9911796707
Advanced Search 
TMI Blog2020 (8) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed u/s. 271(1)(c) of the Act for the Assessment Year 2012-13 is sustainable in law despite the complete disclosure of the sale of windmills and vacant lands in the financial statements which formed part of the annual report and return of income? 3. Whether the penalty under consideration is sustainable on the debatable issue on the reporting of capital gains pertaining to the sale of wind mills and vacant lands? 3. We have elaborately heard M/s. S. Yogalakshmi, learned counsel for the appellant/assessee and M/s. K.G. Usha Rani, learned Standing Counsel appearing for the respondent/revenue. 4. The assessment for the year under consideration, AY 2012-13 was completed under Section 143(3) of the Act by order dated 12.03.2015. During the course of the scrutiny assessment, the Assessing Officer noticed that the assessee had sold two landed properties at Kalapatti and Dharapuram and the capital gain was worked out for both the properties at Rs. 1,37,31,142/-. However this was not admitted by the assessee in the return of income. Further, the Assessing Officer found that the sale of windmill amounting to Rs. 21,60,00,000/- was not admitted by the assessee in the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)]. Apart from reiterating the stand regarding the bonafide inadvertent mistake, the assessee submitted that the entire Unit of the assessee has been sold by the bankers, that the assessee did not even have an office space to function, that the assessee had disclosed the relevant details regarding the sale of the lands and windmill in their annual report, which was published and that there was no concealment to the said effect. The CIT(A) rejected the stand taken by the assessee and held that there was concealment of income and penalty was leviable and accordingly confirmed the order of the Assessing Officer. Aggrieved over such order, the assessee preferred an appeal before the Tribunal reiterating the stand that there was no willful concealment of particulars and prayed for deleting the penalty. The Tribunal took note of the submissions, more particularly, the submission that it was an inadvertent mistake and rejected the same, after noting the conduct of the assessee and accordingly confirmed the order passed by the CIT(A) and dismissed the appeal. 6. M/s. S.Yogalakshmi, learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty set-aside for invoking two limbs of Section 271 (1) (c) of IT Act by AO: 1. CIT vs. SSA Emerald Meadows [(2016) 73 taxmann.com 248 (SC)]. 2. CIT V. Manjunatha Cotton and Ginning Factory [(2012) SCC OnLine Kar 8862] 3. CIT vs. SSA Emerald Meadows" [in ITA No. 380/2015 (Kar)] 4. Ventura Textiles Vs CIT [(2020) SCC Online Bom 709] 5. S Chandrasekar Vs ACIT [(2017) SCC Online Kar 853] 6. Gayathri Exports VS ACIT [ITA 640/2015 (Kar HC)] 7. SHRI S P PRASAD V. ACIT [(2018) - ITA 170/2010 (Kar HC)] 8. CIT v. Virgo Marketing (P) Ltd. [2008] 171 Taxman 156 9. CIT v. Manu Engg. [1980] 122 ITR 306 10. Pr. CIT vs. Smt. Baisetty Revathi - [2017] 398 ITR 88 (Andhra Pradesh HC) 11. Nayan C. Shah vs. Income Tax Officer ITA No.2822/ Ahd/2011 12.Muninaga Reddy vs. Assistant Commissioner of Income Tax ITA NOS. 251/2016 & 390/2016 (T-IT) 13. Safina Hotels Private Limited vs. CIT ITA No.240/2010 III- Sec 271 (1) (C) of IT Act - Concealment of income & Furnishing inaccurate particulars of income have different connotations: 1. Sri T.Ashok Pai vs. CIT [(2007) 292 ITR 11 (SC)] 2. Dilip N Shroff [291 ITR 519 (SC)] 3. CIT Vs Lakhdhir lalji [85 ITR 77(Guj),] 4. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn and for the first time, the assessee admitted to do so on 1st March 2017 when the matter was before the Tribunal. This will clearly establish that the conduct of the assessee is not bonafide. Further it is submitted that the penalty proceedings cannot be set aside merely on the ground that the return of income and the assessed income was a loss. In this regard, placed reliance on the decision of the Hon'ble supreme Court in CIT vs. Shree Chowatia Tubes (India) (P) Ltd. [(2017) 80 Taxmann.com 388]. Further, it is submitted that the non-disclosure of the capital gains came to light based on the annual information report and that is how the Assessing Officer came to know that the sale of the land and windmill were not admitted by the assessee in the return of income, which led to issuance of notice under Section 143(2) of the Act. The assessee never declared anywhere in the return of income about the sale of the lands and windmill and the copy of the annual report was not placed before the Assessing Officer or before the CIT(A). The learned standing counsel placed reliance on the decisions in the case of N.G. Technoligies (In Liquidation) vs. Commissioner of Income Tax [(2016) 70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of law, but a mixed question of fact and law. If such is the position, the vigilant assessee, more particularly, a listed Company like the assessee before us should point out the factual issue at the very first instance. If that was not done by the assessee, then it goes to show that the assessee was not prejudiced by the use of the expression 'or'. 9. This very question was considered in the case of Sundaram Finance Ltd., wherein an identical submission was made by the assessee by placing reliance on Manjunatha Cotton and Ginning Factory. The Court taking note of the fact that the authorities concurrently rejected the explanation offered by the assessee and refused to interfere with the factual finding. In paragraph 16 of the judgment, the argument regarding the defective notice was considered and answered against the assessee which is quoted herein below: 16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect, the Assessing Officer has levied penalty. 12. Among the decisions relied on, emphasis was laid on the decision in the case of CIT vs. Pricewaterhouse Coopers Pvt. Ltd. To answer this issue, it would be first necessary to examine the factual position and to assess the conduct of the assessee, which is being projected as being absolutely bonafide. The return of income was filed by the assessee on 26.09.2012. A notice under Section 143(2) was issued on 13.08.2013 for which there was no response and the Assessing Officer issued notice Section 142(1) dated 09.09.2014 calling for details. The assessee submitted their reply dated 22.09.2014 in which, admittedly no information was disclosed about the sale the lands and windmill. On 03.03.2015, a letter was filed by the assessee, which is in response to the notice under Section 143(2), in which, the assessee states that due to oversight, they had not offered the capital gains in their return and attached a summary of total income adjusting profit on the LTCG and the STCG. To be noted, the assessee did not file a revised return. The assessment was completed under Section 143(3). In response to the penalty notice dated 12.03.2015, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings have to be initiated, by relying to the decision in the case of D.M.Manasvi to support the argument that the enire circumstances should have been considered, more particularly, the financial distress to which the assessee was thrown. 14. We have carefully perused the penalty order dated 25.09.2015 and we find that the Assessing Officer considered all the factual aspects raised by the assessee and rejected the same to be absolutely without bonafides. The decisions relied on by the assessee were also taken note of and each of the decisions was dealt with. The Assessing Officer placed reliance on the decision of the Hon'ble Supreme Court in Mak Data P. Ltd vs. CIT-II [(2018) 38 taxmann.com 448 (SC)] and stated that voluntary disclosure does not release the assesee from mischief of penalty proceedings under Section 271(1)(c) of the Act. Therefore, we find that the penalty order is a reasoned order. 15.The learned counsel had argued that the defect in the penalty notice is a question of law which can be raised by the assessee at any point of time. We have considered this submission and we have rejected it. The learned counsel relied on the decision of the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be aware of the law and its intricacies. Being a professional, he could not have committed a mistake as was attributed to him. The tax paid is undisputedly an inadmissible expenditure from the profits of the business. Hence this amount should have been statutorily added back. Further, from the computation of income, the assessee added back certain inadmissible expenditure. However, he excluded the amount of income tax paid to the extent of Rs. 48,90,114/-. Thus, the addition was only partial and not full. Unless and until the legal provision then in force permitted exclusion of the amount of income tax already paid, the Chartered Accountant could not have done this. The Chartered Accountant cannot feign ignorance of Section 40(ii) of the Income Tax Act as he is well trained and well versed in law representing not only the assessee, but various other clients. As far as the assessee's malafide intention is concerned, the burden was entirely on the assessee to then show in terms of Explanation-I to the provision permitting imposition of penalty that such intention never existed when the above act was committed. For that, there was no material either in the form of evidence of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
