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2016 (9) TMI 800 - ITAT AHMEDABAD

2016 (9) TMI 800 - ITAT AHMEDABAD - TMI - Penalty under section 271(1)(c) - difference of opinion about the recognisation of income or expenditure - Held that:- AO did not find any factual inaccuracy in the details of the assessee. The only difference in the stand of the assessee and the AO was a difference of opinion about the recognisation of income or expenditure. The assessee has been accounting the expenditure on mercantile basis and recognizing the income on cash basis. Such type of method .....

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Shah, AR For The Revenue : Shri O.P. Meena, Sr.DR ORDER The assessee is in appeal before the Tribunal against the order of the ld.CIT(A)-1, Vadodara dated 16.12.2015 passed for the Asstt.Year 2008-09. 2. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming the penalty of ₹ 3,47,727/- which was imposed by the ld.AO under section 271(1)(c) of the Income Tax Act, 1961. 3. Brief facts of the case are that the assessee has filed his return of income on 30.9.2008 dec .....

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g system. For expenses, he has followed mercantile system of accountancy and for income he has been following cash system. The ld.AO has made reference to section 145 of the Income Tax Act and observed that sub-section 1 of section 145 prohibits the assessee to follow mix accounting system. The income was to be computed either cash or mercantile system of accounting. Accordingly, the ld.AO made addition of ₹ 9,84,329/- and ₹ 1,41,000/-. The finding of the AO reads as under: 5. Hence, .....

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(c) of the I.T.Act, 1961, 1961 is also initialed for furnishing of inaccurate (Addition : ₹ 9,84,329/-) 6. On perusal of the submission it was found that the assessee has made payment to Natwarlal N Suthar, Vishwas Construction exceeding ₹ 20,000/- in a day or Gross 50,000/- for Repairs and Maintenance but he has not made TDS on these payments. In addition to this the Assessee has also made payment of ₹ 65,000/- to D Seven advertising for advertisement in Gujarat Samachar but n .....

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edings and issued notice under section 274 r.w.s. Section 271(1)(c) of the Income Tax Act. After hearing the assessee, the ld.AO has imposed penalty of ₹ 3,47,727/-. Appeal to the ld.CIT(A) did not bring any relief to the assessee. 5. The ld.counsel for the assessee contended that penalty was initiated for furnishing inaccurate particulars of income, whereas, it has been imposed for concealing of income. On the strength of Hon ble Karnataka High Court decision in the case of CIT Vs. Manjun .....

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through the record carefully. A perusal of the penalty order would indicate that the ld.AO has imposed penalty for furnishing inaccurate particulars. He has not imposed penalty for concealment of income. The AO has observed that the assessee has tried to evade tax by furnishing inaccurate particulars of income which lead to concealment of income. Thus, there is no confusion in the mind of the AO. I do not find any merit in the first fold of submission raised by the ld.counsel for the assessee. .....

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. With the assistance of the learned representatives, we gone through the record carefully. Section 271(1)(c) of the Income Tax Act, 1961 has direct bearing on the controversy. Therefore, it is pertinent to take note of the section. "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concea .....

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urate particulars of such income or fringe benefits: Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts rela .....

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course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding conc .....

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ct, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computat .....

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