9911796707
|
Home
Issues Involved:
1. Penalty under section 271(1)(c) for assessment year 1984-85. 2. Penalty under section 271(1)(c) for assessment year 1985-86. Assessment Year 1984-85: The assessment was completed u/s 143(3) at an income of Rs. 1,29,29,120 against the returned loss of Rs. 1,58,02,710. Various additions/disallowances were made, leading to penalty proceedings u/s 271(1)(c). The main disallowances/additions confirmed were: - Expenditure on Diesel Generating Set: The assessee claimed Rs. 34,03,163 as revenue expenditure. The Tribunal held it as capital expenditure, noting the lack of evidence for replacing an old generator. The Assessing Officer viewed this as furnishing inaccurate particulars of income. - Amount Paid to M/s. Dalal Consultants: Rs. 10,33,553 was claimed for services by M/s. Dalal Consultants. The Tribunal found no evidence of services rendered within the accounting year, treating it as inaccurate particulars of income. - Interest on FDRs: Rs. 32,84,506 was claimed as non-taxable due to a pending High Court case. The Tribunal upheld it as income of the assessee, leading to penalty for furnishing inaccurate particulars. - Expenses Relating to Earlier Years: Rs. 3,47,276 was disallowed but not considered for penalty as the CIT (Appeals) accepted the assessee's contention. Assessment Year 1985-86: The assessment was completed u/s 143(3) at an income of Rs. 21,83,860 against the returned loss of Rs. 90,55,870. The main disallowances/additions confirmed were: - Interest on FDRs: Rs. 34,35,220 was disallowed under similar circumstances as in 1984-85. - Expenditure on NPC Twin Screw Machine and Transformer: Rs. 35,54,834 was claimed as revenue expenditure but treated as capital expenditure by the Tribunal. - Gratuity Fund: Rs. 1,44,500 was disallowed under section 40A(7) based on the Tax Audit Report. - Expenditure on Repairs and Shifting of Diesel Generating Set: Rs. 1,70,997 was disallowed due to lack of clarity and evidence. - Expenditure Relating to Preceding Years: Rs. 1,58,425 was disallowed but not considered for penalty. Penalty Proceedings: The CIT (Appeals) confirmed the penalties except for expenses incurred in earlier years. The assessee argued that the penalty order did not specify the default under section 271(1)(c) and that there was no finding of concealment or furnishing inaccurate particulars. The Tribunal noted that the assessee had disclosed all material facts and that the explanations were bona fide. The Tribunal found that the revenue authorities did not establish that the explanations were false or unsubstantiated, thus not attracting Explanation 1 to section 271(1)(c). Conclusion: The Tribunal held that the penalties were not justified as the assessee had made bona fide claims and disclosed all material facts. The penalties for both assessment years were cancelled.
|
