TMI Blog2017 (8) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... This appeal by the assessee is directed against order dated 22/01/2014 of Ld. Commissioner of Income-tax (Appeals)-XVII, Laxmi Nagar, Delhi (in short the CIT-A ), for assessment year 1996-97, in respect of penalty levied under section 271(1)(C) of the Income-tax Act, 1961 (in short the Act ). The grounds of appeal raised are as under: 1. The provisions of section 271(1)(c) read with Section 275 are not applicable at all. 2. There is neither concealment of income nor appellant has filed inaccurate particulars of income, thus the provisions of section 271(1)(c) are not applicable at all. 3. Without prejudice to ground that no penalty is leviable, CIT(A) has erred in enhancing the penalty. 4. Bonafide claim made, disallowed in assessment proceeding does not attract penalty at all. 5. The CIT(A) has erred in holding that appellant has not furnished any explanation with regard to addition/disallowance. 6. The CIT(A) has erred in holding that appellant has consciously made the concealment and furnished inaccurate particulars of his income with a view to avoid imposing of tax. 7. The aforesaid grounds of appeal are independent and withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither in the assessment/appellate proceeding or in the penalty proceeding. In the penalty order, the Assessing Officer while computing the amount of penalty considered amount of addition at ₹ 12,29,47,520/- instead of ₹ 17,13,14,030/- and levied the penalty of ₹ 5,65, 55,859/-. (x) the Ld. CIT-A noticed the error committed by the Assessing Officer in amount of addition/disallowance of abnormal loss and accordingly issued a notice for enhancement of the penalty amount to ₹ 7,88,04,440/-. After considering the submission of the assessee against the enhancement as well as against levy of penalty, the Ld. CIT-A, citing various judicial decisions enhanced the penalty levied under section 271(1)(c) of the Act to ₹ 7,88,04,440/- as against the penalty of ₹ 5,65,55,859/- levied by the Assessing Officer. According to the Ld. CIT-A, no evidence has been furnished by the assessee to claim that what was the stock destroyed, how it was destroyed and where it was a standing in the books of account. Aggrieved with the finding of the Ld. CIT A on the issue of penalty, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every claim disallowed by the Assessing Officer, the Ld. counsel relied on the judgment of the Hon ble Supreme Court in the case of Reliance Petroproducts, 322 ITR 158 (SC). In view of the arguments, the Ld. counsel prayed that the penalty sustained by the Ld. CIT-A might be deleted. 4. On the other hand, the Ld. CIT(DR) relied on the order of the lower authorities and submitted that the assessee failed to explain the loss on stock claimed along with necessary evidences even before the Tribunal and there for the Explanation-1 to the sections 271(1)(c) of the Act is attracted in the case of the assessee and accordingly the penalty enhanced by the Ld. CIT-A need to be sustained. 5. We have heard the rival submission and perused the relevant material on record. We find that in the assessment proceeding, the assessee claimed that the stock of ₹ 17,13,14,030/- was damaged in demolition drive of the Municipal Corporation and stolen. The Assessing Officer observed that against export sales of ₹ 24,23,78,722/-, the cost of material utilized for export was claimed at ₹ 4,27,04,735/-, which was after taking into consideration the closing stock as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income has been filed by assessee late by 28 months that too after issue of various notices. Further assessee has also not availed benefit of provisions of section 139(5) which provides an opportunity to an assessee (for revision/ correction of return of income including therein amounts already not offered/withdrawing inadmissible claim) by revising its returns withdrawing such wrong claims. It is only because that case was taken up in scrutiny that such additions/disallowances could be made that too after a lot of efforts were put in by CIT(A) and A.O and, therefore, penalty u/s 271(l)(c) is clearly leviable in such cases. 4. Explanation 1 to section 271(l)(c) has introduced a deeming provision which makes an assessee liable for penalty in respect of any amount which is added or disallowed, if the explanation offered by the assessee is either false or which he/it is not able to substantiate. In the present case, assessee was not able to substantiate its claim at any of the stages including assessment, appeal, remand and penalty proceedings. 5. Almost every tax payer (except a few small taxpayers) is aware of the fact that not all the returns are taken up for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n computation of taxable income though shown in the return/accounts or to make a wrong/inadmissible claim/deduction certainly amounts to concealment or deliberate furnishing of inaccurate particulars of income as such omission is clearly attributable to an intention or desire on the part of the assessee to avoid the imposition of tax thereon. 7.1 Explanation 1 to section 147, (though not directly concerned with the provisions of section 271(1)(c)), also lays down clearly that mere production/furnishing of books of accounts/details/documents, etc. (from which A.O. could with due diligence discover something) does not amount to true, full and correct disclosure on the part of the so far as taxing of income is concerned. 7. In quantum proceeding before the Tribunal, the assessee in support of the claim of existence of stock, produced a copy of certificate issued by the bank dated 21/09/1995 and in support of the claim that demolition took place on 30/01/1996, filed information gathered under the RTI Act. In absence of any application for admitting additional evidences, the issue was not restored to the Assessing Officer. The findings of the Tribunal are reproduced as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake and the said certificate dated 21/09/1995 issued by the bank, supporting the availability of stock, pertains to the assessment year in consideration, which is assessment year 96-97. In view of the observation on the said certificate, the Tribunal did not consider the information collected under the RTI Act in respect of demolition carried out by the Municipal Corporation. 9. The assessee filed above documents before the Ld. CIT-A and requested for admitting the same as additional evidences. The relevant part of the submission of the assessee before the Ld. CIT-A is reproduced as under: In this regard your kind attention is drawn to fresh evidences filed with your good self consisting of pages 26 to 40 of the paper book along with petition for admission of additional evidence. The Honorable Delhi High Court in ITA No 44/2013 in appeal against order of ITAT has held as under It does appear from the order passed by the tribunal that some material and documents were available with the appellant but because of passage of time and as the matter relates to assessment year 1996-97 the appellant could not furnish other documents It further held It is ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard is filed as part of paper books from pages 19 to 21). 12. In our considered opinion, while deciding the appeal against penalty proceeding, the Ld. CIT-A, was required to consider the additional evidences submitted by the assessee, which could explain the disallowance of loss on account of stock, irrespective of the fact that in quantum proceedings before the Tribunal, the counsel of the assessee did not prefer to file an application for admitting those evidences. The penalty under section 271(1)(c) of the Act has been levied invoking Explanation-1 , which reads as under: 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 Principal Commissioner or Commissioner 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 relating to the same and material to the computation of his total income have be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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