Indermal Manaji vs. CIT (Bombay High Court)

DATE: July 6, 2017 (Date of pronouncement)
DATE: July 27, 2017 (Date of publication)
AY: 1982-83
FILE: Click here to download the file in pdf format
S. 271(1)(c): If the basis on which penalty is initiated by the AO and the basis on which the quantum is confirmed on merits by the Tribunal are different, penalty cannot be levied

(i) It is abundantly clear that the very basis for initiation of the Penalty Proceedings stood negated by the Order of the Tribunal in an appeal filed by the assessee against the Order of the Assessing Officer in the Assessment Proceedings.

(ii) The basis for initiation of Assessment Proceedings by the Assessment Officer is that the Assessment Officer disbelieved the claim of the assessee that he was engaged in the business of discounting drafts, whereas the Tribunal held that the assessee carries on the business of Draft Discounting. The assessee has stated that the amount in the account is the amount of the drafts received of which assessee charges Rs.1/per thousand as commission. Explanation (1) to Section 271(1)(c) of the Act states that if a person fails to offer an explanation or offers an explanation which is found by the Assessing Officer to be false or such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person, as a result thereof shall for the purpose of Clause (c) of the said SubSection be deemed to represent the income in respect of which particulars have been concealed. In the present case, no addition of the amount has been made, nor is a case of disallowance. Even the Tribunal had accepted the case of the assessee that he is carrying on the business of Draft Discounting. It is also observed that in many cases, the Tribunal has taken a view that in case of Draft Discounting, income is considered at Rs.1/per thousand and in some cases, at Rs.2/per thousand. In the present case, it considered to Rs.2/per thousand. The assessee, therefore, was not required to give any explanation as his case was accepted by the Tribunal in Appeal. As such, for all the above reasons, Explanation (1) to Section 271(1)(c) of the Act would not be attracted.

Cases referred

Commissioner of Income Tax –Delhi v. Fortune Technocomps (P) Ltd., dated 13/05/2016

Commissioner of IncomeTaxII, Lucknow v. Norton Electronics Systems (P.) Ltd., reported in [2014] 41 280 (Allahabad).

Chuharmal v. Commissioner of Income Tax, M.P. reported in Income Tax Reports Volume 172 page 250

Commissioner of Income Tax v. Kalindi Rail Nirman Engineering Ltd. reported in [2014]365 ITR 304 (Delhi).

3 comments on “Indermal Manaji vs. CIT (Bombay High Court)
  1. hon court is right.
    One needs to rightly define ‘falsehood’, no language is adequate when so how ‘false’ said by the IT Act or general clauses Act can be great discovery of meanings of words, you the AO need to be very careful in all your assessments , as you are the man assessing the ROI.
    CBDT cleverly gave that responsibility to you just to avoid its avid issues.
    Revenue needs to be much more careful when you as AO assess and when appeals are filed in CIT(A) why appeals came into being just because nothing is certain on words used in the very Act, none ‘ only some is superior is the fact, there is nothing called ‘truth’ only called facts, so very word false is also enjoys same status like truth.

  2. one needs to understand philosophy of law more than anything else; that is why, we need law courts, nothing like quasi judicial dispensations which are in fact most inadequate mechanism but some kind of filter, nothing more – like your taxation accounting by CAs.
    No accounting is any kind of accountibility.
    see PM Mr Modi used IAF planes for his jaunts but govt paid at 1999 rates, accounts may justify but it is absolute misappropriation of government exchequer for he misused IAF resources.
    No PM or President is allowed under constitution of india, you need to read Art 265, procedure established by law,
    How can you misappropriate,
    If you do PM or President can be charged under law of crimes, ‘Misappropriation’.
    But weak kneed opposition parties did not go for .
    impeachment on Modi, Jaitley or his predecessor in defense ministry.
    fact is governments blatantly robbing the sovereign citizens .

  3. i find though there is separation of powers in place, yet judiciary sulks under so called ‘judicial restraint’ just because of selfish reasons, if he would be losing post retirement jobs with political government – that way institutions suffer.
    see President Mr Kovind is some toy in the hands of Modi means he abdicates his office ‘s independent funtioning, a sign of failure of the constitutional proprieties means constitution of india is collapsing under BJP control of government.
    No advocate today is not bold enough to fight injustice like what Socratus greek philosopher fought even at the cost of his own life – do we have such kind of men!
    No, as we want tomorrow, when no tomorrow is certain is the absolute fact
    in fact, we as people lost faith in ourselves is the absolute fact – that itself is first worst kind of corruption.

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