TMI Blog2017 (5) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax (Appeals)-XI, New Delhi on the following grounds:- 1. Under the facts and circumstances of the case, the appellate order passed by the Ld. CIT(A) is illegal being against the principles of natural justice and against the provisions of I.T. Act, 1961. 2. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the penalty u/s. 271(1)(c) in respect of additions of ₹ 5,15,176/- on account of foreign travel expenses and ₹ 1,50,000/- on account of addition u/s. 68. 3. The appellant craves leave to add, alter, modify and withdraw any ground of appeal before or during the appellate proceedings. 2. The facts in brief are that the Assessee filed return of income on 31.10.2005 declaring total income of ₹ 3,51,13,855/-. The case was selected for scrutiny and notice u/s. 143(2) of the Act was issued. In response to the same the A.R. of the assessee attended the assessment proceedings from time to time and filed the details. 2.1 The assessee company is engaged in the business of dealing in shares and mutual funds. It has also shown income from brokerage and commission. 2.2 The assessment was completed u/s. 143(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for foreign travel and penalty on account of addition u/s. 68 of the Act of ₹ 1,50,000/-, Ld. CIT(A) observed that it was nowhere submitted that the three basic requirements of proving the identity, creditworthiness and genuineness of the transactions were duly fulfilled. Ld. CIT(A) held that the assessee has furnished inaccurate particulars with a view to concealment of income and explanation given by the assessee is not bonafide. Hence, the penalty was confirmed on additions of ₹ 5,15,176/- on account of foreign travel and ₹ 1,50,000/- on account of addition u/s. 68 of the Act vide impugned order dated 19.12.2011 passed u/s. 271(1)(c) of the Act. 6. Aggrieved with the impugned order dated 19.12.2011 passed by the Ld. CIT(A), Assessee is in appeal before the Tribunal. 7. In support of his contention, Ld. A.R. of the assessee has filed the Synopsis of submissions (revised) and reiterated the contents thereof, which read as under:- 1. Penalty u/s 271(1)(c) has been levied in respect of additions of ₹ 5,15,176/- on account of foreign travel expenses, ₹ 1,50,000/- on account of addition u/s 68 and disallowance of ₹ 3,66,654/- u/s 14A (Pg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at We do not find any merit in these petitions. - Nayan C Shah Vs. ITO, 2016-TIOL-739-HC-AHM ... Whether submitting an incorrect claim while filing return, would amount to giving inaccurate particulars of such income, warranting initiation of penalty proceedings - NO: HC Whether the AO while issuing a notice u/s 271 (1) (c), is required to specify as to what is the default on the part of assessee, as to whether the case is one of concealment of income, or whether it is case of furnishing inaccurate particulars - YES: HC - SANGHAVI SAVLA COMMODITY BROKERS PVT LTD Vs. ACIT, 2016-TIOL-170-ITAT-MUM ... Whether Notice under section 274 of the Act should specifically state the ground mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income - YES: ITAT - M/s Sajan Kumar Bansal and Sons (HUF) vs. DCIT, 2016-TIOL-114-ITAT-KOL ++ the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of the Karnataka High Court, the orders imposing penalty in all the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove view of the matter, the decision of the Apex Court in CIT VS. KHODAY ESWARSA SONS and of this Court in AMRUT TUBEWELL OMPANY VS. ASST. CIT , would apply to the facts of the present case. Hence, the appeal deserves to be allowed. Foreign Travelling Expenses 4. a) The AO has levied the penalty on the ground that the assessee is a dealer in shares and such expenditure cannot be considered as business expenditure because evidence has been filed to prove the business purpose. II b) The AO has completely ignored the fact that the appellant is a share broker also (Pg.16, PB). It has declared brokerage income at ₹ 22,23,372/- during the year. Foreign travelling expenses are duly declared at ₹ 5,15,176/- in the profit and loss account of the assessee company (Pg. 16, PB). The accounts are duly audited. Details of expenses filed before the AO (Pg. 6, PB] clearly indicate that the foreign tours were undertaken through Global E Travel Solution Pvt. Ltd. which is an outside party. The AO has not brought any new fact on record than what is declared in the accounts. c) The foreign tours were undertaken by the director in connection with the share broking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of penalty under s. 271(1)(c) of the Act. We are in conformity with the order of the CIT(A) that there is no merit in the levy of penalty on disallowance of expenses holding the same to be non-business expenses ii) ACIT vs. Vijay Kiran Hotels (p) Ltd., (2008) 10, DTR (Chd) (Trib) 225 Penalty under s. 271(1) (c)- Concealment-Disallowance of expenditure-Director of the assessee company travelled abroad to explore avenues of studies for his son-Expenditure on foreign travel disallowed on the ground that the same was incurred for non-business consideration-No case is made out by the AO that the claim for expenditure reflected any falsity-In fact, the purpose of the travel was fully explained and the same has not been rejected as, false or lacking bona fides-Merely because there is difference of opinion as regards the allowability of the claim for deduction, it could not be said that there was concealment or furnishing of inaccurate particulars within the meaning of s. 271(1)(c)-Penalty rightly deleted iii) Shri Kamal Sahdev vs. ACIT, 2014-TIOL-49-ITATDEL 3. We have heard both the sides and perused the material placed before us. The penalty has been levied on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l)(c) imposed - Not justified. iv) DCIT vs. RAHOUL SIEMESSEN ENGG. (P) LTD., [2004] 91 TTJ (Del) 62 Assessee having claimed debatable deductions , towards interest paid to Department under ss. 201(lA),217, 220(2),220(3) and 234 B out of taxable income, there was no concealment attracting penalty under s. 271 (l)(c). v) NUCHEM LIMITED vs. DCIT, [1992] 49 TTJ (DEL) 177 Penalty under s. 271 (l)(c), Explanation - concealment - Where certain additions and disallowances were made which were confirmed up to the stage of the Tribunal, unless there is a finding that the explanation given by the assessee was false, the claim of assessee cannot be treated as mala fide and it would be covered by the proviso to Expln. 1 - If after furnishing necessary particulars of income assessee's claim for certain deductions are disallowed, it may be on account of difference of opinion on particular set of facts but it does not amount to concealment - Assessee having disclosed in return all material facts relating to computation of income, therefore not liable to penalty through certain items claimed as deduction were disallowed, holding as capital expenditure or not relating to relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to the view taken by the Assessing Officer. In fact, the assessee has the inherent right to take any claim which may or may not be allowed. Mere disallowance of that claim by itself does not form basis for initiating or imposing any penalty in the absence of material to show that the claim was made mala fide. The assessee has disclosed all the facts material to computation of income. On the same facts, the Ld. AO has drawn a different conclusion while passing the assessment order. Penalty u/s 271 (1) (c) cannot be levied if all material facts have been disclosed to enable the AO to arrive at the correct conclusion because concealment can be of facts but not of conclusion from facts. The reliance may be placed on the following:- i) HimatVellanji Karia vs. ITO (1991) 40 TTJ (Ahd.) 446 Where the assessee had disclosed all material facts to enable to ITO to come to the correct conclusion, it cannot be said that he is guilty of concealment - Concealment can only be of facts and not of the conclusion- Assessee had claimed himself to be a non-resident but had furnished all supporting details- It was for the ITO to derive the correct status. ii) Impulse India (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said considering the judicial precedent cited that there was any filing of inaccurate particulars or non-disclosure on the part of the assessee. It is merely a case of claim not allowed. It is also seen that in the peculiar facts and circumstances of the case, the penalty has been imposed and upheld purely on account of the findings arrived at in the quantum proceedings which is not the mandate of law. The explanation offered by the assessee in the penalty proceedings has to be considered independently and judiciously and only thereafter a finding has to be recorded . In the result the appeal of the assessee is allowed. - DCIT vs. PEC Ltd., 2010-TIOL-50-ITAT-DEL. A. Y. 2004-05 6 ... .It is by now settled law that only because addition is sustained, the penalty is not automatic .... - CIT vs. Haryana Warehousing Corporation, (2009) 314 ITR 215 (P H) 24. The second contention advanced by the learned counsel for the appellant- Revenue was, that the impugned order passed by the Tribunal deleting the penalty imposed on the respondent assessee under s. 271(1)(c) of the Act, was not sustainable in law because of the clear judgment rendered by the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the lower authorities. 9. We have heard both the parties and perused the records, especially the orders of the authorities below as well as the Synopsis filed by the Ld. AR of the Assessee, we find that the assessment was completed u/s. 143(3) of the Act vide order dated 24.12.2007 at an income of ₹ 3,92,91,360/- making various additions. Aggrieved with the order of the AO, the assessee went in appeal before the Ld. CIT(A), whereby the additions / disallowances on account of foreign travelling expenses, disallowance u/s. 14A being 2% of dividend income and income from undisclosed sources were confirmed. We further find that the addition on account of interest expense on account of diversion of borrowed funds was restricted to ₹ 15,43,526/-. We note that the AO observed that the assesee had incurred an expenditure of ₹ 5,15,176/- on foreign travel of one of its Directors. The AO held that the assessee was engaged in the business of purchase and sale of shares and there was no relevance for travel to Singapore, Bangkok, Rome, London etc. by one of its Directors. The expenditure on foreign travel can by no means be considered as business expenditure. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
