9911796707
TMI Blog2020 (4) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... If examine the facts, then it would reveal that before issuance of notice under Section 148 assessee itself has brought certain errors in its computation of income to the notice of the Department. Therefore, it shows that there is no deliberate attempt at the end of the assessee to withhold the information. Similarly, the Assessing Officer has made ad-hoc disallowance out of trade settlement expenses, advertisement expenses and commission income etc. CIT(A) has already reduced the disallowance out of trade settlement expenses in the quantum proceedings. Thus, considering the explanation of the assessee, more so in the light of failure of the AO to record a categorical finding as to whether the assessee is being visited with penalty for concealment of income or for furnishing inaccurate particulars of income, assessee does not deserve to be visited with penalty. The penalty proceedings were initiated for furnishing of inaccurate particulars of income. In the show-cause notice, the AO has used both the options i.e. for concealment of income or for furnishing inaccurate particulars of income. So far as the show-cause notice is concerned, this defect is not fatal to the proceedings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and the same are as under: i) Commission income not disclosed : ₹ 9,526/- ii) Disallowance of advertisement expenses : ₹ 8,000/- iii) Interest u/s 244A not disclosed : ₹ 9,460/- iv) Disallowance of trade settlement expenses : ₹ 2,10,800/-" 3. The Assessing Officer has computed the penalty of ₹ 84,850/- on above additions. The penalty order passed by the learned Assessing Officer has been confirmed by the learned First Appellate Authority. 4. While impugning the orders of the Revenue Authorities, the learned Counsel for the assessee has raised multiple propositions. In his first fold of contentions, he submitted that the penalty was initiated in the assessment order for furnishing inaccurate particulars of income. For buttressing his contentions, he took me to the last page of the assessment order wherein the Assessing Officer has observed that the penalty proceedings under Section 271(1)(c) of the Act have also been initiated separately for furnishing inaccurate particulars of income. He further contended that in the show-cause notice issued under Section 274 r.w.s. 271(1)(c) of the Act, learned Assessing Officer has aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the addition to the extent of ₹ 2,10,800/-. This is an ad-hoc disallowance and no penalty deserves to be levied upon the assessee qua this addition. Others are also ad-hoc disallowances namely advertisement expenses, commission expenses and interest under Section 244A of the Act. Thus, learned Counsel for the assessee emphasized that no penalty ought to be imposed upon the assessee. 6. On the other hand, learned Departmental Representative contended that the assessee got information that a notice under Section 148 would be issued upon it; therefore, it had filed a letter dated 22.03.2013 admitting certain errors in its return. As far as the other items are concerned, learned CIT(A) considered all these facts and thereafter confirmed the penalty. 7. We have heard rival submissions and gone through the record. Section 271(1)(c) of the Income-tax Act, 1961 has direct bearing on the controversy. Therefore, it is pertinent to take note of the section. "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 course of any proceedings under this Act, is satisfied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come' in the show-cause notice; but for visiting the assessee with penalty, the Assessing Officer has to record a conclusive finding. The discussion made by the Hon'ble jurisdictional High Court in this regard in the case of Snita Transport P. Ltd. (supra), particularly para no. 9, reads as under:-- "9. Regarding the contention that the Assessing Officer was ambivalent regarding under which head the penalty was being imposed namely for concealing the particulars of income or furnishing inaccurate particulars, we may record that though in the assessment order the Assessing Officer did order initiation of penalty on both counts, in the ultimate order of penalty that he passed, he clearly held that levy of penalty is sustained in view of the fact that the assessee had concealed the particulars of income. Thus insofar as final order of penalty was concerned, the Assessing Officer was clear and penalty was imposed for concealing particulars of income. In light of this, we may peruse the decision of this Court in case of Manu Engineering Works (supra). In the said decision, the Division Bench came to the conclusion that language of "and/or" may be proper in issuing a notice f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
