Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Home Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles News Highlights
Extracts
Home List
← Previous Next →

Bermaco Industries Limited Versus The Asst. Commissioner of Income Tax, Mumbai

2017 (11) TMI 718 - ITAT MUMBAI

Penalty under section 271(1)(c) - charge for which penalty was initiated - Held that:- We are of the view that the AO has initiated penalty proceedings for furnishing of inaccurate particulars of income, whereas, the penalty was levied for both the charges is as evident from the penalty order. - AO has mixed up both the limbs whereas as per settled legal pronouncements of superior court, the two limbs of Section 271(1)(c) viz. furnishing of inaccurate particulars of income and concealment of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ided in favour of assessee. - ITA No. 2825/Mum/2016 - Dated:- 10-11-2017 - SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM For The Assessee : Ms. Shraddha Gor, AR For The Revenue : Kumar Sanjay, Ld. CIT DR ORDER PER MAHAVIR SINGH, JM: 1. This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-47 Mumbai [in short CIT(A)] in appeal No. CIT(A)-36/AP.342/14-15 dated 23-02-2016. The Assessment for impugned AY was framed by Ld. Deputy Commissioner of Inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

risdictional issue as well as on merits. Since, the legal issue questions the very levy of penalty, we take up the same first. The assessee has raised following legal grounds: - I) The learned Commissioner of Income Tax (Appeals) erred in not appreciating the fact that the order passed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 is bad in law as the notice under section 274 read with section 271(1)(c) of the Income Tax Act, 1961 was issued without clarifying whet .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

271(1) of the Income Tax Act, 1961 3. The brief facts of the case are that a search and seizure action was carried out on the business and residential premises of the assessee and its directors on 31.10.2009. During the course of search proceedings, Shri Viren Ahuja, Director of the assessee company offered undisclosed income of ₹ 38.90 crores in the statement recorded u/s 132(4) to account for various discrepancies noticed in the books of accounts namely bogus purchases, unaccounted cash .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ering the facts of the case, rejected the retraction of the statement. Assessment was completed u/s 143(3) read with Section 153A vide order dated 30.12.2011 determining total income at ₹ 27,98,24,090/- after addition of ₹ 27,80,33,410/- towards bogus purchases and disallowance of depreciation of ₹ 95,807/-. Penalty u/s 271(1)(c) was initiated in the quantum assessment order for furnishing of inaccurate particulars of income. The addition of bogus purchases was subsequently con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case as also to the judicial pronouncements cited above, the levy of penalty under section 271(1)(c) is upheld and the ground raised by the appellant are dismissed. Aggrieved, the assessee is in further appeal before us. 4. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us, the learned Counsel for the assessee argued that the AO in his quantum assessment order framed under section 153 A read with Section 143(3) of the Act at Para 7.14 initia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ended that Ld. AO was not sure about the charge against the assessee and the assessee was not aware as to which of the two limbs of section 271(1)(c) of the Act has been invoked by the Assessing Officer. For this, the learned Counsel relied on the decision of Hon ble Bombay High Court in the case of CIT vs. Samson Perinchery [2017] 392 ITR 004 (Bom.) who further relied on the ratio laid down by Hon ble Karnataka High Court in the case of CIT vs. Manjunath Cotton & Ginning Factory [2013] 359 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ation and levy of penalty was concerned and he rejected the contention of the assessee. 5. Finally, the learned Counsel for the assessee argued that the AO was not sure about the charge under which penalty under section 271(1)(c) of the Act was being levied on the assessee. The learned Counsel for the assessee stated that this issue stood squarely covered in assessee s favor by the decision of Hon ble Bombay High Court in the case of Samson Perinchery (Supra), wherein it is held as under: - 3 Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hich of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

culars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus, the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it as case of furnishing of inaccurate particulars. The apex court in the case of Ashok Pai reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. 5. The grievance of the Revenue before us is that there is no difference between furnishing of inaccurate particulars of income and concealment of income. Thus, distinction drawn by the impugned order is between Tweedledum and Tweedledee. In the above view, the deletion of the penalty, is unjustified. 6. The above submission on the part of the Revenue is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ngs will not warrant/ permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice. 7 Therefore, the issue herein stands concluded in favour of the Respondent Assessee by the dec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, the learned CIT Departmental Representative (DR) filed written submissions, which reads as under: - In addition to the above Case Laws, my arguments in brief are as follows. a) The assessee's contention that, in the assessment order passed under section u/s 153A r.w.s. 143(3) of the Act, the Ld AO at end of para 7.14 has merely stated that 'the assessee has furnished inaccurate particulars of its income therefore penalty is separately initiated u/s 271(1)(c)' While in the order pas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct in as much as they result in the keeping off a portion of Income Tax. Thus after reading the two versions written one in the assessment order and other in the penalty order, there is no dichotomy so far as the initiation and levy of penalty is concerned as inaccurate particulars of income furnished appears on both the orders. Hence the contention of the assessee that he is not aware that for which charge he is penalized is not maintainable considering the entire gamut of facts is very clear t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oforma of show cause notice. It therefore does not spell out as to whether the penalty proceedings are sought to be levied for furnishing inaccurate particulars of income or concealing particulars of such income . On this aspect, I would like to rely on the Hon'ble Bombay High Court Case of Kaushalya & Others (216 ITR 660 Bombay) wherein it has been held that: - The assessment orders were already made and the reasons for issuing the notice under section 274 read with section 271(1)(c) we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uance in a particular form. Penalty proceedings are quasi-criminal in nature. Section 274 contains the principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the Principles of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. The issuance of notic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

's (P.) Ltd. [1984] 149 ITR 751 (Patna) (headnote): Under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings. In nutshell, the arguments are as follows: - I) Rules of natur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings. The assessee has relied on the Case of another jurisdictional Bombay High Court Case of Shri Samson Perinchery (392 ITR [Bombay]4) date .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cases and facts whereas in the case of Samson Perincherry it has been followed the principles of Manjunath Cotton as held by Karnataka High Court. In that light my humble prayer will be to follow Kaushalya and others in the instant case. v) I will also rely on the Hon ble Supreme Court case of K P Madhusudhan vs. CIT (118 Taxman 324 ), wherein it has been held that the scheme of the provision does not provide for such a requirement either directly or inferentially that the A.O. is obliged to int .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

planation to Section 271 in the notice u/s 271 is, in our view, necessary before the provisions of the explanation therein are applied. This case has nowhere been argued in the case of Samson Perincherry or Manjunatha Cotton which has a strong relevance for the application of the said section. vi) I am also relying on the two judgments of Hon ble ITAT Mumbai in the case of Mahesh M Gandhi v/s ACIT(Mumbai) order dated 27.02.2017 and in the case of Earth Moving Equipment Service Corporation v/s. D .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

view that the AO has initiated penalty proceedings for furnishing of inaccurate particulars of income, whereas, the penalty was levied for both the charges is as evident from the penalty order vide Para 7 to 12 which read as under: - 7. Coming to the merit of imposition of the penalty, it is to be said that section 271(1)(c) of the IT. Act, 1961, is attracted when the AO is satisfied that any person has concealed the particulars of his income, or has furnished inaccurate particulars of such inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

te particulars of income or disclose all particulars of income? But in this regards AO is not to decide the intention of the assessee for such furnished inaccurate particular of income or concealment of income. The facts and circumstances of the following case are relevant. 9. The Explanation 1 to section 271(1)(c) automatically comes into operation in respect of any facts material to the computation of the total income of any person, when there is failure to offer any explanation, or an explana .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tation of his income, have been disclosed by him, will be on the person charged with concealment. In this connection, further reliance is placed on the case of Western Automobiles (India) Vs CIT (112 ITR 1048) wherein the Bombay High Court has held that where the assessee agree to inclusion of amount, onus shifts on assessee in penalty proceedings to show that the amount was not the concealed income. 10. In a recent decision of the larger bench of the Hon ble Supreme Court in the case of CIT Vs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee for concealment or for giving inaccurate particulars while filing the return . The object behind the enactment of section 271(1)(c) read with the explanation indicates that the said section has been enacted to provide for a remedy for loss of revenue. 11. Further, the Reliance is placed in the case of CIT Vs. Zoom Communication Pvt. Ltd. reported in 191 Taxman 179 (Delhi), where it was held that whether if assessee makes a claim which is not only incorrect in law, but also wholly witho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1) (c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bonafide while making a claim of this nature, that would give a license to unscrupulous assessees to make wholly untenable and unsustainable claim with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Forum
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version