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TMI Blog2012 (4) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... round of appeal raised above at the time hearing." 2. Facts, in brief, as per relevant orders are that return declaring loss of Rs. 62,86,966/- filed on 30th March, 2006 by the assessee, engaged in the business of transportation of goods, after being processed on 28.07.2006 u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") was selected for scrutiny with the service of a notice u/s 143(2) of the Act issued on 25th October, 2006. During the course of assessment proceedings, the Assessing Officer (A.O. in short) noticed that the assessee claimed deduction for expenses amounting to Rs. 15,86,681/- on account of fines and penalties. To a query by the AO, the assessee submitted that the said amount represented challans issued by traffic and other authorities for small violation of traffic rules etc. such as wrong parking, jumping red lights, excess height, overweight, and non-availability of documents etc. Since the driver committed small violations, the assessee was helpless in preventing such expenses. However, the A.O. did not accept the submissions of the assessee and added the aforesaid amount on the ground that in terms of explanation below section 37(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elled the penalty in the following term- "4. These submissions have been carefully considered. With regard to the first issue it is seen that in the case of appellant's stated sister concerns i.e. Chetak Carriers (A.Y. 1991-92) the Hon'ble ITAT Delhi Bench in their I.T.A. No. 2934/D/1996 held as below:- 'After hearing both the sides and considering the materials on the file, we are of the view that the disallowance was unjustified and wrong. The payment fine and penalty amounting to Rs. 11,230/-vide page 12 of the paper book was on account of minor alleged violation of traffic rules in the course of conduct of the transport business, we are of the view that this amount was allowable as a business expenditure.' Similarly, in the case of New Amar Goods Carrier for assessment year 1988-89 and 1990 another stated sister concern of the appellant, the Hon'ble ITAT held in I.T.A. No. 50 & 51/D/92 that payment of fine for petty offences are to be treated as paid in the course of conduct of the business and that there was no deliberate violation of rules and infraction of law. The relevant portion is reproduced as below: '3. In ground No. 2 addition of Rs. 2,260/- on account of disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S Ltd. [2011], 336 ITR 162/[2010] 194 Taxman 311 (Delhi); Sethi Industries Corpn. v. Dy. CIT [2011], 338 ITR 243 (Punj. & Har.); CIT v. N.S. Ichoponani [2011] 330 ITR 125 (Punj. & Har.); Asstt. CIT v. Kanchenjunga Advertising (P.) Ltd. [2011] 16 taxmann.com 137 (Delhi); LMP Precision Engg. Co. Ltd. v. Dy. CIT [2011] 330 ITR 93/[2009] 183 Taxman 12 (Guj.); CIT v. Harparshad & Co. Ltd. [2010] 328 ITR 53 (Delhi); Kamal Basha v. Dy. CIT [2009] 316 ITR 58 (Madras); CIT v. Zoom Communication (P.) Ltd. [2010] 327 ITR 510/191 Taxman 179 (Delhi); and Asstt. CIT v. Nuchem Ltd. [2010] 6 ITR (Tribunal) 429/[2011] 45 SOT 46 (Delhi), the ld. Dr contended that the explanation of the assessee was not bona fide since the assessee itself admitted that claim for deduction for bad debts was inadvertently made. In nutshell, the learned DR supported the findings of the AO. On the other hand, the ld. AR on behalf of the assessee while referring to decision of Hon'ble Apex Court in CIT v. Reliance Petroproducts, [2010] 322 ITR 158/189 Taxman 322 (SC) supported the findings in the impugned order. 5. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1)(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. It is well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) are different than those applied for making or confirming the additions. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the rejection of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing of inaccurate particulars of such income. What is to be seen is whether the said claim made by the assessee was bona-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(1)(c) of the Act. In order to examine the case of penalty, one has primarily to see the nature of concealment, the explanation offered by the assessee, his conduct, etc. These are essenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has in fact incurred and proved such expenditure as "raid expenses" and "donations/rewards to informers". It was further observed that the Income-tax Appellate Tribunal had not recorded any positive finding by reversing the finding of fact recorded by the first two authorities and its decision merely proceeds on the basis of its earlier view in respect of a sister concern of the assessee. A finding of fact recorded in some other case cannot be relied on as a precedent for the purpose of recording a finding in the instant case, Hon'ble High Court concluded. 5.2 It is true that in the decisions reported in B.A. Balasubramaniam & Bros. Co. v. CIT [2001] 116 Taxman 842 (SC), CIT v. B.A. Balasubramaniam & Bros. [1985] 152 ITR 529/20 Taxman 215 (Mad.), CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14/30 Taxman 546H (SC); CIT v. K.R. Sadayappan [1990] 185 ITR 49/51 Taxman 304 (SC); Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244/73 Taxman 182 (SC) and K.P. Madhusudhanan v. CIT [2001] 251 ITR 99/118 Taxman 324 (SC), it has been held that the burden was on the assessee to prove that there has been no concealment. it is also well established that whenever there is difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of penalty was upheld by the Hon'ble jurisdictional High Court, since the assessee failed to offer any explanation in respect of the addition of Rs. 1,83,078 and it was deemed to have concealed the particulars of income or furnished inaccurate particulars thereof, by virtue of this explanation. 5.5 We are of the opinion that the findings given in assessment proceedings are relevant and have probative value. Where the assessee produces no fresh evidence or presents any additional or fresh circumstance in penalty proceedings, he would be deemed to have failed to discharge the onus placed on him and the levy of penalty could be justified. Even if there is no concealment of income or furnishing of inaccurate particulars, but on the basis thereof the claim which is made is ex facie bogus, it may still attract penalty provision. The explanations appended to section 271(1)(c) of the Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The object behind enactment of section 271(1)(c) read with the explanations indicate that the section has been enacted to provide for a remedy for loss of revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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