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TMI Blog2014 (12) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction to the assessee in the earlier years - the plea taken by the assessee is only cursory and does not give any acceptable explanation for the wrong computation, as the error was detected by the original authority only during the proceedings u/s 143(3) and she has also recorded a categorical finding that the assessee suppressed the income by making a wrong claim of royalty payment, which actually pertained to earlier assessment years, which was claimed and allowed and therefore thought it fit to levy penalty u/s 271(1)(c) of the Act – the decisions relied upon by assessee cannot be followed as they are distinguishable and the department was justified in imposing the penalty u/s 271(1)(c) of the Act, as the explanation offered by the assessee is no explanation at all in the eye of law – thus, as such no substantial question of law arises for consideration – Decided against assessee - Tax Case (Appeal) No.927 of 2014 - - - Dated:- 2-12-2014 - R. Sudhakar And R. Karuppiah,JJ. For the Appellant : Mr. B. Ramana Kumar For the Respondent : Mr. T. Ravikumar JUDGMENT (Judgment of the Court was delivered by R. Sudhakar, J.) The issue raised in this appeal rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in the earlier years. When asked about this the assessee vide their letter dt. 14th March 2005 admitted the error and stated that in AY 2002/03 a sum of ₹ 1,12,29,927/- which has been already claimed in earlier year was again inadvertently claimed as deduction in the computation of income. In view of the above fact and on the basis of admission made by the assessee a sum of ₹ 1,12,29,927/- is added to the assessee's total income. As the assessee has made a false claim of deduction penalty u/s 271(1)(c) is separately initiated.'' 2. Thereafter, on the same day, a notice was issued under Section 271(1)(c) read with Section 274 of the Act for initiation of penalty proceedings. However, after completion of the appeal proceedings on merit before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal vide the order of the Tribunal dated 14.3.2008, the assessee was heard by letter dated 30.7.2008 to show cause as to why penalty should not be levied for furnishing inaccurate particulars of income and the assessee filed a reply dated 1.8.2008 and the relevant portion of the pleading reads as follows:- ''2. Royalty payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby furnished inaccurate particulars of income. It is upheld by the Supreme Court in the case of CIT Vs Gold Coin Health Food Pvt Ltd (304 ITR 308) that the penalty is leviable even in a case where addition of concealed income reduced the returned loss even in a case of assessment prior to 1.4.2003. 8. I, therefore, hold that the assessee has suppressed the income by making a wrong claim of Royalty payment of ₹ 1,12,29,927/- which actually pertained to earlier assessment years which was claimed and allowed. Hence, it is a fit case to levy penalty u/s 271(1)(c) of the IT Act, 1961 for furnishing inaccurate particulars of income and tax on the same works out to ₹ 40,09,083/- and accordingly, I levy a minimum penalty of ₹ 40,09,083/- being 100% of tax on the concealed income of ₹ 1,12,29,927/-.'' 3. Aggrieved by the above order, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals) and by a cryptic order, the Commissioner of Income Tax (Appeals) allowed the appeal holding that it was a bona fide mistake and that the assessee had admitted his mistake, there was no scope for levying penalty. Challenging the said order, the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the above submissions. So far as the facts of the present case are concerned, it is to be noticed that the penalty has been imposed on account of disallowance of royalty payment, as the same was claimed and allowed during the preceding assessment year in respect of the assessee. The Tribunal, however, placed much reliance on the decision of the Supreme Court in Mak Data (P) Ltd., case reported in (2013) 358 ITR 593, where the assessee in that case offered to surrender certain amount received as share application money as its income from undisclosed source in the assessment proceedings pursuant to survey operations and when penalty was sought to be imposed under Section 271(1)(c) of the Act, the Supreme Court decided the issue in favour of the Revenue holding as follows, which has been extracted by the Tribunal in paragraph 8.1 of its order, and we are inclined to reproduce the same in this order:- The Assessing Officer, shall not be carried away by the plea of the assessee like voluntary disclosure , buy peace , avoid litigation , amicable settlement , etc., to explain away its conduct. The question is whether the assessee has offered any explanation f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of assessment proceedings and the AO is not required to record his satisfaction in particular manner or reduce it into writing. [para 10] In view of above, impugned penalty order passed by the High Court deserved to be confirmed. [para 11]'' 7. Since the issue relates to imposition of penalty under Section 271(1)(c) of the Act, the said section reads as follows:- ''271.(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person-- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income,... he may direct that such person shall pay by way of penalty,-- (iii) in the cases referred to in clause (c) .... in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income.... or the furnishing of inaccurate particulars of such income ....'' 8. Here is a case where the appellant-assessee had claimed the deduction for the royalty payment for the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Supreme Court also held that neither the assessee in that case noticed the error nor it was noticed by the assessing officer who framed the assessment order. Therefore they came to hold that when the contents of the tax audit report were overlooked by all the persons concerned, it was a clear case of bona fide and inadvertent error and in that circumstance, the penalty order was set aside. Hence, the said decision is of no avail to the assessee in this case. 10. The decision of a Division Bench of this Court in Gem Granites case (supra) will also not enure to the benefit of the assessee in this case, as we find in that case that when the explanation on the differential amount was given by the assessee therein that the entries were made in the account and that the Accountant did not make the correct entry, the said explanation was accepted by the fact finding authority and therefore the Court thought it fit not to interfere. It merely went on the premise that some explanation was offered and since the initial onus had been discharged, the Revenue had to show that there was concealment of the particulars of income or must have furnished inaccurate particulars of income. For ..... X X X X Extracts X X X X X X X X Extracts X X X X
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