Search Results For: concelment Penalty


Pr CIT vs. Shree Gopal Housing & Plantation Corporation (Bombay High Court)

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DATE: February 6, 2018 (Date of pronouncement)
DATE: February 12, 2018 (Date of publication)
AY: 2006-07
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CITATION:
S. 271(1)(c) Penalty: The law in Nayan Builders 368 ITR 722 (Bom) does not mean as a matter of rule that in case where the High Court admits an appeal relating to quantum proceedings ipso facto i.e. without anything more, the penalty order gets vitiated. The question of entertaining an appeal from an order imposing / deleting penalty would have to be decided on a case to case basis. There can be no universal rule to the effect that no penalty can be levied if quantum appeal is admitted on a substantial question of law

Each appeal in respect of the order deleting / imposing a penalty by the Tribunal would have to be considered in relation to the facts arising therein and also in the quantum proceedings. It cannot be said as a matter of rule that in case where this Court admits an appeal relating to quantum proceedings ipso facto i.e. without anything more, the penalty order get vitiated. Thus, the question of entertaining an appeal from an order imposing / deleting penalty would have to be decided on a case to case basis. There can be no universal rule to the effect that no penalty, if quantum appeal is admitted on a substantial question of law

Pankaj Kumar Gupta vs. ITO (ITAT Lucknow)

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DATE: January 16, 2018 (Date of pronouncement)
DATE: January 24, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 271(1)(c) penalty: Though capital gains was not disclosed in the return, if tax on the same is paid after the s. 147 assessment order is passed, there is no loss to the Revenue and it also shows the bona fides of the assessee and penalty cannot be levied. The fact that if the s. 148 notice was not issued, the assessee would have got away with tax evasion does not mean that his action was not bona fide

At the very outset, we observe that as appearing on record, in the return filed by the assessee the tax on sale of immoveable property was not paid or entered into. However, when notice under section 148 of the Act was issued, assessee himself attended the proceedings and thereafter paid the entire tax on the same date when the assessment order was finalized. This element of behaviour on the part of the assessee shows that when he had filed the return, there was some omission on the part of the assessee to include the tax on the sale of property. However, when he received notice under section 148 of the Act, he was very eager to know what mistake has been committed by him and, therefore, he himself attended the hearing before the Assessing Officer and on coming to know about the amount of tax payable, has immediately paid tax on the same date. He has not even challenged the assessment order and has accepted the assessment as passed by the Assessing Officer and paid due tax. Therefore, there is no loss to the Revenue.

Indrani Sunil Pillai vs. ACIT (ITAT Mumbai)

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DATE: January 19, 2018 (Date of pronouncement)
DATE: January 23, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) penalty: If the AO has not recorded any satisfaction in absolute terms whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income, the levy of penalty is invalid. The judgement of the Bombay High Court in Maharaj Garage cannot be read out of context or in a manner to mean that there is no need for mentioning the specific limb of section 271(1)(c) of the Act for which the penalty was intended to be imposed, as such issue never came up for consideration before the High Court

As far as the judgment of the Hon’ble Jurisdictional High Court in Maharaj Garage dated 22nd August 2017 in ITA no. 21 of 2008 relied upon by the learned Departmental Representative, on a careful reading of the said judgment, we are of the view that it will have no application to the facts of the case. As could be seen, the basic issue arising out of the reference application which fell for consideration of the Hon’ble Jurisdictional High Court was, while granting previous approval by Inspecting Assistant Commissioner of Income–tax as per provisions of section 271(1)(c)(iii) of the Act whether the assessee was required to be given an opportunity of being heard. While considering this issue, the Hon’ble Jurisdictional High Court observed that provisions of section 271(1)(c)(iii) does not attract rule of presumption of mens rea as the penalty imposable under the said provision is for the breach of civil obligation. The observations of the Hon’ble Court against issuance of show cause notice appears to be in the context of quantum of penalty proposed to be imposed and not with reference to the doing away with the issuance of show cause notice as contemplated under section 274 of the Act. Therefore, the judgment of the Hon’ble Court cannot be read out of context or in a manner to mean that there is no need for mentioning the specific limb of section 271(1)(c) of the Act for which the penalty was intended to be imposed, as such issue never came up for consideration before the Hon’ble High Court. That being the case, the aforesaid decision cannot be applied for rebutting the proposition that in the absence of recording of satisfaction regarding the exact nature of offence, no penalty under section 271(1)(c) can be imposed

Jeetmal Choraria vs. ACIT (ITAT Kolkata)

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DATE: December 1, 2017 (Date of pronouncement)
DATE: January 20, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) Penalty: Conflict in law laid down by Bombay, Patna & Karnataka High Courts in Kaushalya 216 ITR 660 (Bom), Maharaj Garage (Bom), Samson Perinchery (Bom), Mithila Motors 149 ITR 751 (Pat) & Manjunatha Cotton & Ginning 359 ITR 565 (Kar) on whether the issuance of a s. 274 notice is merely an administrative device for informing the assessee about the proposal to levy penalty and mere mistake in the language used or mere non-striking of the inaccurate portion invalidates the notice or not explained. Impact of the conflicting law of the High Courts on Benches of the Tribunal in jurisdictional and non-jurisdictional States also explained

The line of reasoning of the Hon’ble Bombay High Court and the Hon’ble Patna High Court is that issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The Tribunal Benches at Mumbai and Patna being subordinate to the Hon’ble Bombay High Court and Patna High Court are bound to follow the aforesaid view. The Tribunal Benches at Bangalore have to follow the decision of the Hon’ble Karnataka High Court. As far as benches of Tribunal in other jurisdictions are concerned, there are two views on the issue, one in favour of the Assessee rendered by the Hon’ble Karnataka High Court in the case of Manjunatha Cotton & Ginning (supra) and other of the Hon’ble Bombay High Court in the case of Smt. Kaushalya. It is settled legal position that where two views are available on an issue, the view favourable to the Assessee has to be followed

Halcrow Consulting India Pvt. Ltd vs. DCIT (ITAT Delhi)

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DATE: October 31, 2017 (Date of pronouncement)
DATE: January 11, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) Penalty: Under Explanation 7 to s. 271(1)(c), the onus on the assessee is only to show that the ALP is computed in accordance with the scheme of s. 92 C in good faith and due diligence. The fact that the TPO changes the method of computation of ALP does not mean it is a fit case for imposition of penalty if there is no dishonesty is found in the conduct of the assessee

The scheme of Explanation 7 to section 271(1)(c) of the Act makes it clear that the onus on the assessee is only to show that the ALP was computed by the assessee in accordance with the scheme of section 92 C of the Act in good faith and due diligence. It is not in dispute here that the ALP was computed in accordance with the scheme of section 92C inasmuch as Cost Plus Method was used. The TPO only substituted Cost Plus Method with TNMM and also computed the ALP of intra group services by taking the ALP as nil by applying the CUP Method. Whatever may be the merits in the action of the TPO changing the method of computation of ALP, the same cannot be a fit case for imposition of penalty inasmuch as it cannot be said that the ALP had not been computed by the assessee under the scheme of section 92C

Pr CIT vs. Verizon India Pvt. Ltd (Delhi High Court)

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DATE: August 22, 2016 (Date of pronouncement)
DATE: January 9, 2018 (Date of publication)
AY: 2007-08
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S. 271(1)(c) Penalty: In the absence of any overt act, which disclosed conscious and material suppression, invocation of Explanation 7 to s. 271(1)(c) in a blanket manner could not only be injurious to the assessee but ultimately would be contrary to the purpose for which it was engrafted in the statute. It might lead to a rather peculiar situation where the assessees who might otherwise accept such determination may be forced to litigate further to escape the clutches of Explanation 7

The Court is also of the opinion that in the absence of any overt act, which disclosed conscious and material suppression, invocation of Explanation 7 in a blanket manner could not only be injurious to the assessee but ultimately would be contrary to the purpose for which it was engrafted in the statute. It might lead to a rather peculiar situation where the assessees who might otherwise accept such determination may be forced to litigate further to escape the clutches of Explanation 7

Sachin Arora vs. ITO (ITAT Agra)

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DATE: September 7, 2017 (Date of pronouncement)
DATE: January 5, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 271(1)(c): Concealment of income and furnishing of inaccurate particulars are distinct and separate charges. A nebulous notice which contains both charges is null and void ab initio (All judgements on the topic relied upon by the assessee and the department have been referred to and discussed)

It is quite clear, that `suppressio vari’, or ‘suppression of truth’, which has, in section 271(1)(c) of the IT Act, as its equivalent, `concealment of income’, and `suggestio falsi’, literally, ‘suggesting or stating a falsehood’, which manifests itself as ‘furnishing of inaccurate particulars thereof, are two distinctly separate charges; that leveling of either of these charges has to be explicitly brought to the notice/knowledge of the assessee, sans which, the assessee, under a nebulous notice containing both these charges, is rendered incapable of defending the charge per se. This would be in utter violation of the principles of natural justice, such notice being null and void ab initio. It is also pertinent to note at this juncture that the notice u/s 274 is a mandatory statutory notice without which, the initiation of penalty proceedings would be nugatory, nay, non est in the eye of the law

Maharaj Garage & Company vs. CIT (Bombay High Court)

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DATE: August 22, 2017 (Date of pronouncement)
DATE: December 5, 2017 (Date of publication)
AY: 1987-88
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CITATION:
S. 271(1)(c) Penalty: The requirement to obtain previous approval of the IAC is mandatory as it is to safeguard the interests of the assessee against arbitrary exercise of power by the AO. Non-compliance may vitiate the penalty order. However, the requirement in s. 274 that the assessee must be given a reasonable opportunity of being heard cannot be stretched to the extent of framing a specific charge or asking the assessee an explanation in respect of the quantum of penalty proposed to be imposed

The provision of Section 271(1)(c)(iii) of the Income Tax does not attract the rule of presumption of mens rea and it cannot be equated with the provision in the Criminal Statute. The penalty is for default in complying with the provision, i.e. of furnishing true and correct particulars of the income in the return. The penalty is imposable for breach of the civil obligation. It is only the reasonable opportunity of being heard in the matter, which is required to be provided to the assessee. The enquiry seems to be of summary in nature, which does not even call for issuance of show cause notice in respect of the quantum of penalty proposed to be imposed. While exercising the discretion in respect of the quantum of penalty, the explanation furnished by the assessee to mitigate the rigour of penalty has to be considered, having regard to the intention of the assessee, if any, to evade the tax, as one of the factors

Pr CIT vs. Baisetty Revathi (Andhra Pradesh High Court)

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DATE: July 13, 2017 (Date of pronouncement)
DATE: December 4, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) penalty can be levied only where the charge is unequivocal and unambiguous. The AO must specify whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars thereof and which one of the two is sought to be pressed into service. He is not permitted to club both by interjecting an ‘or’ between the two. The ambiguity in the show-cause notice compounded by the confused finding of the AO that he was satisfied that the assessee was guilty of both renders the proceedings void (K. P. Madhusudhanan 251 ITR 99 (SC) & MAK Data 358 ITR 593 (SC) distinguished

On principle, when penalty proceedings are sought to be initiated by the revenue under Section 271(1)(c) of the Act of 1961, the specific ground which forms the foundation therefor has to be spelt out in clear terms. Otherwise, an assessee would not have proper opportunity to put forth his defence. When the proceedings are penal in nature, resulting in imposition of penalty ranging from 100% to 300% of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an ‘or’ between the two, as in the present case

Uttam Value Steels Limited vs. ACIT (ITAT Mumbai)

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DATE: May 22, 2017 (Date of pronouncement)
DATE: September 23, 2017 (Date of publication)
AY: 2008-09
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CITATION:
S. 271(1)(c) penalty: Voluntary disclosure of Rs. 557.50 crores. Entire law on levy of penalty discussed in the context of declaration made during survey, bogus purchases, bogus share capital, accommodation entries, non-application of mind by the AO etc. All important judgements incl Kaushalya 216 ITR 660 (Bom), MAK Data 358 ITR 593 (SC) explained/ ditinguished

A survey action u/s 133A was taken by the Investigation Wing against the assessee on 19/12/2012. The survey took place at the office premises as well as at the factory premises where the manufacturing activity is carried on. Not a single piece of paper is found either from the office premises or from the factory premises which could prove or indicate or suggest that the assessee has earned unaccounted income. However, during course of survey, statement of Director of Company Shri Babu Lal was recorded on 21/12/2012, wherein he offered income earned during the course of business. No iota of proof is also found regarding the manufacturing results disclosed by the assessee. The Investigation Wing has not issued a -single letter or a show cause or a questionnaire after conduct of the survey to the assessee pointing out any discrepancy or defect in the books of account or regarding detection of unaccounted income. The assessee on its own voluntarily filed a letter dated 27/12/2012 on 07/01/2013 with the Investigation Wing offering the income of Rs.557.50 crores for A.V. 2007-08 to 2010-11. As no incriminating material/document was found, the assessee was left with no choice but to state that the said income was generated on account of difference in yield, when in fact and in substance there was no defect or error in the yield which is disclosed by the assessee in the regular books of accounts. The assessee thereafter filed the return of income disclosing the income offered in the letter dated 27/12/2012 on 15/01/2013 and filed a copy of the same with the Investigation Wing. Notice u/s 148 was issued on 25/11/2013 received by the assessee on 27/11/2013. The assessee filed a letter stating that the return filed voluntarily on 15/01/2013 may be treated as return in response to notice u/s 148. The assessments for the impugned assessment years were framed u/s 147 r.w.S. 143(3) of the Income Tax Act(“the Act”). The impugned penalty in respect of impugned assessment years were imposed by the ACIT, Central Circle-41, Mumbai(“AO”) u/s.271(1)(c) of the IT Act.

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