Ram Ramesh (Professional) (25 Points)
11 July 2017
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(177736 Points)
Replied 11 July 2017
Please refer: https://itatonline.org/archives/section/2711c/
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(177736 Points)
Replied 11 July 2017
Landmark Judgment by Supreme Court On Penaltyu/s 271(1)(c) in Favour Of Taxpayers !
Very recent judgment of Supreme Court in
CIT vs Reliance Petroproducts Pvt Ltd
delivered on 17/3/2010, is a great relief to taxpayers as it has cleared the confusionin minds of Authorities regarding the imposition of penalty. In fact the decision of Apex Court in Dharmendra Textile embolden Authorities to the extent that penalty proceeding was turned into just a procedure contrary to the scheme framed by lawmakers. In the very recent judgment, the facts of the case was as under
The assessee is a company and the relevant Assessment Year is 2001-02. TheReturn was filed on 31.1.2001 declaring loss of Rs.26, 54,554/-. This assessmentwas finalized under Section 143(3) of the Act on 25.11.2003 whereby the totalincome was determined at Rs.2,22,688/-. In this assessment the addition in respect of interest expenditure was made. Simultaneously penalty proceedings under Section 271(1)(c) of the Act were also initiated on account of concealment of income/furnishing of inaccurate particulars of income. The said expenditure wasclaimed by the assessee on the basis of expenditure made for paying the interest onthe loans incurred by it by which amount the assessee purchased some IPL sharesby way of its business policies. However, admittedly, the assessee did not earnany income by way of dividend from those shares.
The company in its Return claimed disallowance of the amount of expenditurefor Rs.28,77,242/- under Section 14A of the Act.
By way of response to the Show Cause Notice regarding the penalty in its replydated 22.3.2006, the assessee claimed that all the details given in the Return werecorrect, there was no concealment of income, nor were any inaccurate particulars of such income furnished. It was pointed out that the disallowance made by the Assessing Authority in the Assessment Order under Section 143(3) of the Act weresolely on account of different views taken on the same set of facts and, therefore,they could, at the most, be termed as difference of opinion but nothing to do with theconcealment of income or furnishing of inaccurate particulars of such income. It wasclaimed that mere disallowance of the claim in the assessment proceedings couldnot be the sole basis for levying penalty under Section 271(1)(c) of the Act
The Supreme Court made following observation while dismissing the petition by Income Tax Department.
1. For every penalty u/s 271(1)(c) , one of the two conditions must be satisfied
• There must be concealment ; or
• Assessee must have furnished inaccurate particulars of income.
If none of these are alleged by A.O vide his order of assessment, penalty u/s 271(1)(c) can not be imposed.
Ram Ramesh
(Professional)
(25 Points)
Replied 11 July 2017
Thank you somuch for your quick reply sir
CAclubindia
