9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 568 - AT - Income TaxPenalty proceedings u/s. 271(1)(c) - revised return of income due to the difference between the returned MAT income based on the final audited financial statements as against that disclosed in the original return of income - certain revised expenses that were claimed to have surfaced due to mistakes in feeding expenses and income data in the revised return of income, thus AO made an addition to the book profit disclosed by the assessee company in its revised return of income - HELD THAT - As the assessee company had not only failed to come up with any bonafide explanation for having raised in its revised return of income filed on wrong claim for deduction of inflated expenses, which was contrary to its audited financial statements, thus, are of the view that the disallowance by the AO of the said inflated expenses clearly falls within the realm of the Explanation 1 r.w. Explanation 4 (for quantification) of Section 271(1)(c) of the Act. Apart from that, we are of the view that as the assessee company could have only revised its claim for deduction of expense by filing a revised return of income, which, it had failed to do; therefore, its letter wherein it had after being confronted by the AO sought to correct its wrong claim would not assist its case. Our aforesaid view is supported by the judgment of Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT wherein as observed that an assessee is not vested with any right to raise a claim before the AO otherwise than by filing a revised return of income. In case the assessee company before us intended to seek a further correction of the book profit disclosed by it in its revised return of income by an amount of Rs. 8.84 crore (supra), then, the only remedy available with it was to have further filed a revised return of income, which, we find it had failed to do. As view taken by the CIT(Appeals) that as the information that was sought by the assessee company to be corrected in the assessment proceedings vide its letter dated 06.12.2019 was already available with the AO in Form No. 3CA, Form No. 3CB report, Form 29B and audited financial statements; therefore, it could safely be inferred that it had no malafide intention in hiding/concealing its income, the same does not find favor with us. If an AO who comes across an assessee who had raised a wrong/false claim of expenses in his return of income but a correct disclosure of the same in his audited financial statements/forms/reports, does not visit such assessee with penalty u/s 271(1)(c) for admittedly having raised a wrong/false claim for deduction of expenses in the return of income with an attempt to suppress its income, then, it would send a wrong message and may lead to the adoption of such nefarious practice by certain assessee s who would though correctly disclose their claim for deduction of expenses in the audited financial statements/forms/reports but knowingly raise an inflated/wrong claim of such expenditure in the return of income, which, in case, on being confronted would be offered by them for tax without being subjected to any penalty. We, thus, in terms of our aforesaid observations are of a firm conviction that the AO had rightly saddled the assessee company with penalty u/s 271(1)(c) of the Act w.r.t the inflated/false claim of expenses raised by it in the revised return of income. As the assessee company had failed to come forth with any explanation as regards its claim of inflated expenses in its revised return of income, which claim of it is not borne out from its final audited financials, therefore, we find no infirmity in the view taken by the AO who had rightly saddled it with penalty u/s 271(1)(c) imposed by the AO u/s 271(1)(c) to the extent it pertains to the variance in the book profit under the MAT provisions arising on account of claim of deduction of false/inflated expenses in the revised return of income by the assessee company. Decided against assessee. Penalty u/s. 271(1)(c) - Addition /disallowance of the delayed deposit by the assessee company of the employee s share of contribution towards labour welfare funds u/s. 36(1)(va) - HELD THAT - Admittedly, as on the relevant point of time, i.e., at the stage of filing return of income/revised return of income by the assessee company, the allowability of the assessee s claim for deduction of delayed deposit of employee s share of contribution towards labor welfare funds there was a judgment of Alom Extrusions Limite 2009 (11) TMI 27 - SUPREME COURT reversing the judgment of Pamwi Tissues Ltd. 2008 (2) TMI 400 - BOMBAY HIGH COURT favoring the assessee Also, there were certain Hon ble High Courts that took a view in favor of the assessee s on the aforesaid issue. As the claim of the assessee company for deduction of the delayed deposit of the employees share of contributions towards labour welfare funds, as long as the same was made within the due date prescribed under sub-section (1) of Sec. 139 for filing of the assessee s return of income, was at the stage of filing of the return of income/revised return of income by the assessee company a possible and plausible view, thus, the same in our view would not attract penalty u/s. 271(1)(c) of the Act. Decided in favour of assessee. Penalty proceedings u/s. 270A - misreporting of income - assessee company had not disclosed the true and correct figure of book profit while filing its return of income - claim for deduction of the delayed deposit of employees' share of contributions towards labor welfare funds - HELD THAT - Admittedly, at the stage of filing the revised return of income by the assessee company on 29.03.2019, the delayed deposit of the employees share of contribution towards labor welfare funds as per the judgment of Alom Extrusions Limited 2009 (11) TMI 27 - SUPREME COURT and other judicial pronouncements were not liable for disallowance u/s. 36(1)(VA) of the Act, and were allowable as a deduction as long as the same was deposited by the assessee before the due date of filing of its return of income as prescribed in sub-section (1) of Section 139 of the Act. As the aforesaid position of law was dislodged only pursuant to the judgment of Checkmate Servies Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT as per which the delayed deposit by an assessee of the employee's share of contribution towards labor welfare funds was liable for disallowance u/s. 36(1)(va) therefore, we find substance in the claim of the Ld. AR that as at the relevant point of time, i.e., on 29.03.2019, the assessee s claim for deduction was supported by the judgment of the Hon ble Apex Court in the case of Commissioner Of Income Tax Vs. Alom Extrusions Limited (supra) Thus, as the assessee company had come up with a bonafide explanation with respect to the aforesaid issue, the same, thus, could not have been construed as an under- reporting of income by the assessee company within the meaning of Clause (a) to sub-section (6) of Section 270A of the Act. We, thus, based on our aforesaid observations vacate the penalty imposed by the A.O u/s. 270A of the Act. Penalty imposed u/s. 270A - difference/variance in the deemed total income assessed as per the provisions of Section 115JB as against that determined in its return of income filed u/s.139(5) - HELD THAT - When the book profit that was earlier disclosed by the assessee company in its return of income (revised) on 31.03.2018, at Rs. 64.09 crore (approx.) was, thereafter, increased by an amount of Rs. 3.28 crore (approx.) and disclosed in its return of income (revised) on 29.03.2019 at Rs. 67.38 Crore (supra), which, the A.O had thereafter assessed/determined vide his order u/s. 144 therefore, no penalty u/s 270A of the Act for the aforesaid amount ,i.e., increase in the amount of book profit which inadvertently had remained omitted to be considered by the A.O in his order passed u/s.144 could have been imposed on the assessee company.
Issues Involved:
1. Deletion of penalty for furnishing inaccurate particulars/concealment of income. 2. Confirmation of penalty for disallowance under Section 36(1)(va). 3. Jurisdictional validity of penalty imposition under Section 270A. Detailed Analysis: Issue 1: Deletion of Penalty for Furnishing Inaccurate Particulars/Concealment of Income The revenue challenged the deletion of the penalty amounting to Rs. 2,92,58,402/- imposed for furnishing inaccurate particulars/concealment of income. The assessee company filed its return based on provisional financial statements, later revised due to discrepancies in the data. The AO made an addition of Rs. 8,84,92,885/- to the "book profit" due to these discrepancies and initiated penalty proceedings under Section 271(1)(c). The CIT(Appeals) vacated the penalty, observing that the discrepancies were due to bona fide mistakes and the data was already available with the AO in various forms. The CIT(A) relied on the Supreme Court judgment in CIT Vs. Reliance Petroproducts and other ITAT decisions, concluding that there was no malafide intention by the assessee. The Tribunal disagreed with the CIT(A), noting that the assessee failed to provide a plausible explanation for the delay in filing the revised return and the subsequent correction of expenses. The Tribunal upheld the AO's penalty imposition, stating that the assessee's actions fell within the realm of "Explanation 1" r.w. "Explanation 4" of Section 271(1)(c), and the assessee's claim of a bona fide mistake was not credible. Issue 2: Confirmation of Penalty for Disallowance under Section 36(1)(va) The assessee contested the penalty of Rs. 16,20,646/- imposed for the disallowance of Rs. 49,01,692/- under Section 36(1)(va) for delayed deposit of employees' contributions to labor welfare funds. The CIT(A) upheld the penalty, citing the Supreme Court judgment in Checkmate Services Pvt. Ltd. Vs. CIT-1, which clarified the disallowance of delayed deposits. The Tribunal found merit in the assessee's claim that the issue was debatable at the time of filing the return, supported by the Supreme Court judgment in Commissioner of Income Tax Vs. Alom Extrusions Limited and other High Court decisions. The Tribunal vacated the penalty, recognizing the assessee's bona fide belief in the allowability of the claim. Issue 3: Jurisdictional Validity of Penalty Imposition under Section 270A For the assessment year 2017-18, the revenue challenged the deletion of a penalty of Rs. 2,17,52,866/- for furnishing inaccurate particulars/concealment of income. The assessee also contested the penalty of Rs. 55,39,257/- for disallowance under Section 36(1)(va). The Tribunal noted that the AO failed to specify whether the penalty was for "underreporting" or "misreporting" of income in the SCNs issued under Section 274 r.w.s. 270A. The Tribunal, referencing various judicial pronouncements, held that the AO wrongly assumed jurisdiction and quashed the penalty imposition. Additionally, the Tribunal observed that the assessee had revised its gross receipts and "book profit" in the revised return, which was later assessed by the AO. The Tribunal concluded that no penalty under Section 270A was warranted, as the revised return accurately reflected the income. Conclusion: 1. The Tribunal upheld the AO's penalty under Section 271(1)(c) for the addition of Rs. 8,84,92,885/- but vacated the penalty for disallowance under Section 36(1)(va). 2. The Tribunal quashed the penalty under Section 270A for the assessment year 2017-18 due to jurisdictional errors and accepted the revised return's accuracy. 3. The appeals and cross-objections were decided in favor of the assessee for the respective issues, with the Tribunal providing detailed reasoning for each decision.
|
