2011 (6) TMI 933 - AT - Income Tax

Summary

Issues Involved:
1. Sustaining the penalty of Rs. 14,000,000/- despite the return income and finally assessed income being negative (loss).
2. Validity of revised returns filed beyond the time limits specified u/s 139(5).
3. Excess claims of expenditure on account of sugar cane price and H&T contractors.
4. Applicability of penalty u/s 271(1)(c) for concealment of income and furnishing inaccurate particulars.

Summary:

Issue 1: Sustaining the Penalty of Rs. 14,000,000/-
The assessee contested the penalty of Rs. 14,000,000/- arguing that both the return income and finally assessed income were negative (loss). The CIT(A) sustained the penalty, leading to the appeal.

Issue 2: Validity of Revised Returns Filed Beyond Time Limits u/s 139(5)
The assessee filed multiple revised returns beyond the time limits specified u/s 139(5). The A.O. treated these returns as non-est and proceeded with the original return. The CIT(A) dismissed the grounds as infructuous due to the invalidity of the revised returns, and the quantum appeal attained finality.

Issue 3: Excess Claims of Expenditure on Account of Sugar Cane Price and H&T Contractors
The assessee initially claimed excessive expenditures in the Profit & Loss Account, which were later revised. The A.O. found discrepancies between the claims in the return and the printed Annual Reports. The excess claims included Rs. 1,53,55,549/- for cane price and Rs. 2,36,96,069/- for H&T contractors. The assessee explained the discrepancies as due to random data and government-approved prices. However, the A.O. did not accept the explanations, leading to the initiation of penalty proceedings u/s 271(1)(c).

Issue 4: Applicability of Penalty u/s 271(1)(c)
The A.O. concluded that the assessee's failure to file revised returns within the stipulated time was intentional, constituting deemed concealment of income. The CIT(A) upheld the penalty, stating that the assessee furnished inaccurate particulars of income by claiming excessive deductions. The Tribunal admitted additional evidence and remanded the matter to the A.O. for fresh examination, emphasizing the need to critically examine the reasons for the delay and the sufficiency of the explanations provided by the assessee.

Conclusion:
The appeal was allowed for statistical purposes, with directions to the A.O. to re-examine the reasons for the delay in filing revised returns and the sufficiency of the explanations for the excess claims of expenditure. The A.O. was instructed to pass a speaking order after granting the assessee a reasonable opportunity of being heard.