to give such gift and assessee himself has made gift deed and bank statement. Therefore, considering the overall position, the AO has levied the penalty of ₹ 1,30,000/-, ₹ 25,000/- and ₹ 1,00,000/- for assessment years 2002-03 and 2003-04. 6. The matter carried to the ld. CIT(A) and the ld. CIT(A) has confirmed the same. 7. The ld.Authorized Represe .....

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gularly in his statement of affairs, showing opening credit balance of Smt. Sajjanbai, who is mother of assessee. It is an inherited capital of Mother, shown after her death on 31/12/1990, which should have been included in asesseees capital immediately after Smt. Sajjanbai's death on 31/12/90 i.e. in the year1991. Carried forward amount of the previous year does not become an investment or cash credit of the relevant year. Copy of Statement of affairs for Accounting period 1998-99, 1999-200 .....

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s disclosed the entire facts before the authorities below without concealing any income. The assessee made a claim of deduction in the return of income and explained the facts but the same were not accepted by the authorities below and additions have been confirmed. Therefore, it is a case of mere disallowance of expenditure without bringing any adequate material against assessee to prove that assessee has concealed the particulars of income or has furnished inaccurate particulars of income. Ass .....

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u/s 148 on 13/02/06. (3) AO passed order on 18/12/06 on income of 9,41,018/- . (4) Being aggrieved appellant preferred an appeal before Hon'ble CIT(A), Indore, which was dismissed by order dated 25/06/2010. (5) AO issued show cause notice u/s 271 (l)(c) on 16/04/2012 and then passed order imposing penalty u/s 271(1)(c) vide order dated 21/05/2012. SI. No. Date Event 1. 18/12/2006 Assessment order under s. 143(3) was passed by the lTO,Dhar. 2. 25/06/2010 CIT(A)-I, Indore passed the order in t .....

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roceedings u/s 271(1)(c) on 16/04/2012 and passed order imposing penalty on 21/0512012 being time barred and liable to be quashed outright. The legal plea of the assessee is that the order of penalty under s. 271(1)(c) of the Act which was passed by the AO on 21/05/2012 is beyond the period of limitation that had expired on 31s t March, 2011 as prescribed by newly inserted proviso to sec. 275(1)(a) of the IT Act w.e.f. Ist June, 2003 for calculation of period of limitation with reference to the .....

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(A) is received whichever is later. In the present case, the CIT(A) passed the order on 22/06/2010, the penalty proceedings were initiated by the AO in 16/04/2012 and the penalty order was passed on 21/05/2012. The CIT(A) had passed the order on 25/06/2010 so the penalty order was to be passed within one year from the end of the financial year in which the order of the CIT(A). As such the penalty order was to be passed upto 31 st March, 20 I I. However, the AO has passed the penalty order levyin .....

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essed on 18/12/06 u/s 148 on income of ₹ 3,02,680/-. Copy of IT return is filed. Additions are for disallowance of expenses for ₹ 79,244/- and imposed penalty u/s 271(1)(c) for ₹ 25,000/- . Same arguments as pleaded above in A.Y. 2002-03 for penalty imposed. Ground No.3 :- Same arguments as pleaded for timebarred proceedings in A.Y.2002-03. A.Y.2004-05 :- ITA no. 540/Ind/ 2015 Ground no. 1 &2 :- Assessee filed his return declaring income of ₹ 1,88,416/- which was asse .....

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authorities below without concealing any income. The assessee made a claim of deduction in the return of income and explained the facts but the same were not accepted by the authorities below and additions have been confirmed. Therefore, it is a case of mere disallowance of expenditure without bringing any adequate material against assessee to prove that assessee has concealed the particulars of income or has furnished inaccurate particulars of income. Assessee made a bona fide claim of deductio .....

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are liable to be dropped being bona fide and venial in nature. Assessee had furnished all the details in its return were not found to be inaccurate nor could be viewed as concealment of income merely as claim not found acceptable to the revenue that itself would not attract Penalty u/s 271(1)(c). Relied on :- 1 CIT V s. Ratanchand Ramprasad - (1983) 139 ITR 64 MP Assessment proceedings can not be regarded as conclusive for purposes of penalty proceedings. Authorities to consider afresh all the .....

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ereby. Penalty cannot be visited if the details and particulars had been placed on record. Held that the assessee made the claim in its return of income, which the revenue authorities interpreted differently. 4 CIT vs. Balbir Singh - (2007) 304 ITR 125 P&H Page 32 - 34 That the assessee had disclosed all detailed particulars about his income which he had received claiming to be gift. The case did not fall within the mischief of section 271(1)(c) and it could not be concluded that the assesse .....

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ed, made addition. Penalty was imposed- CIT(A) confirmed action of AO-Held, assessee had furnished particulars of gifts in return of income filed by him-Assessee had furnished income-tax particulars as well as declarations for making gifts from donors along with their balance sheets furnished with income tax return. In view of judgment of Apex Court in case of CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC), penalty is not eligible-Appeal allowed. 6 Assistant C.I.T. Vs. Chandbibi S .....

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not amount to furnishing inaccurate particulars regarding the income 0: the assessee. By no stretch of imagination can the making of an incorrect claim in law tantamount to furnishing inaccurate particulars. 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 u/s 271(J)(c). The penalty levied u/s 271(1)( c) had been deleted Relying on CIT vs. Reliance Petro Products Ltd.(322 ITR .....

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-No interference warranted and penalty under s. 271 (J)( c) was not leviable.-CIT vs. Suresh Chandra Mittal (2000) 158 eTR (MP) 26: (2000) 241 ITR 124 (MP) affirmed 8 C.I.T. Vs. Agrawal Round Rolling Mills Ltd (2014) 88 CCH 036 SC 17/01/2014 Page 3 Penalty u/s 271 (l)(c)-Concealment of income-Assessee filed return of income declaring loss Return was selected in scrutiny on account of share application money received-Assessee could not furnish documents relating to some of applicants and surrende .....

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ent-Absence of mens rea - Tribunal has given reasons for accepting the factual version of the assessee and found that there was no mens rea as contemplated under s. 271(1)(c) for imposing the penalty-There is no good ground to upset the aforesaid finding of the Tribunal-s-Levy of penalty under s. 271(1)(c) rightly cancelled. Assessee having surrendered income and the Tribunal having given reasons for accepting the factual version of the assessee. It is noticed from the record of the case that it .....

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aid request was accepted by AO-Thereafter an exercise u/s 143(2) was undertaken and scrutiny of each and every item was made-In respect of two items of sundry credits, explanation offered by assessee was not found satisfactory-Assessee agreed for treating those two items as income and it paid tax-AO imposed penalty u/s 271 (1 )( c) in respect of two sundry creditors, rejecting assessees' explanation that he did not have any intention to conceal amounts, and two amounts were carried forward f .....

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o others, and in particular authorities under the Act fails or refuses to do so-It is then, and only then, that he can be said to have concealed and once factum of concealment is proved, his attempt to voluntarily disclose it does not save him-However, an inadvertent mistake, or a bona fide belief, as to classification, or character of an amount, cannot per se provide a ground for levy of penalty-In instant case assessee agreed to treat two sundry creditors as income as a measure of purchasing p .....

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iled return of income-Pursuant to survey uls 133A in premises of assessee, a statement was recorded with regard to fixed deposits made by assessee in a bank account- Subsequently, assessee vide year 1977 and that said deposits were renewed along with interest accumulated thereon-AO issued notices to assessee uls 148 and in response revised return of income was filed by assesseeAssessment was completed and revised returns filed by assessee was accepted by AO without any addition-However penalty u .....

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is submitted, onus shifts to Revenue to come to a conclusion that explanation was not acceptable and therefore case falls uls 271 (1 )( c) when assessee had given some reasonable explanation, it was incumbent on part of Authority to consider same on its own merits before proceeding further-In present case, explanation made on basis of Explanation B to Section 271(1)(c) was satisfied by assessee and his legal heirs to some extent, but, same was not considered by revenue authorities-Order of Tribu .....

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entries showing outstanding amount-AO doubted genuineness of liabilities-Notice for imposing penalty u/s. 271(1)(c) was issued and Assistant Commissioner imposed penalty-ACIT held that, assessee deliberately concealed income and furnished incorrect particulars-CIT allowed appeal and cancelled penalty-Held, present case is not a case of mentioning of inaccurate particulars or concealment. Appeal dismissed. 13 Commissioner Of Income Tax Vs. Gem Granites (2013) 86 CCH 0160 Chen HC Page 20 - 24 Pen .....

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d penalty-Held, in case of Union of India vs. Rajasthan Spinning and Weaving Mills (2009) 13 SCC 448, it was held that mere making of claim, which is not sustainable in law, would not amount to furnishing of inaccurate particulars .For sustaining penalty u/s 271(l)(c), penalty being multiple liability, bona fide conduct of assessee necessarily assumes significance, even though willfulness of assessee may not be criteria, conduct is to be considered-Mere fact that addition in present case had bee .....

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agree with explanation, then onus was on it to prove concealment or furnishing inaccurate particulars of income-Such onus was not discharged by AO-Order of Tribunal confirmed. 9. The ld. Departmental Representative relied upon the order of CIT(A). 10. We have heard the rival contentions of both the parties. In assessment year 2002-03, we find that the assessee has claimed in the return of income that he has inherited this capital of ₹ 5,49,542/- from his mother Smt. Sajjanbai. The assessee .....

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has restricted the above addition to ₹ 2,99,542/-. Therefore, we are of the view that the assessee could not prove the claim that he has carried forward the amount and he has inherited this capital from his mother. The assessee could not prove that he has inherited ₹ 5,49,542/-, but the Tribunal has accepted the fact that the assessee has inherited the capital from his mother. Therefore, we are of the view that the assessee has made his claim in his return of income and explained the .....

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dings, it was found that the assessee has only salary income and he was claiming business expenses. Therefore, it was not allowed. Therefore, show cause notice was given and the assessment was reopened u/s 148 and the assessee agreed that these expenses are not allowable and he has paid the tax thereon. Therefore, the penalty has been imposed on the ground that the assessee has claimed the bogus expenses against the interest income. 12. Having heard both the parties and looking to the facts and .....

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