9911796707
TMI Blog2025 (1) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... an inadvertent omission, but we are unable to persuade ourselves to concur with the same. As the assessee firm had failed to come forth with any plausible explanation for having suppressed/understated the net profit in its return of income, therefore, as observed by the CIT(Appeals) and, rightly so, it was liable to be saddled with penalty u/s. 271(1)(c) of the Act. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals) who had rightly saddled the assessee firm with penalty u/s. 271(1)(c) of the Act on the aforementioned amount of understated/suppressed net profit uphold the same. Deduction of expenses of FBT, donation and prior period expenses - There is nothing available on record which would substantiate the genuineness of the aforesaid expenses, which the assessee had admitted before the CIT(Appeals) as inadmissible, therefore, the same is nothing short of raising of a false/wrong claim of deduction. We, thus, in terms of our aforesaid observations, find no infirmity in the view taken by the CIT(Appeals) who had rightly imposed penalty u/s. 271(1)(c) on the assessee firm for raising a wrong claim of deduction of expenses. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income. 6. That, the impugned order of assessment and demand notice received by the appellant on 08.01.2011 is barred by limitation and for that matter, the demand notice and assessment order are liable to be quashed and/or annulled. As there cannot be any demand. Therefore penalty should not be levied as there is neither concealment of income nor furnishing of inaccurate particulars of income. 7. That, the learned Assessing Officer has made disallowance of expenses u/s. 40 (a) (ia) of the Act when the entire amount has been paid and nothing remains payable and for that matter the disallowance u/s. 40(a)(ia) of the Act is illegal, without jurisdiction and the same is liable to be deleted. Therefore penalty should not be levied as there is neither concealment of income nor furnishing of inaccurate particulars of income. 8. That, the learned Assessing Officer has erred both in law and in fact by estimating the income of the appellant and for that matter the same is liable to be deleted. Therefore penalty should not be levied as there is neither concealment of income nor furnishing of inaccurate particulars of income. 9. That, the learned Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 143 (2). More over service of the order was time barred and has no legal standing and the entire demand is illegal needs to be quashed. Hence no penalty can be imposed. That the Appellant craves the leave of the Hon'ble Bench to add, alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal, submit written submissions, paper book and such other facts and figures before or at the time of final hearing of the case, if necessary so arises." 2. Succinctly stated, the assessee firm which is engaged in the business of execution of works contracts had filed its return of income for A.Y.2008-09 on 30.09.2008, declaring an income of Rs. 35,29,930/-. Subsequently, the case of the assessee firm was selected for scrutiny assessment u/s. 143(2) of the Act. 3. Thereafter, assessment was framed by the A.O vide his order passed u/s. 144 (sic), dated 31.12.2010, wherein the income of the assessee firm was determined at Rs. 6,07,64,390/-, after, inter alia, making certain additions/disallowances, viz. (i) disallowance u/s. 40(a)(ia) of the Act : Rs. 4,89,10,524/-; (ii) determination on an estimate basis the income of the assessee i.e. @ 8% of its turnover of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions that were sustained by the latter vide his order dated 30.01.2012. Although the assessee firm tried to impress upon the A.O that no penalty u/s. 271(1)(c) of the Act was called for in its hands but the same did not find favour with him. (a). Apropos the disallowance of the assessee's claim for deduction of expenses of Rs. 82,08,597/- u/s. 40(a)(ia) of the Act, the A.O observed that as the assessee firm despite being well aware about the statutory provisions of deduction of tax at source had failed to deduct the same on the aforementioned payments, therefore, to the said extent, it was liable to be visited with penalty u/s. 271(1)(c) of the Act for furnishing of inaccurate particulars of income and thereby concealing its correct income. (b). As regards the addition of Rs. 9 lacs qua the unexplained additions to the capital accounts of the partners, viz. S/shri Raj Kishore Sahu (Rs.3.50 lacs) & Shri Uday Nath Sahu (Rs.5.50 lacs), the A.O observed that as the assessee firm even in the course of the quantum appeal proceedings had failed to explain the source of the cash credits in the capital accounts of the respective partners, therefore, it was liable to be subjected to pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 57,58,944/- i.e. expenses incurred on hire charges, wrapping and quoting expense, radiography charges etc., on which the assessee firm had failed to deduct tax at source or carried out short deduction, the CIT(Appeals) was of the view that as there were no adverse inferences drawn by the A.O regarding the genuineness of the incurring of the said expenses, therefore, no penalty u/s. 271(1)(c) of the Act was liable to be imposed on the amount of expenditure so disallowed. At the same time, the CIT(Appeals) observed that the assessee's claim for deduction of certain expenses of Rs. 24,49,653/- which were wrongly disallowed u/s. 40(a)(ia) of the Act, thereafter, was rectified in the course of quantum appeal and modified as an addition u/s. 69C of the Act. As the A.O had not made any specific comment regarding the imposition of penalty on the aforesaid addition of Rs. 24,49,653/- (supra), therefore, the CIT(Appeals) was of the view that no penalty on the said amount could have been imposed. 12. As regards the penalty imposed u/s. 271(1)(c) of the Act on the addition made by the A.O towards unexplained credits in the capital accounts of the partners aggregating to Rs. 9 lacs, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Rukmani Infra Project Pvt. Ltd., Bhubneshwar wherein, he is posted as DGM, Finance. Thus, aforesaid expenses are not subject to verification. The-Ld.AR, however, admits that prima facie inadmissible expenses i.e. FBT of Rs. 1,29,423/-, Donation and Secretion of Rs. 1,10,635/-, Prior Period expenses of Rs. 1,76,917/- totaling to Rs. 4,16,975/- ought to be added to net profit at Rs. 68,82,127/-." Thus, the income from the business is Rs. 68,82,127/-. plus Rs. 4,14,975/- i.e. Rs. 72,99,102/-, as admitted by the appellant before the CIT(Appeals), Bilaspur in course of appellate proceedings on quantum appeal. To this admitted income, the CIT(Appeals), Bilaspur added Rs. 24,43,309/- being interest and remuneration paid to the partners not admissible for complete failure of the appellant firm to comply notice u/s 142(1)/143(2) r.w.s. 184(5) of the Act and modified the addition to Rs. 97,42,411/-. Hence, it is not a case that the CIT(Appeals), Bilaspur confirmed the addition estimated at 8% of the turnover and accordingly, the submission of the Ld. AR that the AO has imposed penalty on estimated income is misplaced. Similarly, on account of theory of merger, the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding addition out of denial of remuneration and interest paid to the partners, I find that the addition was,. made for complete failure of the appellant to comply the notices u/s. 142(1)/143(2) r.w.s. 184(5) of the Act. Hence, there is neither any element of concealment nor element of inaccurate particulars of income filed in the return and therefore, penalty on such addition is not leviable. In view of the above facts and circumstance of the case, the AO is directed to levy minimum penalty on Rs. 37,67,172/- out of sustained addition of Rs. 62,12,482/- to business income. The other addition made to the returned income is disallowance of expenses of Rs. 4,89,10,524/- u/s. 40(a)(ia) and the CIT(Appeals), Bilaspur in the captioned appellate order has allowed relief of Rs. 4,07,01,927/-. The addition of Rs. 57,58,944 -out of expenditure on hire charges expenses, wrapping and quoting expenses. radiography charges, etc. for non-deduction or short deduction of tax at source and addition of Rs. 24,49,653/- on account of unexplained expenditure was confirmed by the 1st Appellate Authority. So far as addition of Rs. 57,58,944/- is concerned, no inaccurate particulars were filed as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h must be prepared and kept by the business entity including the profit and loss account and the balance-sheet. In traditional terms, books means a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used are kept collectively in one volume. It may also be assumed that it connotes the intention that it should serve as a permanent record. At the same time, to account means to reckon, and it is difficult conceive of any accounting which does not involve either additions or subtractions or both of these operations of arithmetic. A book which contains successive entries of items may be a good memorandum book; but until those entries are totaled or balanced, or both, as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which on account is made at any time, is not a book of account in a commercial sense. [Sheraton Apparels Vs. ACIT (2002) CTR 81 (Born. HC)]. Section 2(12A) defines the said term as including ledgers, day-books, cash books, account books and other books whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant firm. The addition made in the returned income is confirmed." In course of penalty proceedings, the Ld. AR did not furnish any submission to rebut the presumption raised in the Explanation-1 to section 271(1)(c) of the Act. No fresh ground was taken to establish the introduction of fresh capital by the partners with cogent evidence. In absence of any fresh material, observation of the CIT(Appeals), Bilaspur in course of appellate proceedings on quantum appeal is formed as basis for deciding the issue and from the above observation, inference of furnishing in accurate particulars of income in the return is drawn & placing reliance in the ratio of the case in CIT Vs. Reliance Petro Products Pvt. Ltd. reported in 322 ITR 158 found to be applicable, it is held that penalty u/s. 271(1)(c) of the Act is imposable. In view of the above, the AO is directed to impose minimum penalty on tax sought to evaded on enhanced income of Rs. 46,67,172/- (Rs.37,67,172/- + Rs. 9,00,000/-). 3. In the result, the appeal is partly allowed." 14. The assessee firm being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 15. As the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory provision. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals) who had rightly saddled the assessee firm with penalty on the aforesaid addition of Rs. 9 lacs made u/s. 68 of the Act, uphold the same. B). Re: Penalty sustained by the CIT(Appeals) qua the addition to the business income of Rs. 37,67,172/- (out of Rs. 62,12,482/-) 20. Apropos the aforesaid issue, we find that the CIT(Appeals) while disposing off the quantum appeal had, inter alia, observed that the assessee firm in its return of income had understated its net profit by an amount of Rs. 33,52,197/-. Accordingly, the CIT(Appeals) made an addition of the aforesaid amount to the returned income of the assessee firm. Apart from that, the CIT(Appeals) had further disallowed certain expenses aggregating to Rs. 4,16,975/- which the assessee firm had admitted before him as inadmissible. 21. Thereafter, the CIT(Appeals) while disposing off the appeal filed by the assessee firm against the order passed by the A.O u/s. 271(1)(c) of the Act, had directed the A.O to impose minimum penalty on tax sought to be evaded by the assessee firm on the aforementioned amount i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
