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TMI Blog2016 (9) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... d deferred tax liability as revenue expenditure, because they have not been debited to expenditure account. The onus upon the assessee was to demonstrate as to how mistake has occurred. How such a mistake could be alleged as a bona fide mistake ? The only explanation on that score is that the company is operating at a very small level. Its total turnover was ₹ 19 lakhs. Apart from that the assessee did not bother to go to AO to give any explanation. How the AO could verify that explanation given by the assessee was false or not ? Because no explanation was given. Similarly, the assessee failed to give any material which can substantiate its explanation as to how the mistake has happened. - Decided against assessee. - ITA.No.2034/Ahd/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 3,15,585/- as against ₹ 12,41,455/-. The ld.AO has passed the assessment order. He made various additions, and ultimately assessed the loss at ₹ 2,13,398/-. The AO has initiated penalty proceedings with regard to claim of prior period expenditure and alleged deferred tax liability. A show cause notice under section 274 r.w.s. 271(1)(c) of the Act was issued on 28.5.2010, which was duly served upon the assessee. The assessee did not file any explanation before the AO. The AO imposed penalty of ₹ 2,74,652/-. Appeal to the CIT(A) did not bring any relief to the assessee. 4. Before me, the ld.counsel for the assessee contended that the assesseecompany has been suffering loss from last many years. It has very small busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at filing of return was duly verified by the competent person, and thereafter, he put his signature. There is nothing on record to show as to how the mistake was committed by the assessee. 5. I have considered rival contentions and gone through the record carefully. Section 271(1)(c) of the Act has a direct bearing on the controversy, therefore, we take note relevant provision, which reads as under: 271. Failure to furnish returns, comply with notices, concealment of income, etc.- (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the of course of any proceedings under this Act, is satisfied that any person (a) and (b) ** ** ** (c) has concealed the particulars of his income or furnished inaccurate par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 7. Apart from the above, Explanation 4(a) to Section 271(1)(c) of the Act talks of notional evasion of taxes i.e. if there is reduction of loss declared in the return and in ultimate assessment order, then such reduced loss would be considered the amount on which taxes are sought to be evaded. This will bring an assessee at pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Supreme Court in the case of Price Waterhouse Coopers P.Ltd. (supra.). The facts are quite distinguishable. In that case, a provision for payment of gratuity was made. The company itself has mentioned that this provision was not allowable under section 40A(7) of the Act. But inspite of that, while filing return, it has claimed as deduction. The AO has passed the assessment order under section 143(3) of the Act and allowed the deduction. The explanation given for the mistake has been noticed by the Hon ble Supreme Court in para-14 to 16 of the judgment, which read as under: 14. During the course of hearing this appeal against the judgment and order of the Calcutta High Court, we had required the assessee to explain to us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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