Mahindra Intertrade Ltd. v. Dy. CIT

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The Tax Publishers2012 TaxPub(DT) 1013 (Mum-Trib) : (2011) 133 ITD 0597 : (2012) 147 TTJ 0190 : (2012) 072 DTR 0138 INCOME TAX ACT, 1961 --Penalty under section 271(1)(c)--Bar of limitationApplicability of proviso to section 275(1)(a)--Assessee filed its return of income, declaring loss. Assessing officer after making certain adjustment, assessed positive income. CIT(A) and Tribunal confirmed these additions/disallowances. Thereafter assessing officer levied penalty under section 271(1)(c) on the additions confirmed by the appeallate authorities. Assessee submitted that the order imposing penalty under section 271(1)(c) was passed on 30-1-2009, whereas CIT(A) had passed the order in quantum proceedings on 31-8-2004 and, hence, the order is barred by limitation in terms of proviso to section 275(1)(a), inserted by Finance Act, 2003, for the reason that the first appellate authority had passed the order after 1-6-2003. Assessing officer submitted that the proviso only applies to the orders passed by CIT (A), which have not been appealed against before the Tribunal and that proviso does not apply to appeals which were pending before the Tribunal. Held: Was justified. Since penalty order under section 271(1)(c) was passed by assessing officer within a period of 6 months from the end of the month in which the order of the Tribunal was received by the CCIT/CIT in the quantum proceedings, therefore, penalty levied was just and proper. Income Tax Act, 1961, Section 275 Income Tax Act, 1961, Section 271(1)(c) INCOME TAX ACT, 1961 --Penalty under section 271(1)(c)--Inaccurate particulars of incomeProvision for doubtful debts--In the return of income, in respect of provisions for doubtful debts, an amount of Rs. 10 crores was debited to the Profit and Loss Account and claimed as deduction under sections 28, 36 or 37 as the case may be. Assessing officer made addition which was confirmed by Tribunal. Assessing officer levied penalty under section 271(1)(c) for furnishing incorrect particulars of income. Assessee submitted that the requirement of section 36(2) have not been satisfied. Nevertheless assessee submitted that the claim should be allowed either under section 28 or 37(1). Assessee further submitted that there was nothing inherently wrong in the claim and it was a debatable issue and that mere disallowance could not result in a penalty. Held: Since loss had not crystallized during the year, the claim could not have been made either under section 28 or 37. Thus the claim was not bona fide and was made without any basis and the explanation furnished by assessee for making such a claim was not found to be bona fide, therefore, assessee was liable to penalty under section 271(1)(c). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1013 (Mum-Trib) : (2011) 133 ITD 0597 : (2012) 147 TTJ 0190 : (2012) 072 DTR 0138

INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--Bar of limitationApplicability of proviso to section 275(1)(a)--Assessee filed its return of income, declaring loss. Assessing officer after making certain adjustment, assessed positive income. CIT(A) and Tribunal confirmed these additions/disallowances. Thereafter assessing officer levied penalty under section 271(1)(c) on the additions confirmed by the appeallate authorities. Assessee submitted that the order imposing penalty under section 271(1)(c) was passed on 30-1-2009, whereas CIT(A) had passed the order in quantum proceedings on 31-8-2004 and, hence, the order is barred by limitation in terms of proviso to section 275(1)(a), inserted by Finance Act, 2003, for the reason that the first appellate authority had passed the order after 1-6-2003. Assessing officer submitted that the proviso only applies to the orders passed by CIT (A), which have not been appealed against before the Tribunal and that proviso does not apply to appeals which were pending before the Tribunal. Held: Was justified. Since penalty order under section 271(1)(c) was passed by assessing officer within a period of 6 months from the end of the month in which the order of the Tribunal was received by the CCIT/CIT in the quantum proceedings, therefore, penalty levied was just and proper.

Income Tax Act, 1961, Section 275

Income Tax Act, 1961, Section 271(1)(c)

INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--Inaccurate particulars of incomeProvision for doubtful debts--In the return of income, in respect of provisions for doubtful debts, an amount of Rs. 10 crores was debited to the Profit and Loss Account and claimed as deduction under sections 28, 36 or 37 as the case may be. Assessing officer made addition which was confirmed by Tribunal. Assessing officer levied penalty under section 271(1)(c) for furnishing incorrect particulars of income. Assessee submitted that the requirement of section 36(2) have not been satisfied. Nevertheless assessee submitted that the claim should be allowed either under section 28 or 37(1). Assessee further submitted that there was nothing inherently wrong in the claim and it was a debatable issue and that mere disallowance could not result in a penalty. Held: Since loss had not crystallized during the year, the claim could not have been made either under section 28 or 37. Thus the claim was not bona fide and was made without any basis and the explanation furnished by assessee for making such a claim was not found to be bona fide, therefore, assessee was liable to penalty under section 271(1)(c).