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M/s. Satnam Overseas Exports Versus ACIT, Central Circle-22, New Delhi

2017 (9) TMI 963 - ITAT DELHI

Penalty under section 271(1)(c) - validity of notice u/s 274 - bonafide explanation - false claim made by assessee - Held that:- Manjunath Cotton and Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) and held that in absence of specifying the limb of the 271(1)(c) of the Act under which penalty is to be levied, the notice under section 274 read with section 271(1)(c) of the Act was bad in law. - We find that the assessee has not filed before us the copy of notice under section 274 .....

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order, the Assessing Officer has clearly specified the charges for initiating penalty u/s 271(1)(c) of the Act. We also note that the Ld. CIT-(A) following the decision of the Hon’ble Delhi High Court in the case of Madhushree Gupta Vs. CIT (2009 (7) TMI 38 - DELHI HIGH COURT) has already rejected the argument of not mentioning in the impugned penalty order as to whether the penalty was levied on account of concealment or on account of furnishing of inaccurate particulars. - We agree with t .....

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ailed to rebut any of the above finding of the Ld. CIT-(A). The claim of depreciation and repair & maintenance expenses made in return of income is a clear case of false claim by the assessee and no bonafide explanation has been given by the assessee. - Decided against assessee. - ITA No. 5722/Del/2013 - Dated:- 14-9-2017 - SH. I.C. SUDHIR, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : S/sh. Salil Kapoor & Sanat Kapoor, Advocates For The Respondent : Sh. Kaushlendr .....

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t no satisfaction was recorded before initiation of penalty proceedings u/s 271 (1) (c) and as such the notice issued u/s 271 (1) (c) and the penalty order passed under said section is without jurisdiction and is liable to be quashed. The CIT(A) erred in upholding the same. 3. That the AO has in view of the facts and circumstances of the case and in law erred in not specifying the charge against the assessee for which the penalty has been levied against the assessee. The CIT(A) erred in upholdin .....

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red in upholding the same. 6. That the impugned order is against the well settled principles of law as laid down by various judicial pronouncements. 7. That the AO has in view of the facts and circumstances of the case erred in law and on facts and has failed to appreciate that the explanation filed by the assessee is bonafide. The CIT(A) erred in upholding the same. 8. The information filed and available on record has not been properly considered and judicially interpreted. The penalty levied b .....

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bad in law and contrary to facts on record. 11. The assessee craves leave to add, alter, amend, delete, rescind, forgo or withdraw any of the Grounds of Appeal as may be considered necessary either before or during the course of hearing of the grounds of appeal by the Hon ble ITAT proceedings in the interest of natural justice. 12. The above grounds are without prejudice to each other. 2. Briefly stated facts of the case are that the assessee filed return of income on 30/09/2009 declaring incom .....

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and repair and maintenance expenses of ₹ 2,31,917/- claimed in the profit and loss account. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act and issued notice under section 274 read with section 271(1)(c) of the Act. The assessee did not contest the addition made by the Assessing Officer. The Assessing Officer issued a letter dated 01/06/2012 to the assessee as why the penalty under section 271(1)(c) of the Act should not be levied. The assessee .....

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sessee and no person would sign the return without reading and understanding. - that the mistake committed by the accountant was a self-serving story as no such explanation was given during assessment proceeding 2.1 The Assessing Officer held that the assessee failed to offer any bonafide explanation and, therefore, he levied penalty amounting to ₹ 4,85,597/-equivalent to 100 % of the tax sought to be evaded. 2.2 Before the Ld. CIT-(A) the assessee raised various grounds and filed detailed .....

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on the ground as it does not mention whether the penalty levied was on account of concealment or on account of furnishing of inaccurate particular, it is stated that this objection of the appellant is hyper technical and it tantamount to hair splitting and further it don't show as to what prejudice is caused to them because of aforesaid aspect. Further, it is a cardinal principle of taxation that technicalities cannot shake the substance of the matter, i.e. in absentaia of bonafides assessee .....

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e claim' but a case of a 'bonafide mistake' and that too because of the fault of the accountant. In the fact of the present case it is seen that the appellant's case falls within the provisions of subclause B of Explanation 1 of section 271(1)(c), therefore, one has to examine as to whether the appellant is able to show that the mistake in making a wrong claim has been 'bonafide' or not. 4.3 It is pertinent to mention here appellant is part of Kohinoor Group of Industries .....

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l ever be levied on anyone, by simply shifting the burden on a poor accountant and filing his affidavit (who being an employee will have no choice otherwise also) that it was because of the mistake of the accountant that any wrongful claim was also made. 4.4 In my view, the explanation given by the appellant is totally farcical, dubious and fanciful and it is not backed by any tangible material or evidence specifically when the Income from house property has not been declared for the first time .....

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the penalty Under section 271(l)(c) for concealing the particulars and for furnishing the inaccurate particulars is leviable. In coming to this conclusion, I rely on the recent decision of Delhi High Court dated 29.07.2013 in the case of CIT vs. HCIL Kalindee Arsspl, where on somewhat similar issue, where the assessee took the plea that for claiming the deduction under section 80IA, they referred to the certificate issued by a CA, but still in that case the Hon'ble Court held that the asses .....

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Pvt. Ltd. (201C) (327 ITR 510)(Del) where the Court observed that: . 20. The Court cannot overlook the fact that only a small percentage of the Income Tax Returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bonafide, it would be difficult to say that he would still not be liable to penalty under Section 271(l)(c) of the Act. If we .....

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basis of self Assessment under Section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by a malafide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these .....

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raising the grounds as reproduced above. 3. In the grounds of appeal raised, the sole issue involved is levy of penalty under section 271(1)(c) of the Act amounting to ₹ 4,85,597/-. 4. Before us, the learned counsel of the assessee submitted that in the impugned penalty order, the Assessing Officer has not specified the charges whether the assessee has filed inaccurate particulars of income or concealed particulars of income. The Ld. counsel also submitted that in the notice under section .....

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the said decision was also dismissed as reported in CIT Vs. SSA S Emerald Meadows, 73 taxmann.com 248 (SC). The Ld. counsel also placed his reliance on following decision of the Tribunal: 1. Vijay Kumar Arora Vs. ACIT in ITA No. 843/Del/2014 dated 05/05/2017; 2. M/s MG Contactors Private Limited Vs. DCIT in ITA No. 7034 to 7038/Del/2014; 3. Yum ! Restaurants (I) Private Limited Vs. ITO in ITA No. 894 to 896/Del/2013 5. On the other hand, Ld. Sr. DR submitted that in para-2 of the impugned penal .....

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ion 274 of the Act, in support of the reliance placed on the decision cited by the Ld. Counsel. According to the Ld. Sr. DR, the Ld. CIT-(A) has already considered all the pleas of the assessee and rejected. He, accordingly, submitted that the order of the ld. CIT-(A) might be upheld. 6. We have heard the rival submissions and perused the relevant material on record. In the decision of the Hon ble Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra), the Hon ble High .....

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he notice under section 274 read with section 271(1)(c) of the Act was bad in law. In the decisions of the Tribunals cited by the Ld. counsel also, the decision of the Hon ble Karnataka High Court in the case of Manjunath Cotton and Ginning Factory (supra) has been relied. However, we find that the assessee or the Ld. counsel has not filed before us the copy of notice under section 274 read with section 271(1)(c) of the Act issued in the case of the assessee. In absence of a copy of such a notic .....

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