Search Results For: penalty


Pr. CIT vs. Fortune Technocomps (P) Ltd (Delhi High Court)

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DATE: May 13, 2016 (Date of pronouncement)
DATE: May 19, 2016 (Date of publication)
AY: 2007-08
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CITATION:
S. 271(1)(c) penalty on Bogus Purchases: If the assessment order in the quantum proceedings is altered by an appellate authority in a significant way, the very basis of initiation of the penalty proceedings is rendered non-existent and the AO cannot continue the penalty proceedings on the basis of the same notice

Once the assessment order of the AO in the quantum proceedings was altered by the CIT (A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT (A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any concealment of facts or furnishing of inaccurate particulars by the Assessee that warranted the imposition of penalty under Section 271 (1) (c) of the Act

ITO vs. Pushpanjali Hospital and Research Centre Pvt Ltd (ITAT Agra)

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DATE: April 12, 2016 (Date of pronouncement)
DATE: May 4, 2016 (Date of publication)
AY: 2009-10
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S. 271C: Concept of "Reasonable Cause" for avoiding levy of penalty for TDS default explained

“Reasonable cause” for the purpose of application of Section 271C in the backdrop of Section 273B has been explained by the Hon’ble Delhi High Court in the case of Woodward Governors India (P) Ltd. Vs. CIT (2002) 253 ITR 0745 to mean a probable cause, an honest belief founded on reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the person concerned to come to the conclusion that same was the right thing to do. The cause should not be found to be frivolous, without substance or foundation

Sanghavi Savla Commodity Brokers Pvt Ltd vs. ACIT (ITAT Mumbai)

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DATE: December 22, 2015 (Date of pronouncement)
DATE: April 5, 2016 (Date of publication)
AY: 2007-08
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CITATION:
S. 271(1)(c): If show-cause notice does not delete inappropriate words whereby it was not clear as to whether the default is concealing particulars of income or for furnishing inaccurate particulars of income, the levy of penalty is invalid

The Tribunal quashed penalty proceedings initiated u/s 271(1)(c) for AY 2007-08 as penalty show cause notice failed to specify default committed by assessee i.e. the AO did not delete inappropriate words / parts whereby it was not clear as to the default committed by assessee was for concealing particulars of income or for furnishing inaccurate particulars of income

B. L. International vs. ACIT (ITAT Delhi)

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DATE: March 3, 2016 (Date of pronouncement)
DATE: March 31, 2016 (Date of publication)
AY: 2009-10
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S. 271(1)(c): No penalty leviable on bonafide human error committed while filing return of income

When the assessee was confronted with the depreciation being claimed on the property, the income from which had been returned under the head income from house property, it immediately realized its mistake of computation of total income and agreed for the addition to its total income. The mistake was inadvertent, is evident from the fact that assessee had furnished return of income of Rs. 3,27,79,273/- and, therefore, there was no reason to make a false claim of a petty sum of Rs. 7,87,734/-

Koramangala Club vs. ITO (Karnataka High Court)

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DATE: February 26, 2016 (Date of pronouncement)
DATE: March 2, 2016 (Date of publication)
AY: -
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S. 44AB/ 271B: Belief that a mutual association like a club is not liable for tax audit is a bona fide one and constitutes reasonable cause u/s 273B

Under the general law relating to mutual concerns, the surplus accruing to a mutual concern cannot be regarded as income, profits or gains for the purpose of the Act (s.4), and where the contributors are to receive back a part of their own contributions, the complete identity between the contributors and recipients negatives the idea of any profit, for no man can make profit out of himself. Therefore, a mutual concern can carry on an activity with its members, though the surplus arising from such activity is not taxable income or profit. The principle of mutuality has also been accepted in the case of a voluntary organization, which receives contributions from its members. The assessee’s contention that Section 44AB of the Act is not applicable to a club being a mutual concern is supported by several judgements

CIT vs. Hiralal Doshi (Bombay High Court)

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DATE: February 9, 2016 (Date of pronouncement)
DATE: February 23, 2016 (Date of publication)
AY: 2006-07
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S. 271(1)(c): Penalty is not leviable on income declared during survey and offered in return. Law laid down in Mak Data 358 ITR 593 (SC) is distinguishable on facts and not universally applicable. A mere change of head of income does not attract penalty

The reliance by the Revenue upon the decision of the Apex Court in Mak Data P. Ltd 358 ITR 593 (SC) to contend that the justification of having deleted and accepted the amount of Rs.1.62 Crores as business income, to buy peace is not available. We find that the facts in that case are completely distinguishable and the observations made therein would not be universally applicable. In that case, a sum of Rs.40.74 lakhs had never been disclosed to the Revenue. During the course of survey, the assessee therein had surrendered that amount with a covering letter that this surrender has been made to avoid litigation and buy peace with the Revenue. In the aforesaid circumstances, the Apex Court held that the words like “to avoid litigation and buy peace” is not sufficient explanation of an assessee’s conduct. It held that the assessee had to offer an explanation for the concealment of income and/or furnishing of inaccurate particulars of income by leading cogent and reliable evidence. The Apex Court further records that in the facts of the case before it the surrender of income was not voluntary but was made only on the account of detection by the Assessing Officer during the course of survey. Further, the Apex Court also records the fact that the survey was conducted more than 10 months before the assessee filed its return of income

Mangalam Drugs & Organics Ltd vs. DCIT (ITAT Mumbai)

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DATE: September 24, 2015 (Date of pronouncement)
DATE: February 23, 2016 (Date of publication)
AY: 2004-05
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S. 271(1)(c): Penalty cannot be levied on all issues in a "wholesale" manner. The AO has to give findings for each issue separately. He has to apply mind meticulously and carefully for each issue separately and establish precisely whether there was concealment of income or furnishing of inaccurate particulars of income. The Assessee cannot be fastened with the liability of penalty without there being a clear or specific charge. Fixing a charge in a vague and casual manner is not permitted under the law. Fixing twin charges is also not permitted under the law

It is further noted, from the perusal of penalty order, that the penalty has been levied, on all the additions/disallowances, in a ‘whole sale’ manner. The AO has not given his findings, for levying the penalty, for each issue separately, with respect to the satisfaction of the AO for each of the issue respectively, nor has he given a finding for each issue separately as to whether there was a concealment of income or furnishing of inaccurate particulars of income. The AO has held in the penalty order that various disallowance made by the AO have been confirmed by the Ld CIT(A) and therefore, it is automatically established that the assessee has concealed its income and furnished inaccurate particulars, which has led into concealment of income within the meaning of section 271(1)(c) of the Act. In our considered view, this approach of the AO for levy of penalty is not correct as per law. Penal provisions are quite harsh, these can make the assessee liable for prosecution, as well. Therefore, the AO is obliged, under the law, to make application of his mind meticulously and carefully for each issue separately and to show and establish precisely and specifically whether there was concealment of income or there was furnishing of inaccurate particulars of income on the part of the assessee, at the stage of filing of return of income. The Assessee cannot be fastened with the liability of penalty without there being a clear or specific charge. Fixing a charge in a vague and casual manner is not permitted under the law. Fixing the twin charges is also not permitted under the law. We drive support from the judgment of Hon’ble Gujrat High Court in the case of New Sorathia Engineering Co vs CIT 282 ITR 642 (Guj)

Safina Hotels Private Limited vs. CIT (Karnataka High Court)

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DATE: January 25, 2016 (Date of pronouncement)
DATE: February 12, 2016 (Date of publication)
AY: 2001-02
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CITATION:
S. 271(1)(c)/ 271(1-B): If the notice is issued without application of mind (by striking out the relevant part in the notice), the penalty proceedings are invalid

It is clear that the notice is issued proposing to levy penalty under Section 271(1)(b) of the Act whereas the order is passed by the Assessing Officer under Section 271(1)(c) of the Act which clearly indicates that there was no application of mind by the Assessing Officer while issuing the notice under Section 274 of the Act. As regards Section 271(1-B) of the Act, it clearly indicates that the assessment order should contain a direction for initiation of proceedings. Merely saying that the penalty proceedings have been initiated would not satisfy the requirement, a direction to initiate proceeding shall be clear and not be ambiguous

CIT vs. Bank Of Nova Scotia (Supreme Court)

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DATE: January 7, 2016 (Date of pronouncement)
DATE: January 25, 2016 (Date of publication)
AY: -
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S. 271C: Penalty for failure to deduct TDS cannot be levied if Dept is unable to show contumacious conduct on the part of the assessee

We have carefully considered the rival submissions. In the instant case we are not dealing with collection of tax u/s 201(1) or compensatory interest u/s 201(1A). The case of the assessee is that these amounts have already been paid so as to end dispute with Revenue. In the present appeals we are concerned with levy of penalty u/s 271-C for which it is necessary to establish that there was contumacious conduct on the part of the assessee. We find that on similar facts Hon’ble Delhi High Court have deleted levy of penalty u/s 271-C in the cae of M/s. Itochu Corporation, reported in 268 ITR 172 (Del) and in the case of CIT Vs. Mitsui & Company Ltd. Reported in 272 ITR 545

Suvaprasanna Bhattacharya vs. ACIT (ITAT Kolkata)

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DATE: November 6, 2015 (Date of pronouncement)
DATE: December 3, 2015 (Date of publication)
AY: 2006-07
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CITATION:
S. 271(1)(c): A penalty notice u/s 274 which does not strike out the irrelevant portion & which does not specify whether the penalty is for “concealment” or for “furnishing inaccurate particulars” renders the penalty order void

The next argument that the show cause notice u/s.274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for “furnishing inaccurate particulars of income” or “concealing particulars of such income”. On this aspect we find that in the show cause notice u/s.274 of the Act the AO has not struck out the irrelevant part. It is therefore not spelt out as to whether the penalty proceedings are sought to be levied for “furnishing inaccurate particulars of income” or “concealing particulars of such income”

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