9911796707
TMI Blog2017 (1) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... tively reach a conclusion that the fact alleged is proved or disproved, the principle that mere rejection of explanation cannot result in levy of penalty will have no application. To reach this stage also, inquiry will have to be undertaken of the disclosure made in the return or in the statement annexed to the return and to arrive at a finding whether the particulars disclosed are truthful, or false or not proved to be satisfactory. In the first case, it would be a positive case of no concealment, in the second stage, it would be a positive case of concealment and in the third case, benefit of doubt will go in favour of assessee. But in either case, inquiry must proceed from the stage the alleged disclosure has taken place and not stop at that stage and close the inquiry at the threshold on the abstract principle that mere rejection of explanation does not result into levy of penalty. In the present case also the Revenue has no where proved the allegation of concealment despite explanation offered by the assessee. The AO has not detected the income rather assessee suo moto declared the same and that also without any enquiry. The actual position in law is that merely because the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not appreciating bona finds of the Appellant's explanation. 4. Disregarding that the penalty was groundless and that the levy was without application of mind. 5. Upholding AO's false premise of a notice having been served on the Appellant, disregarding that the same was proved to be false. 6. Disregarding that the notice u/s 143(2)/142(1) called for information generally required in every scrutiny case with no specific query at all." 3. Briefly stated facts are that both the assessee are director of Sanchita Frozen Foods P. Ltd. and declared income from salary, income from other sources and capital gains on sale of property. The assessee along with her husband was owner of land and building situated at Sector-8 Vashi, Navi Mumbai and sold it for a total consideration of ₹ 1.50 crores. Both the assessee had 50% share each amounting to ₹ 75,00,000/-. This property was acquired on 11-10-1999 and the cost of acquisition was amounting to ₹ 28,84,660/-, the cost of acquisition per assessee being 50% each amounting to ₹ 14,42,330/-. The assessee file original return income and declaration of long term capital gain from the above sale, which was computed at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Apex Court in the case o K.P. Madhusudan Vs. CIT 251 ITR 99 (SC) that is for the assessee to prove that his failure to return the correct income was not due to fraud or negligence on the part of the assessee and his CA and that itself is sufficient to attract the levy of penalty as was held by the Hon'ble Apex Court in the case of K.P. Madhusudan Vs. CIT 251 ITR 99 (SC) that is for the assessee to prove that his failure to return the correct income was not due to fraud or negligence..." Finally, he levied the penalty vide Para 8 which reads as under: - "8. Upon carefully considering the submissions made after examining the assessee's case in the light of various judicial parameters as discussed above, I hold that the assessee company has furnished inaccurate particulars of income and concealed the particulars of its income both in terms of Explanation 1 to Section 27(1) (c) of the Act, and even otherwise i.e. without invoking such deeming provisions, to the extent of ₹ 16,62,721/-. Hence, this is a fit case for levy of penalty u/s 271(1)(c) of the Act." 5. We have heard rival contentions and gone through facts and circumstance of the case. The facts are that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come in September 2010 itself, or thereafter would not have waited till July 2011 increasing his liability of interest u/s 234-B & u/s 234-C of the Act. As such the explanation seems to be correct for the reason that assessee had trusted the computation by his earlier CA as correct until errors and omissions were detected by new CA, is bona fide. We also find that the amount in question which formed the basis for the AO to levy penalty was truthfully reported in the Return of Income. The AO was requested to add ₹ 31,40,9171- to returned income as Revised Return was time-barred. In any case, the assessee realized his mistake and rectified the same by revising income & paying tax, prior to actual assessment proceedings. The following needs to be noted in this connection: (i) AO admits that assessee disclosed and his only objection is that the disclosure was in response to AO's notice raising specific query (para 2(iii) & 4.1) but, we noted that his notice does not contain any specific query. (ii) Assessee's explanation since inception that the error was computational is reproduced at para 3.l of the Order, & iii, AO has not alleged non-disclosure or suppression of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot result in levy of penalty will have no application. To reach this stage also, inquiry will have to be undertaken of the disclosure made in the return or in the statement annexed to the return and to arrive at a finding whether the particulars disclosed are truthful, or false or not proved to be satisfactory. In the first case, it would be a positive case of no concealment, in the second stage, it would be a positive case of concealment and in the third case, benefit of doubt will go in favour of assessee. But in either case, inquiry must proceed from the stage the alleged disclosure has taken place and not stop at that stage and close the inquiry at the threshold on the abstract principle that mere rejection of explanation does not result into levy of penalty. In the present case also the Revenue has no where proved the allegation of concealment despite explanation offered by the assessee. The AO has not detected the income rather assessee suo moto declared the same and that also without any enquiry. The actual position in law is that merely because the assessee's addition has been confirmed, that cannot automatically bring in levy of penalty for concealment. If the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
