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TMI Blog2017 (8) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... at all. 5. The CIT(A) has erred in holding that appellant has not furnished any explanation with regard to addition/disallowance. 6. The CIT(A) has erred in holding that "appellant has consciously made the concealment and furnished inaccurate particulars of his income with a view to avoid imposing of tax. 7. The aforesaid grounds of appeal are independent and without prejudice to one another. The appellant craves leave to add, amend, alter or vary any of the aforesaid grounds of appeal before or at the time of hearing. 2. The facts in brief of the case are that: (i) the assessee company was engaged in export of Knitwear during the relevant period; (ii) the assessee did not file return of income for the year under consideration on or before the due date of filing of return of income under section 139(1) of the Act i.e. 30/11/1996; (iii) the Assessing Officer issued notice under section 142(1) of the Act on 03/12/1996 for filing return of income for the year under consideration; (iv) the return of income was filed on 26/02/1999 declaring loss of Rs. 11,27,27,555/-; (v) the Assessing Officer in the assessment order completed under section 144 of the Act dated 26/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of penalty, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. Before us, the Ld. counsel of the assessee filed the paper book containing 1 to 88 pages and submitted that the assessee had disclosed full information in respect of the loss in the return of income filed. He referred to page - 6 of the paper book, which is copy of profit and loss account for the year under consideration and submitted that abnormal loss of Rs. 17,13,14,030/- was duly reported under the expenditure. He further referred to page 17 of the paper book, which is Schedule - L to the balance sheet and contained notes on accounts. In part 'B' of the said schedule, in note No. 6, it is mentioned that an amount of Rs. 17,13,14,030/- has been written off on account of damage, which took place at the 'Dichaun Kalan' (godowns) of the company due to demolition of building by the Corporation in the absence of the director or any employee. He further referred to the decision of the Tribunal and submitted that the Tribunal in the quantum proceedings, while upholding the disallowance of abnormal loss, rejected the certificate issued by the bank dated 21/09/1995 supporting the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was after taking into consideration the closing stock as under: Opening stock Rs. 38,20,25,167.00 Add : Material purchases Rs. 12,99,72,769.75 Less : Closing stock Rs. 29,79,79,171.00 Rs. 4,27,04,735.75 6. According to the Assessing Officer, when the entire stock stands accounted for, it was not understood how the claim of Rs. 17,13,14,030/- on account of abnormal loss of stock was worked out and claimed in the profit and loss account. No reasonable explanation in this regard was furnished before the Assessing Officer. We have examined this question raised by the Assessing Officer. According to us, if the assessee makes entry of loss of stock in material consumed, then also the net result of the business would be same and there will not be any impact on the net loss shown by the assessee in profit and loss account. Further, in support of the claim of theft of stock before the Assessing Officer, the assessee filed copy of first information report (FIR) lodged by the assessee with the police authorities. In the said FIR, the date and hour of occurrence of theft was reported on 16 & 17/02/1997 at 12.10 in the night. In view of the copy of FIR, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-free, if the case is not taken up for scrutiny. Furthermore, disallowance/additions in such cases can be made only if the AO is having sufficient time & knowledge to catch hold of such deficiencies which is not practically possible/feasible in each and every case. Considering the facts of (i) non filing of return & (ii) not being able to prove correctness of its claims during proceedings spanning over a lengthy period of more than 15 years before various authorities including 03 AOs, 02 CIT(A)'s, CIT((Adm.) and ITAT; in the present case; it can be safely inferred that asses see tried to evade tax by not offering proper income to tax. Penal provisions are meant only to have deterrent effect to dissuade tax payers for making such claims and will lose its impact if not applied in cases of such violation. 6. The Hon'ble Delhi High Court in the case of Zoom Communication Pvt. Ltd. reported in (2010) 40 DTR (Del) 249, dated May 24, 2010 have observed as under- "The Court cannot overlook the fact that only a small percentage of the Income Tax Returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect that would give a license to unscrupulous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook, assessee has placed on record a note in respect of loss claimed due to demolition, copy of a letter dated 09th September, 1995 mitten by the assessee to die Manager, Indian Bank, Delhi seeking a certificate demonstrating the details of stock pledged with the bank. On page 22, assessee has placed on record certificate of lire bank. It also placed on record copy of an application moved under Right to Information Act, 2005 dated 15.11.2010. *The assessee has placed on page 28, the information received under the RTI Act. With the help of these documents, it was contended by the learned counsel for the assesses that the demolition taken place on 30.1.1996. Learned DR pointed out that these documents were not produced before the Assessing Officer. They cannot be placed in the paper book without seeking permission for leading additional evidence. On this objection, we put the learned counsel whether he wants to file application for permission of additional evidence. The learned counsel for the assessee submitted that assessment year involved is 1996-97. Assessee is not in a position to bring any better evidence, lie left the issue for the discretion of the ITAT. 5. On due consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings are pending. We also notice that return was filed belatedly and, therefore, appellant could not have claimed carried forward of loss. This is another aspect which can be raised before the said authorities." Copy of the order of Delhi High Court is filed along with the written submissions. In view of the above you are requested to kindly consider the additional evidence filed in the interest of the justice From perusal of those documents you will kindly appreciate that demolition of godown took place which resulted in loss of stock. The relevant documents are: - 1. Letter dated 19.09.1995 filed with Indian Bank for pledge of Goods. Page 26. 2. Confirmation letter dated 21.09.1995 issued by Indian Bank Page 27. 3. Copy of letter dated 13.12.2010 issued by MCD in response to application under RTI confirming demolition of building. Page 31-34 4. Copy of report of local Commissioner appointed by Debt Recovery tribunal confirming demolition of building and Stock damage. Page 35 - 34 The aforesaid documents confirm that building was demolished and stock was damaged. In the note on business activities appellant has explained the circumstances for the del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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