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TMI Blog2014 (7) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... entage - additions have to be resorted to and the turnover is ultimately confirmed at the stage of first appellate proceedings – relying upon CIT vs. HCIL Kalindee ARSSPL [2013 (8) TMI 245 - DELHI HIGH COURT] - the conduct of the assessee is far from bona fide and there was a clear-cut strategy to not only evade taxes, but also to file inaccurate particulars of income even after search operation - the penalty u/s 271(1)(c) of IT Act is confirmed – Decided against Assessee. - ITA No. 1861/Hyd/2013, ITA No. 1862/Hyd/2013, ITA No. 1863/Hyd/2013 - - - Dated:- 23-5-2014 - Shri Chandra Poojari And Smt. P. Madhavi Devi,JJ. For the Appellant : Sri Mohd. Afzal For the Respondent : Smt. K. Harita ORDER Per Chandra Poojari, A.M.: These appeals by the assessee are directed against the common order of the CIT(A)-III, Hyderabad dated 13th November, 2013 for A.Ys. 2006-07 to 2008-09. 2. The ground raised by the assessee in these appeals is with regard to levy of penalty u/s. 271(1)(c) of the Act and being so, we are inclined to adjudicate the issue in a consolidated manner. 3. Brief facts of the issue are that the assessee is a company engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was very sure of the charges and had got ample opportunity to defend its case. For all the reasons given above, the arguments pertaining to the initiation of penalty proceedings are not tenable. 5. Coming to the merits of the cases, the CIT(A) observed that there was a distinct and well thought out plan for tax evasion. The assessee was maintaining two sets of books and records. One set was obviously meant for the income tax authorities wherein systematically the assessee had been disclosing lower sales and hence lower turnover. The other set of documents contained the exact amount of sales. It was in the knowledge of the assessee who in fact planned and executed the tax evasion strategy. Had the search and seizure operations not been carried out, this modus operandi would never have been discovered and the tax evasion would not have come to light. The seized documents do not provide evidence of an abnormal increase in sales for certain months. Rather, they provide a clear glimpse of the actual business of the assessee. In other words, the evidence at hand clearly indicates how the business of the assessee is being carried out and what is the quantum of daily and monthly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While it is true that the Income-tax Act, 1961 is one of most vexed and complicated legislation and requires highest degree of interpretative skills and there are divergent views on interpretation of its provisions and while it is also true that penalty for concealment cannot be imposed merely because assessee's interpretation or claim is rejected, such cases have to be distinguished from cases where the claim of the assessee is farcical or farfetched. Dubious and fanciful claims under the garb of interpretation, are a mere pretence and not bona fide. Absurd or illogical interpretations cannot be pleaded and become pretence and excuses to escape penalty. Bona fides have to be shown and cannot be assumed. The fact that the claim for deduction u/s 80IA was duly supported by the Chartered Accountant's Certificate and prescribed forms signed by the CA cannot absolve and protect an assessee who furnishes inaccurate particulars because then in all cases where a form/certificate is furnished by the CA but a wrong claim of deduction is made, no penalty u/s 271(1)(c) can be imposed. Merely because the assessee complies with the statutory procedural requirement of filing the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 7,04,32,296/- to purchase peace with the Department, in spite of no material was found, except for two months during the course of search. It was further submitted that the assessee was compelled to pay rents to various landlords and also to material suppliers such as mutton, vegetables, firewood and fish in cash and out of books of accounts which has been elaborately stated by the accountant of the company in his statement before the investigating authorities. These persons refused to accept the payment by cheque therefore; the assessee has no other go except to oblige the landlords and suppliers. Therefore, the assessee unwillingly to meet such expenditure was compelled not to record a part of turnover for two months in the books of accounts for the subject assessment year. Otherwise, there is no omission in respect of escapement of turnover for the other 10 months. However, as submitted above the assessee offered the estimated escaped turnover in his statement and to stand by the word and also not to have a protracted litigation with the Department, the assessee has not contested in respect of estimation of turnover before the Appellate Authorities. In respect of disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the additional turnover disclosed by the assessee was a subject matter of estimate and application of law. 11. The AR further submitted that explanation 5A to Section 271 is also not applicable as during the course of search no books of accounts were found confirming the escaped turnover and also the slip of papers found were not conclusive to determine the escaped turnover/income, therefore, ultimately the turnover was estimated and income was also estimated. Under these circumstances application of explanation 5A can also be ruled out. The explanation offered in respect of two months escaped turnover is a bona-fide explanation and the assessee has disclosed all the facts relating to such escapement before the Department during the course of search and also during the course of assessment proceedings. Accordingly, the AR pleaded before us that to delete the penalty levied. 12. The AR submitted that the judgement of Supreme Court in the case of MAK Data P. Ltd. vs. CIT, Civil Appeal No. 9772 of 2013 dated 30.10.2013 cannot be applied to the facts of the present case. In that case surrender of income by the assessee is not voluntary and in the sense that offer was made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case, the assessee has maintained two sets of books of account. One set was maintained for Income-tax authorities wherein systematically the assessee had been disclosing to the lower sales and thereby declaring lower income by concealing its income. The other set of documents contains the actual amount of sales. It was in the knowledge of the assessee, but, in fact, is a well planned and executed tax evasion so as to defraud the revenue. Because of search action carried out by the Department, the unaccounted turnover came to light and the evasion was found out. The AR pleaded before us that the assessee has concealed income because the assessee has to make cash payment towards purchase of fish, chicken, mutton and vegetables and it is not possible to make any payment to these traders by cheque as those traders are small traders who do not accept cheque payment as such the assessee has suppressed the cash sales. According to the AR this explanation is bona fide and not proved untrue so as to levy penalty u/s. 271(1)(c) of the Act. This argument of the assessee counsel is totally misconceived which and having no legal sanction. More so, it is a baseless contention. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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