Monday, October 12, 2015

[aaykarbhavan] Judgments and Infomration [5 Attachments]





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Parinee Developers Pvt Ltd vs. ACIT (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: September 11, 2015 (Date of pronouncement)
DATE: October 12, 2015 (Date of publication)
AY: 2009-10
FILE: Click here to download the file in pdf format
CITATION:
S. 271(1)(c): If the notice does not clearly specify whether the penalty is initiated for "concealment" or for "filing inaccurate particulars", it is invalid. Penalty should be imposed merely because the income has been offered to tax in a later year and not in the present year
The assessee contented that the penalty notice issued u/s 274 of the Act is ambiguous to the extent for which the penalties are initiated. The said notice does not specify where the present penalty is being levied for concealment of income or for furnishing of inaccurate particulars of income. CIT (A) did not strike of the irrelevant limb mentioned in the notice u/s 274 of the Act. CIT (A) is not clear as to the relevant limb of the provisions of section 271(1)(c) of the Act for which penalty should be levied. Further, in the quantum order u/s 250 of the Act, the CIT (A) initiated penalty for assessee's failure in furnishing inaccurate particulars in respect of estimated cost of future expenditure resulted in suppression of income. In the penalty order of the CIT (A), penalty was levied for "concealment of particulars of income‟ in respect of the change in estimated cost. By all these variations, the CIT (A) is not clear as to whether the penalties are levied for "concealment of income" or "furnishing of inaccurate particulars of income". Further, Ld Counsel for the assessee brought our attention to various decisions of the Tribunal to support his argument that the penalty should not be levied when the CIT (A) is not clear in reasons for levying the penalty. Ld Counsel for the assessee also mentioned that the CIT (A) cannot initiate penalty for one reason and levy for other reasons. In this regard, Ld Counsel for the assessee relied on the judgment of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (92 DTR 111) (Kar. HC) and the coordinate Bench decision in the case of Shri Samson Perinchery (ITA Nos. 4625 to 4630/M/2013), dated 11.10.2013, wherein one of us (AM) is a party to the said order of the Tribunal (supra). He also relied on the following decisions viz (i) M/s. Ittina Properties Pvt Ltd (ITA No.36/Bang/2014), dated 21.11.2014 (Bang); (ii) Dharini Developers (ITA No.1848 to 1851/M/2012), dated 7.1.2015 (Mum) and others. All these general arguments relevant for all the 4 segments of the penalties discussed above. Per contra, no contrary judgments are brought to our notice by the Ld DR. HELD by the Tribunal:
The concealment penalty was levied by the CIT (A) in this case on the issues which are not free from debate. In our opinion, the assessee would have got relief in most of issues relating to additions based on the estimations, change of method of accounting, preponement of taxable income to AY 2009-2010 etc. Taxation of interest receipt with or without netting is under the head "profit and gains from business or profession" or "income from other sources" is also a debatable issue. Therefore, the concealment penalty in the case is not sustainable on such addition / issues. Further, the decision in the case of Manjunatha Cotton & Ginning Factory (supra) helps the assessee considering the lack of clarity in the mind of the CIT (A), at the time when notice u/s 274 was issued. Further also, it is demonstrated beyond doubt that there are no adverse tax implications to the Revenue if the profits are finally taxed in AY 2012-2013, the year of completion. Therefore, we are of the opinion that this is not a fit case for levy of penalty u/s 271(1)(c) of the Act. Accordingly, all Grounds raised by the assessee are allowed.

Related Judgements

  1. Rushi Builders and Developers vs. ACIT (ITAT Mumbai) 
    The disallowance of expenditure was attracted due to non-deduction of TDS and it cannot be said to be a case of concealment of income or furnishing of inaccurate particulars of income. The levy of penalty u/s.271(1)(c) of the Act is not attractedRead more ›
  2. Hafeez S. Contractor vs. ACIT (ITAT Mumbai) 
    The notice issued by the AO u/s 274 read with section 271 of the Act at the time of initiation of penalty proceedings states that it is issued for "concealment of particulars of income or furnishing of inaccurate particulars of income". The assessing officer has not specified that as…
  3. Tristar Intech (P) Ltd vs. ACIT (ITAT Delhi) 
    There are two different charges i.e. concealment of particulars of income or furnishing of inaccurate particulars of income. The penalty can be imposed only for a specific charge. Furnishing inaccurate particulars of income means, when the assessee has not disclosed the particulars correctly or the particulars disclosed by the…
  4. DCIT vs. Nepa Limited (ITAT Indore) 
    (i) It is incumbent upon the Assessing Officer to state whether penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. There are two…Read more ›
  5. ACIT vs. Crescent Property Developers (ITAT Mumbai) 
    Though the assessee offered a sum of Rs. 1 crore during the survey on account of discrepencies, errors and omissions in the accounts, at the stage of the assessment, there is no reference to any incriminating material found during the…Read more ›


S. 271(1)(c): If the notice does not clearly specify whether the penalty is initiated for "concealment" or for "filing inaccurate particulars", it is invalid. Penalty should be imposed merely because the income has been offered to tax in a later year and not in the present year the penalty notice issued u/s 274 of the Act is ambiguous to the extent for which the penalties are initiated. The said notice does not specify where the present penalty is being levied for concealment of income or for furnishing of inaccurate particulars of income. CIT (A) did not strike of The irrelevant limb mentioned in the notice u/s 274 of the Act. CIT (A) is not clear as to the relevant limb of the provisions of section 271(1)(c) of the Act for which penalty should be levied. Further, in the quantum order u/s 250 of the Act, the CIT (A) initiated penalty for assessee's failure in furnishing inaccurate particulars in respect of estimated cost of future expenditure resulted in suppression of income. In the penalty order of the CIT (A), penalty was levied for "concealment of particulars of income‟ in respect of the change in estimated cost. By all these variations, the CIT (A) is not clear as to whether the penalties are levied for "concealment of income" or "furnishing of inaccurate particulars of income"

Uday C Tamhankar vs. DCIT (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: September 11, 2015 (Date of pronouncement)
DATE: October 12, 2015 (Date of publication)
AY: 2002-03 to 2008-09
FILE: Click here to download the file in pdf format
CITATION:
Extrapolation: Fact that assessee admitted undisclosed income for one year does not mean that AO can assume that similar undisclosed income is earned in earlier years as well
The assessing officer estimated the professional income of the assessee for assessment years 2002-03 to 2007-08. The reasoning given by the AO is explained in brief. The excess cash found at the time of search was declared by the assessee as his income for the AY 2008-09. Accordingly, the assessee included the same in the professional receipts. Accordingly the professional receipts for AY 2008-09 was shown at Rs.328.70 lakhs. The AO took the total number of working days for that year as 300 and accordingly worked out the average collection per day as Rs.1,09,000/-. Then the AO presumed that the assessee would have earned professional collections in the same pattern in the earlier years also. Accordingly, he estimated the average daily collection at Rs.1,00,000/-, Rs.90,000/-, Rs.80,000/-, Rs.70,000/-, Rs.60,000/- and Rs.50,000/- respectively for assessment years 2007-08, 2006-07, 2005-06, 2004-05, 2003-04 and 2002-03. Accordingly the assessing officer worked out the gross receipts. Then the AO worked out the difference between the gross receipts declared by the assessee and that was worked out by him. Thereafter he applied the net profit rate declared by the assessee on the difference and accordingly worked out the additions. On appeal by the assessee the CIT(A) deleted the addition. On appeal by the department to the Tribunal HELD dismissing the appeal:
There is no dispute with regard to the fact that the revenue did not unearth any incriminating material, which could suggest that there was under billing or evasion of professional receipts. The revenue only stumbled with excess cash balance and the same was surrendered as income of the year in which the search took place. The assessee offered the same as his professional income. As observed by CIT(A), the unexplained cash is required to be assessed in the year in which it was found as per the deeming fiction of provisions of sec. 69A of the Act, which does not mean that the assessee would have earned the entire excess cash balance in one year. Hence, in our view also, the assessing officer misguided himself by presuming that the entire undisclosed cash balance represents his professional fee collected during the financial year relevant to the assessment year 2008-09. Hence, in our view, the CIT(A) has rightly concluded that the assessing officer did not bring any material on record to support his case of estimation of professional receipts of earlier years. We also notice that the assessing offer has assessed the net profit on the alleged suppressed professional receipts, meaning thereby, the assessing officer has presumed that the assessee would have suppressed corresponding expenses also. Again it is only a guess work only, unsupported by any material. Similarly, the average daily collection estimated by the AO was also mere guess work. In effect, there is no material available with the AO to show that the assessee has suppressed professional receipts as well as expenses in order to substantiate the estimation made by him. During the course of hearing, the Ld D.R placed reliance on the decision rendered by Hon'ble Punjab & Haryana High Court in the case of Ved Prakash Vs. CIT (265 ITR 642) to support the estimation made by the assessing officer. However, we notice that the Hon'ble Punjab & Haryana High Court has considered a case, wherein materials were found during the course of search. However, in the instant case, no material relating to suppression of professional fee receipts was found.

Related Judgements

  1. Rita Stephen Pinto vs. ITO (ITAT Mumbai) 
    Though the assessee could not furnish the confirmation of the loan and other evidences but such a loan could not have been added in the A.Y. 2005-06 as the same was taken in the earlier years and is being carried forward. In this year it is appearing balance of…
  2. DCIT vs. Garware Polyester Ltd (ITAT Mumbai) 
    Assessing Officer has not specified categorically that as to how the Part II & III of Schedule VI has not been followed or is against the prescribed accounting standard there is a requirement of law that waiver of loan taken for utilizing capital expansion is to be routed only…
  3. Jignesh P. Shah vs. DCIT (ITAT Mumbai) 
    Since the assessment had attained finality before the date of search and does not get abated in view of second proviso to section 153A, therefore, without there being any incriminating material found at the time of search, no addition over and above the income which already stood assessed can…
  4. DCIT vs. Aanjaneya Life Care Ltd (ITAT Mumbai) 
    The assessee claimed that it was having meagre cash and current balances and was in financial constraints during the year under consideration. If there is financial hardship to the assessee it has to be considered as sufficient cause in which event penalty cannot be leviedRead more ›
  5. R. L. Allied Industries vs. ITO (ITAT Delhi) 
    As per Section 153A(1)(b), the Assessing Officer is empowered to assess or reassess the total income of the six assessment years immediately preceding the assessment year relevant to the assessment year in which search is conducted. Thus, in other words,…Read more ›

Extrapolation: Fact that assessee admitted undisclosed income for one year does not mean that AO can assume that similar undisclosed income is earned in earlier years as well The assessing officer did not bring any material on record to support his case of estimation of professional receipts of earlier years. We also notice that the assessing offer has assessed the net profit on the alleged suppressed professional receipts, meaning thereby, the assessing officer has presumed that the assessee would have suppressed corresponding expenses also. Again it is only a guess work only, unsupported by any material. Similarly, the average daily collection estimated by the AO was also mere guess work. In effect, there is no material available with the AO to show that the assessee has suppressed professional receipts as well as expenses in order to substantiate the estimation made by him


For filing frivolous appeals and harassing taxpayers, heavy/exemplary costs to be imposed which will have to be personally paid by the jurisdictional CIT who sanctioned filing of the appeal We are now putting the Officers of the Revenue to notice, that in all cases including where appeals are filed, the Offices instructing the Counsel would review whether the appeal should at all be pressed in view of the Revenue having accepted the jurisdictional High Court's order on an identical issue and take necessary instructions from the Commissioner of Income Tax to withdraw and/or not press the appeal. Alternatively, in case a conscious decision is taken to press the appeal, then an averment to the effect that either the case is distinguishable or an appeal has been preferred from the decision of this Court to the Apex Court if not averred in the appeal memo, then a further affidavit in support be filed indicating the reasons. In the absence of the above, we will be compelled to impose heavy/exemplary costs to be personally personally paid by the jurisdictional – Commissioner of Income Tax under whose jurisdiction, the appeal is being filed and pressed in spite of the issue being settled by this Court and the same having been accepted by the Revenu

CIT vs. Proctor and Gamble Home Products Ltd (Bombay High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: January 19, 2015 (Date of pronouncement)
DATE: October 12, 2015 (Date of publication)
AY: -
FILE: Click here to download the file in pdf format
CITATION:
For filing frivolous appeals and harassing taxpayers, heavy/exemplary costs to be imposed which will have to be personally paid by the jurisdictional CIT who sanctioned filing of the appeal
(i) It needs to be pointed out that we have noticed that the Revenue has been preferring appeals from the orders of the Tribunal even where the issue stands concluded by the orders of this High Court. These appeals are filed by the Revenue in a very causal manner without indicating the basis of the challenge i.e. some distinction in facts from the order of the High Court or that the order of the jurisdictional High Court is a subject matter of challenge before the Apex Court. In the absence of the above explanation, it follows that there are times when even though the decision of the jurisdictional High Court has been accepted by the Revenue and yet the Revenue chooses to file an appeal on the same issue before this Court. Rule of law implies certainty of law and the State filing appeals on settled issues arbitrarily and/or without any application of mind. This filing of appeal without due application of mind leads to attempting to unsettle settled position without reasons. This casual manner of filing appeals subjects an assessee to unnecessary expenditure and at times anxiety. Even the Revenue incurs substantial expenses in pursuing unwarranted cases, which are a sheer waste of public money. The least that the Revenue should do is to examine whether or not the decision of the jurisdictional High Court being relied upon by the Tribunal, is subject matter of challenge before the Apex Court or is otherwise distinguishable and the same must be indicated in the appeal memo.
(ii) In the above view, we were contemplating to impose costs on the Revenue. However, we noticed that on earlier occasion when costs were imposed on the Revenue, it seemed to matter little to the Officers, for after all the amount came out of the general pool of tax paid by the tax payers. In the circumstances, we are now putting the Officers of the Revenue to notice, that in all cases including where appeals are filed, the Offices instructing the Counsel would review whether the appeal should at all be pressed in view of the Revenue having accepted the jurisdictional High Court's order on an identical issue and take necessary instructions from the Commissioner of Income Tax to withdraw and/or not press the appeal. Alternatively, in case a conscious decision is taken to press the appeal, then an averment to the effect that either the case is distinguishable or an appeal has been preferred from the decision of this Court to the Apex Court if not averred in the appeal memo, then a further affidavit in support be filed indicating the reasons. In the absence of the above, we will be compelled to impose heavy/exemplary costs to be personally personally paid by the jurisdictional – Commissioner of Income Tax under whose jurisdiction, the appeal is being filed and pressed in spite of the issue being settled by this Court and the same having been accepted by the Revenue.

Related Judgements

  1. Charu Home Products Pvt. Ltd vs. CIT (Delhi High Court) 
    This writ petition is directed against the order dated 06.08.2014 passed by the Additional Commissioner of Income Tax with the approval of the CIT, Delhi-I, New Delhi. By virtue of the said order dated 06.08.2014 the stay application filed by…Read more ›
  2. CIT vs. Sairang Developers and Promoters Pvt.Ltd (Bombay High Court) 
    High Court imposes costs of Rs. 50,000 on AO for filing frivolous appeal & wasting public money & judicial time
    Though the Bench clearly indicated to the department's counsel that the appeal had no merit and gave the department an opportunity to withdraw, the department did not do so….
  3. CIT vs. Sevak Pharma Pvt. Ltd (Bombay High Court) 
    The grievance of the Revenue is that the Tribunal ought to have entertained the appeal by following the decision of the Apex Court in the matter of Surya Herbal Ltd. However, the revenue has not been able to point out before us any of circumstance as laid down by…
  4. DIT vs. Credit Agricole Indosuez (Bombay High Court) (No. 1) 
    Undoubtedly, an Advocate has to fearlessly put forth his client's point of view, however the same has to be tempered /guided by truth and justice of the dispute. In matters of tax, justice requires that there must be certainty of law which presupposes equal application of law. Thus where…
  5. CIT vs. Larsen and Toubro Ltd (Bombay High Court) 
    Frivolous appeals by dept results in harassment to assessee & wastage of judicial time. Dept to pay costs of Rs. 3 Lakh. Costs may be recovered from, disciplinary action taken against, concerned official
    (i) We are surprised if not shocked that such appeals are being brought before us and…




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