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TMI Blog2016 (1) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 148 of the Act. Thereafter, the assessee's case was selected for scrutiny and notice under section 143(2) of the Act was served on the assessee. After following due process, the assessment was completed under section 143(3) r.w.s. 147 of the Act by making various additions by the Assessing Officer. Against the additions made by the Assessing Officer, the assessee has not preferred any appeal before the first appellate authority. Moreover, in view of the quantum additions, the Assessing Officer has initiated penalty proceedings under section 271(1)(c) of the Act. 3. The first issue relates to disallowance of agricultural income. In the 147 assessment order, the Assessing Officer has observed that against the notice under section 142(1) of the Act, the assessee was asked to produce evidence for the agricultural income. However, the assessee has not produced complete evidence for the agricultural activities carried out by the assessee company. Further, the assessee has agreed to offer the agricultural income for taxation. Against the said addition, the Assessing Officer has initiated penalty proceedings by serving notice under section 271(1)(c) of the Act. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the agricultural operation for earning agricultural income. During the course of assessment proceedings, the assessee was not able to produce any evidence of having engaged in agricultural activities and agreed to offer the said income for taxation. Once the assessee has agreed to pay tax for the said income, the income so declared by the assessee under the head "Agricultural Income" has no locus standi and it is nothing but undisclosed income under section 68 of the Act claimed under the head "Agricultural Income" to evade tax. Any evidence furnished for having carried out agricultural operation by incurring any expenditure, the income so earned shall be treated as "Agricultural Income", which is exempt under the Act. In the present case, the assessee has not admitted any gross agricultural income showing expenses towards earning of such agricultural income and agreed to pay tax. The ld. CIT(A) has not at all considered the very fact that tax so agreed to pay by the assessee to the income for which, the assessee has not produced any particulars or cogent evidence, tantamount to concealment of income and furnishing of inaccurate particulars, duly attracts penalty proceedings. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any and these have been debited due to the matching concept and have to be incurred to earn the income. However, the Assessing Officer has held that these are only provisions created in the accounts, which are not allowable under the Income Tax Act. Further, the assessee did not furnish any proof to show that the expenditure so claimed was laid out or expended wholly and exclusively for the purpose of the assessee's business as required by section 37(1) of the Act, the actual expenditure incurred to an extent of Rs..8,75,000/- for which evidences were produced was allowed and the balance of Rs..96,75,000/- has been added back to the returned income. Against the above disallowance, the assessee has not contested before the first appellate authority. Subsequently, the Assessing Officer has initiated penalty proceedings under section 271(1)(c) of the Act. 11. During the course of penalty proceedings, in reply to the notice, the assessee has submitted that it was obligatory on the part of the assessee to maintain entries and accounts on mercantile basis under the provisions of Companies Act, 1956. The company had committed to provide various permanent infra facilities to the prospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Accordingly, the Assessing Officer initiated penalty proceedings against the disallowance. Since the assessee made a wrong claim, for which the assessee could not able to offer explanation, the Assessing Officer levied penalty. 16. The ld. CIT(A) has relied on the decision in the case of CIT v. Sankaran 241 ITR 825 (Mad), in the case of CIT v. Pachamuthu 295 ITR 502 (Mad) and in the case of CIT v. Saran Khandsari Sugar Works 246 ITR 216 (All). In the case of CIT v. Sankaran (supra), the Hon'ble High Court has observed that mere addition to income at the instance of assessee would not warrant a finding of concealment of income. Further in the case of CIT v. Saran Khandsari Sugar Works (supra), the assessee has agreed to a higher assessment on the condition that no penalty would be imposed. In the case of CIT v. Pachamuthu (supra), during the survey, the assessee has agreed for addition and no concealment was discovered, for which the Hon'ble High Court has held that penalty is not attracted. In the instant case, during the course of reassessment proceedings, the Assessing Officer has found that the assessee has furnished inaccurate particulars to reduce the taxable income in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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