TMI Blog2020 (4) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee itself has brought certain errors in its computation of income to the notice of the Department. Therefore, it shows that there is no deliberate attempt at the end of the assessee to withhold the information. Similarly, the Assessing Officer has made ad-hoc disallowance out of trade settlement expenses, advertisement expenses and commission income etc. CIT(A) has already reduced the disallowance out of trade settlement expenses in the quantum proceedings. Thus, considering the explanation of the assessee, more so in the light of failure of the AO to record a categorical finding as to whether the assessee is being visited with penalty for concealment of income or for furnishing inaccurate particulars of income, assessee does not deserve to be visited with penalty. The penalty proceedings were initiated for furnishing of inaccurate particulars of income. In the show-cause notice, the AO has used both the options i.e. for concealment of income or for furnishing inaccurate particulars of income. So far as the show-cause notice is concerned, this defect is not fatal to the proceedings in view of the judgment of Hon ble jurisdictional High Court in the case of Snita Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : ₹ 4,706/- Total ₹ 43,782/- While completing the assessment u/s 143(3) r.w.s. 147, the Assessing Officer made further additions which have been sustained in first appeal and the same are as under: i) Commission income not disclosed : ₹ 9,526/- ii) Disallowance of advertisement expenses : ₹ 8,000/- iii) Interest u/s 244A not disclosed : ₹ 9,460/- iv) Disallowance of trade settlement expenses : ₹ 2,10,800/- 3. The Assessing Officer has computed the penalty of ₹ 84,850/- on above additions. The penalty order passed by the learned Assessing Officer has been confirmed by the learned First Appellate Authority. 4. While impugning the orders of the Revenue Authorities, the learned Counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Department before the initiation of reassessment proceedings. With regard to the additions made by the learned Assessing Officer are concerned, he pointed out that major items relate to disallowance of trade settlement expenses. The Assessing Officer made an addition of ₹ 3,55,010/-, out of which learned CIT(A) has deleted ₹ 47,567/- out of ₹ 1,47,567/- relating to J.K. Securities Pvt Ltd and similarly ₹ 96,641/- out of ₹ 1,96,641/- incurred through J.K. Securities Pvt Ltd. In other words, against the total disallowance of ₹ 3,55,010/-, learned CIT(A) has confirmed the addition to the extent of ₹ 2,10,800/-. This is an ad-hoc disallowance and no penalty deserves to be levied upon the assessee qua this addition. Others are also ad-hoc disallowances namely advertisement expenses, commission expenses and interest under Section 244A of the Act. Thus, learned Counsel for the assessee emphasized that no penalty ought to be imposed upon the assessee. 6. On the other hand, learned Departmental Representative contended that the assessee got information that a notice under Section 148 would be issued upon it; therefore, it had filed a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section are deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice, the Assessing Officer has used both the options i.e. for concealment of income or for furnishing inaccurate particulars of income. So far as the show-cause notice is concerned, I am of the view that this defect is not fatal to the proceedings in view of the judgment of Hon ble jurisdictional High Court in the case of Snita Transport P. Ltd. Vs. ACIT, (2014) reported 42 taxmann.com 54 (Guj) wherein the Hon ble High Court has observed that for providing an opportunity to the assessee for explaining its position, the Assessing Officer may use expression or in between the concealment of income and furnishing inaccurate particulars of income in the show-cause notice; but for visiting the assessee with penalty, the Assessing Officer has to record a conclusive finding. The discussion made by the Hon ble jurisdictional High Court in this regard in the case of Snita Transport P. Ltd. (supra), particularly para no. 9, reads as under:-- 9. Regarding the contention that the Assessing Officer was ambivalent regarding under which head the penalty was being imposed namely for concealing the particulars of income or furnishing inaccurate particulars, we may record that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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