TMI Blog2019 (7) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... lty proceeding the specification has expressed by the AO towards furnishing of inaccurate particulars of income by the assessee which is again reflected in the final order of penalty at penultimate paragraph 4.6. Thus we find no force in such argument advanced by the Learned Advocate appearing for the appellant before us. We find no infirmity in the order passed by the authorities below so as to warrant interference. Thus the same is hereby upheld. - I.T.A. No.1538/Ahd/2015 - - - Dated:- 17-5-2019 - Shri Amarjit Singh, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Jignesh Kumar Parikh, A.R. For the Respondent : Shri James Kurian, Sr. D.R. ORDER PER MS. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 07.02.2015 passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred as to the Act ) arising out of the order dated 23.05.2013 passed by the Deputy Commissioner of Income Tax (OSD), Circle 8, Ahmedabad for the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discussed in para 8 ₹ 2,49,273/- ₹ 15,96,287/- Total Assessed Income ₹ 64,29,831/- Say ₹ 64,29,830/- Disallowance of interest of ₹ 32,503/- and disallowance of ₹ 12,52,978/- on the ground of income omitted to be included were taken into consideration by the Learned AO in initiating the penalty proceeding against the assessee on the ground that the assessee has furnished inaccurate particulars of income on both counts. The penalty order also concluded with the levy of penalty for furnishing inaccurate particulars of income. In appeal, the penalty levied by the authorities below to the tune of ₹ 32,503/- on disallowance of interest expenses was deleted by the Learned CIT(A). However, ₹ 11,56,842/- as the penalty imposed against the income omitted to be included was confirmed by the first appellate authority, hence the instant appeal before us. 4. At the time of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reconcile the difference and also consented for addition thereto. The plea of the assessee was not found acceptable by the Learned AO. He, thus made the addition of the said amount of ₹ 12,52,978/- against the assessee with the following observation: 7.2 The contention of the assessee that it may be granted 3 months time is not acceptable as it is nothing but delaying tactic being employed by the assessee. Furthermore the assessee accepted that it is not possible for it to reconcile the said income vis a vis TDS claim in the return of income. Thus the assessee failed to discharge the onus heavily casted on it to explain the transaction in its books of accounts. The assessee has neither offered the said amount in the current year's income nor has offered the same in other years. Therefore it amounts to escapement of income which is not permitted. Accordingly an addition of the aforesaid amount of ₹ 1252978/- is made to the income of the assessee company for want of necessary evidence and also due to the acceptance of the disallowance by the assessee. hi view of the facts mentioned above I am satisfied that the assessee has fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to our detailed written submission in this regard which has already been filed earlier. In addition to what has already been mentioned therein, it is further placed on record that when it has undertaken ongoing contract which continues for several months or for several year there is generally a provision for the contractor raising a running bill (RA bill) at various stages of completion of the work. When such RA bills are raised, the same are required to be booked as sales in the books of account. The RA Bills so raised are there after checked by a team of the respective principals before the same are passed with or without any corrections. Since verification of the RA bills at tines take longer duration, There is always a possibility of the principal deducting tax at source and paying the same to the credit of the Government on the gross amount of the HA Bill while sanctioning and disbursing a lower amount in due course of time thereafter. We am already in the process of carrying out a full and compete reconciliation of the mismatching entries so that a correct position can properly be arrived at The company however requires various information from its principals and since mos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AC so as to establish that the addition made In the order passed in quantum in fact amounted to satisfaction of the charge for which the penalty was initiated. (b) The company specifically draws kind attention to the fact that even after retrospective insertion of section 271(1B). it is only the Initiation of penalty proceedings without specifying the satisfaction of the AO as to the specific charge, that has been validated by creating a deeming fiction in the statute book.. This deeming fiction cannot however be extended beyond initiation and while levying the penalty, it continues to be obligatory on the part of the AC to satisfy himself about the charge and also to specify the same in the body of the penalty order. The deeming fiction created in the section for initiation cannot be applied while actually levying the penalty under section 271(l)(c) of the Act. (c) Nothing adverse has been brought on record by the department during the assessment proceedings which can substantiate the contention that the Company has furnished inaccurate particulars of (d) It may also be appreciated by your Honor that in so far as the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se available with it, it is possible that even it can make a silly make. The relevant para of the order of Hon'ble Supreme Court is reproduced herein below. Notwithstanding the fact that the assessee is undoubtedly a reputed firm and has great expertise available with it, it is possible that even the assessee could make, a silly mistake. The fact that the Tax Audit Report was filed along with the return and that it unequivocally stated that the provision for payment was not allowable u/s 40A(7) indicates that the assessee made a computation error in its return of income. Apart from the assessee, even the AO who framed the original assessment order made a mistake in overlooking the contents of the Tax Audit Report. The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. All that happened in the present case is that through a bona fide and inadvertent error failed to add the provision for gratuity to its total income This can only be described as a human error which we am all prone to make. The caliber and expertise of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee was this that merely because the additions confirmed does not ipso facto attract penalty provision. Penalty provision requires a strict adherence and onus to prove that there was a concealment of income with a view to avoid the tax is on the department, penalty is not automatic. While dealing with the issue the Learned DCIT discussed the legal ambit of the matter in the following manner: 3. Legal position 3.1 In this connection, it may be mentioned that the term inaccurate particulars has not been defined in the Act. As per law lexicon, the meaning of the word particular is a detail or details; the details of a claim or the separate items of an account. Similarly, in Webster's Dictionary, the word inaccurate has been defined as not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript . Thus reading the words in conjunction, it means the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. 3.2 Hon'ble Gujarat High Court, which is also the jurisdictional H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. 3.4 It is further noted that the Hon'ble Supreme Court in the case of Dharmendra Textiles Processors 306 ITR 277 (2008) (SC) has noted that the explanations appended to sec. 271(1)(c) entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. It is also held that the section has been enacted to provide for a remedy for loss of revenue and that willful concealment is not an essential ingredient for attracting civil liability as u/s. 271(1)(c) of the I. T. Act. 3.5 Furthermore, the Hon'ble Delhi Court in the case of CIT V/s. ECS Ltd. held that, In so far as bonafide of assessee is concerned we would do no better to quote the following discussion from the order of CIT(A) with approval. '............It is settled now that, claiming excessive deductions also amount to concealment of income. Falsehood in accounts can take either of the two forms. Either an item of receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Communication (P.) Ltd.(2010) stated The Court cannot overlook the fact that only a small percentage of the incometax 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 bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c ). If one takes 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 urns not acting bona fide while making a claim of this nature, that would give a licence to the unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated independently of anything else that appears in the return or the documents accompanying it or whether it is something derived from other figures elsewhere stated in such return or documents. False result may be produced by the falsity of one or more of the constituent items in the return. The words 'inaccurate particulars' would cover falsity in the final figure as also the constituent elements or items. They simply would mean inaccurate in some specific or definite respect whether in the constituent or subordinate items of income or the end result Ultimately, the Learned DCIT observed that it is a clear case of concealment or inaccuracy in the particulars of income in the return occurring at any stage upto and inclusive of the ultimate stage of working out of total income would attract the penalty provision of section 271(1)(c) but finally it was held that the assessee has furnished inaccurate particulars of income and therefore liability of penalty arises with the following manner: 4.6 In view of above facts and legal position discussed in the preceding paras, the assessee is held to have furnished inaccurate particulars of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated to any claim made which was disallowed. So the case law CIT vs Reliance Petro Products 322 ITR 158 will not apply. The case in the CIT vs. Price water. 6924/2012 also will not be applicable since the facts related to disallowance were not disclosed. In fact in the present case the facts are not related to disallowance but rather addition of undisclosed receipts. Here another point which is required to be discussed is whether the amount added represents furnishing inaccurate particulars or concealment of income. This is a fact that entire receipts was not shown by the appellant in its accounts and so it is to be held that entire income was not disclosed and so it was a case of concealment of income. However looking at the facts in another way that the relevant source of contract receipts was disclosed, however, full receipts related to these sources were not recorded in the gross receipts and this leads to influence of furnishing of inaccurate particulars. Thus in the present case there is considerable overlap between the term concealment of income for furnishing inaccurate particulars of income. In fact in the case both are applicable. 8. Coming to the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The lower authorities erred in holding that though the amount was agreed to be added, the AO failed to prove concealment. The onus was on the assessee to substantiate the explanation offered. AO is required to record his finding on the explanation furnished. 9.5 Further, in the case of COMMISSIONER OF INCOME TAX vs. MASTER SUNIL R. KALRO reported as (2007) 211 CTR (Kar) 314 : (2007) 292 ITR 86 (Kar) : (2007) 163 TAXMAN 675 (Kar) it was held that AO having found on a detailed examination that the so-called gifts received by the assessee were not genuine, and all the authorities, including the Court having sustained the addition under s. 68, it cannot be said that this is a case of no concealment or of no inaccurate particulars of income and, therefore, penalty under s. 271(1)(c) is leviable. The honourable High Court held in para 7 (quoted verbatim) as below: 7......... When this order was challenged, the Commissioner has ruled that the department has not discharged its burden in the case on hand. The order of the Assessing Officer would clearly go to show that the assessing authority has chosen to discharge his burden by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner in the course of any proceedings under this Act, is satisfied that any person- .. (c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or] .. he may direct that such person shall pay by way of penalty,- .. [(iii) in the cases referred to in clause (c) [or clause (d)], [in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income [or fringe benefits] or the furnishing of inaccurate 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)] 7[or the Commissioner] to be false, or (B) such person offers an explanation which he is not able to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that his failure to return his correct income was not due to fraud or neglect, he shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof and, consequently, be liable to the penalty provided by that section. No express invocation of the Explanation to section 271 in the notice under section 271 is, in our view, necessary before the provisions of the Explanation therein are applied. The High Court at Bombay was, therefore, in error in the view that it took and the Division Bench in the impugned judgment was right. Learned counsel for the assessee then drew out attention to the judgment of this court in Sir Shadilal Sugar and GeneralMills Ltd. v. CIT [1987] 168 ITR 705. He submitted that the assessee had agreed to the additions to his income referred to hereinabove to buy peace and it did not follow therefrom that the amount that was agreed to be added was concealed income. That it did not follow that the amount agreed to be added was concealed income is undoubtedly what was laid down by this court in the case of Sir Shadilal Sugar and General Mills Ltd. [ 987] 168 ITR705 and that, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting treatments for errors omission and commissions that may have been committed by the principles etc. The case of the assessee dose not fall under the explanation 1(A) to Sec 271(1)(c) as an explanation for the unaccounted receipt has not been proved to be false. Let us examine now the applicability of explanation 1(B) to section 271(1)(c) as below: (a) The assessee has offered an explanation regarding difference in receipts as per TDS statement and as per books of accounts but assessee itself is stated that difference can be..... And thus the explanation is based on possible reasons without any analysis of facts and figures and thus the explanation is totally unsubstantiated. (b) The appellant also failed to prove that it's explanation was bona fide, as no attempt was made to prove the bona fides of the explanation rather appellant tried to skirt the issue by taking shelter of various case laws rather than verifying the facts. (c) The addition made by the assessing officer has been confirmed which shows that all the facts relating to the explanation offered by appellant and material to the computa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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