9911796707
TMI Blog2015 (5) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Briefly stated, the relevant material facts are like this. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has sold plot No. 14, Block-D, Surajpur Industrial Area, Nodia for Rs. 14,00,000/- as against purchase price of Rs. 28.38 lacs. In response to the requisition for details by the Assessing Officer, the assessee submitted that this plot was purchased for setting up pharmaceutical project, but as the assessee subsequently also acquired land in Dehradun Industrial Area in excise free zone, it was decided to set up the project in Dehradun and dispose of the plot in question. As far as the reasoning for sale of plot below the purchase price is concerned, the assessee explained that in accordance with the guidelines of UPSIDC, i.e., authority allotting the aforesaid plot, the project was to be completed within the specific time, failing which the land was to be acquired back by UPSIDC and it was in this backdrop that the assessee had to sell the plot, according to the assessee, and below the market price. The Assessing Officer was not satisfied with this explanation. He deputed his Inspector for ascertaining further details and based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the appellant, the findings of the Assessing Officer in the assessment order as well as in the penalty order and the facts on record. There is no dispute to the well-settled legal proposition that the penalty proceedings are distinct and different from assessment proceedings. Findings in the assessment proceedings are not conclusive. The entire material available should be considered afresh by the Assessing Officer before imposing penalty U/s. 271(1 )(c ). The Explanation to section 271(1)(c) provides a rule of evidence raising a rebuttable presumption in certain circumstances. No substantive right is created or annulled thereby. The substantive law relating to levy of the penalty is preserved. The initial burden of proof is cast on the assessee to establish the presumption arising in certain cases. The assessee can discharge the onus either by direct evidence or circumstantial evidence or by both. The cumulative effect of all facts should be taken into consideration. During the course of penalty proceedings, the assessee is entitled to show and establish by the material and relevant facts, which may go to affect and having direct bearing on the liability for penalty. Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, Explanation 1 to section 271 (1)( c) has been inserted w.e.f. 1.4.1976 by the Finance (No.2) Act, 1975. By this Explanation a fiction has been created for deeming the concealment of particulars of income, if in respect of any facts material to the computation to the total income any person has failed to offer an explanation or the explanation has found to be false or where such person has offered an explanation which he is unable to substantiate. Wherein an explanation is furnished which the assessee is unable to substantiate but the assessee establishes that the explanation furnished was bona fide and all the facts relating to the same and material to the computation of his total income has been disclosed by him, explanation 1(B) will not be applicable. 4.4 Now whether a particular case falls within the ambit of the Explanation or not would depend upon the facts of each case. Therefore, it would be appropriate to refer to Explanation 1 to section 271(1)(c) and examine the facts of the assessee's case in the light of the Explanation. Explanation 1 to section 271 (1)( c) reads as under: "Where in respect of any facts material to the computation of the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Therefore, the assessee's case does not fall within the ambit of Part A of the Explanation. So far as Part B is concerned, I find that the assessee offered an explanation and was able to prove that the explanation was bona fide and all the facts relating to the same had been disclosed. Therefore, Part B is also not applicable. Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Ajaib Singh & Co. [2002] 253 ITR 630 have observed that merely because of certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that particulars furnished by the assessee were wrong. It was held that mere disallowance of expenses per se cannot mean that assessee has furnished inaccurate particulars of its income. It is repeatedly held by the Courts that the penalty on the ground of concealment of particulars or non-disclosure of full particulars can be levied only when in the accounts/return an item has been suppressed dishonestly or the item has been claimed fraudulently or a bogus claim has been made. When the facts are clearly disclosed in the return of income, penalty cannot be levied and merely because an amount is not allowed or taxed to income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital loss is concerned. As regards the disallowance of expenditure in respect of car hire charges, it is an undisputed position that the assessee did produce Memorandum of Understanding in support of the claim of expenditure but then the Assessing Officer was swayed by other considerations such as non deduction of tax at source which was wholly irrelevant so far as assessment year 2004-05 was concerned since the provisions of section 40(a)(ia) has been brought to statute w.e.f. 1st April, 2005. Therefore, whether the tax was deducted at source while making payments of car hire charges or not, prima facie, could not have any legally sustainable implications in the disallowance with respect to the expenditure in question. Even on this issue as we refrain from making any observation on merits, we are clearly of the view that the facts on record did not justify or warrant imposition of penalty in respect of this quantum disallowance. Finally as regards the partial disallowance of depreciation on software, it is an undisputed position that all the relevant facts were before the Assessing Officer and incorrectness of the claim, even if that be so, cannot by itself lead to or result in im ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
