Gangotri Textiles Ltd. v. The Deputy Commissioner of Income-tax, Corporate Circle 2, Coimbatore
[Citation -2020-LL-0825-11]

Citation 2020-LL-0825-11
Appellant Name Gangotri Textiles Ltd.
Respondent Name The Deputy Commissioner of Income-tax, Corporate Circle 2, Coimbatore
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 25/08/2020
Assessment Year 2012-13
Judgment View Judgment
Keyword Tags furnishing inaccurate particulars of income • non-application of mind • imposition of penalty • concealment of income • voluntary disclosure • financial condition • defective notice • levy of penalty • annual report • penalty order • sale of land • satisfaction • capital gain • mens rea
Bot Summary: Taking note of the admission made by the assessee, the LTCG and the STCG were added to the total income of the assessee and accordingly assessment was completed. 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 conduct of the assessee in concealing the income by not mentioning the sale of windmill and the lands will clearly establish the lack of bonafides on the part of the assessee. To demonstrate the conduct of the assessee, the learned standing counsel referred to the list of dates and pointed out that the conduct of the assessee will clearly show that the concealment was motivated and intended to benefitthe assessee. Further, we find that in the reply given by the assessee on 08.04.2015, the assessee would state that there is no concealment any income or furnishing any inaccurate particulars. 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 assessee relies upon the annual report and substantial portion of the report was read to us by the learned counsel to impress upon us that the assessee's non-disclosure was bonafide and an inadvertent mistake.


T.C.A.No.266 of 2018 In High Court of Judicature at Madras Orders Reserved On Orders Pronounced On 18.08.2020 25.08.2020 Coram : Honourable Mr.Justice T.S.SIVAGNANAM and Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.266 of 2018 and C.M.P.Nos.4876 & 4877 of 2018 M/s.Gangotri Textiles Ltd., 35, Robertson Road, RS Puram, Coimbatore. PAN: AAACG8018M ...Appellant Vs Deputy Commissioner of Income Tax, Corporate Circle 2, Coimbatore. ...Respondent APPEAL under Section 260A of Income Tax Act, 1961 against order dated 26.05.2017 in ITA No.3413/Mds/2016 on file of Income Tax Appellate Tribunal Chennai 'A' Bench for assessment year 2012-13. For Appellant : M/s.S.Yogalakshmi For Respondent : Mr.T.R.Senthil Kumar M/s.K.G.Usha Rani Standing Counsel 1/24 http://www.judis.nic.in T.C.A.No.266 of 2018 JUDGMENT Judgment was delivered by T.S.SIVAGNANAM,J This appeal by assessee filed under Section 260A of Income Tax Act, 1961 ( Act for brevity), is directed against order dated 26.05.2017 passed by Income Tax Appellate Tribunal, Chennai 'A' Bench (for brevity, Tribunal) in ITA No.3413/Mds/2016 for assessment year 2012-13. 3.The appeal is entertained on following substantial questions of law: 1.Whether penalty imposed u/s. 271(1)(c) of Act for Assessment Year 2012-13 is sustainable in law despite invalid initiation of said proceedings on issuance of show cause notice dated 12.03.2015? 2.Whether penalty imposed u/s. 271(1)(c) of Act for Assessment Year 2012-13 is sustainable in law despite complete disclosure of sale of windmills and vacant lands in financial statements which formed part of annual report and return of income? 2/24 http://www.judis.nic.in T.C.A.No.266 of 2018 3.Whether penalty under consideration is sustainable on debatable issue on reporting of capital gains pertaining to sale of windmills and vacant lands? 3.We have elaborately heard M/s.S.Yogalakshmi, learned counsel for appellant/assessee and M/s.K.G.Usha Rani, learned Standing Counsel appearing for respondent/revenue. 4.The assessment for year under consideration, AY 2012-13 was completed under Section 143(3) of Act by order dated 12.03.2015. During course of scrutiny assessment, Assessing Officer noticed that assessee had sold two landed properties at Kalapatti and Dharapuram and capital gain was worked out for both properties at Rs.1,37,31,142/-. However this was not admitted by assessee in return of income. Further, Assessing Officer found that sale of windmill amounting to Rs.21,60,00,000/- was not admitted by assessee in return of income filed and short term capital gain arising on sale of windmill was Rs.21,59,90,469/- after reducing opening WDV of Rs.9,531/-. Assessing Officer called upon assessee to explain this aspect and in course of assessment, assessee admitted to 3/24 http://www.judis.nic.in T.C.A.No.266 of 2018 have omitted sale of land and windmill and filed letter dated 03.03.2015 along with computation of Long Term Capital Gain [LTCG] on sale of lands and Short Term Capital Gain [STCG] on sale of windmill. Taking note of admission made by assessee, LTCG and STCG were added to total income of assessee and accordingly assessment was completed. assessment order stated that penalty proceedings under Section 271(1)(c) is initiated separately. notice under Section 274 r/w. 271(1)(c) of Act dated 12.03.2015 was issued to assessee to show cause as to why order imposing penalty should not be made under Section 271 of Act. Personal hearing was offered to assessee. assessee availed opportunity and filed their written submissions dated 08.04.2015 inter alia stating that they would be put to great hardship if penalty is imposed, that they had disclosed particulars of all income voluntarily and that there was no concealment of any income or furnishing of inaccurate particulars of income and therefore, there was no question of concealment of income under Section 271(1)(c) of Act and question of levy of penalty would not arise. They relied upon decision of this Court in CIT vs. K.R.Chinni Krishna Chetty [246 ITR 121 (Madras)] and decision of Hon'ble Supreme Court in case of Hindustan Steel 4/24 http://www.judis.nic.in T.C.A.No.266 of 2018 Ltd. vs. State of Orissa [83 ITR 26(SC)]. By notice dated 31.07.2015 assessee was called upon to appear before Assessing Officer on 11.08.2015 and on receipt of notice, assessee sent representation dated 31.07.2015 requesting for dropping penalty proceedings, wherein they stated that at time of assessment, they found out omission with regard to LTCG and STCG and voluntarily offered capital gains, that they acted bonafidely and that omission to mention same in return of income was inadvertent bonafide mistake. Assessing Officer after considering submissions made and decisions relied on, by order dated 25.09.2015 levied minimum penalty of 100%. 5.Aggrieved by such order, assessee preferred appeal before Commissioner of Income Tax (Appeals)[CIT(A)]. Apart from reiterating stand regarding bonafide inadvertent mistake, assessee submitted that entire Unit of assessee has been sold by bankers, that assessee did not even have office space to function, that assessee had disclosed relevant details regarding sale of lands and windmill in their annual report, which was published and that there was no concealment to said effect. CIT(A) rejected stand taken by assessee and held 5/24 http://www.judis.nic.in T.C.A.No.266 of 2018 that there was concealment of income and penalty was leviable and accordingly confirmed order of Assessing Officer. Aggrieved over such order, assessee preferred appeal before Tribunal reiterating stand that there was no willful concealment of particulars and prayed for deleting penalty. Tribunal took note of submissions, more particularly, submission that it was inadvertent mistake and rejected same, after noting conduct of assessee and accordingly confirmed order passed by CIT(A) and dismissed appeal. 6.M/s.S.Yogalakshmi, learned counsel for appellant strenuously contended that notice dated 12.03.2015 issued under Section 274 r/w. 271(1)(c) of Act is defective and it is outcome of non-application of mind and therefore, notice is non-est in law. Consequently, all proceedings culminating in order of Tribunal have to be declared as non-est. Secondly, it was submitted that assessee acted with bonafide that there was no malafide intention on part of assessee, that assessee incurred huge loss, that there was no positive income as banks have sold property and that on re-working of capital gains, loss got reduced from RS.33 Crores to Rs.11 Crores which was paper loss. It is further 6/24 http://www.judis.nic.in T.C.A.No.266 of 2018 submitted that imposition of penalty under Section 271(1) of Act is not automatic and Assessing Officer has to give reasons as to why penalty should be imposed and though mens rea may not apply yet bonafide of assessee are required to be considered which was not done by Assessing Officer. Further, it is submitted that Assessing Officer held that assessee furnished inaccurate particulars. On appeal, CIT(A) held that assessee concealed its income and it was totally on different ground, on which, order of CIT(A) was affirmed by Tribunal. This also shows non- application of mind. It is further reiterated that Assessing Officer has to record reasons and that penalty order dated 25.09.2015 is devoid of reasons and hence liable to be set aside. In support of her contentions learned counsel referred to following decisions which are enumerated below under five sub headings which are as follows: I - Sec 271 (1) (C) of IT Act penalty set-aside based on Bonafide conduct of assessee / inadvertence: 1. CIT vs. Pricewaterhouse Coopers Pvt. Ltd. [2012-ITRVSC-244] 2. T. Ashok Pai vs. CIT [(2007) 161 Taxmann 340 (SC)] 3. Hindustan Steel v. State of Orissa [(1992) 83 ITR 26] 4. CIT vs. Societex [2012-ITRV-HC-DEL-163] 7/24 http://www.judis.nic.in T.C.A.No.266 of 2018 5. CIT vs. Bennett Coleman & Co. Ltd [2013-ITRV-HC MUM-030] 6. CIT vs. Sania Mirza [2013-ITRV-HC-AP-002] 7. CIT vs. Balaji Distilleries Ltd. [(2003) 126 TAXMAN 264 (Mad.)] 8. CIT vs. S.D.Rice Mills [(2005) 275 ITR 206] 9. Jagannath Singh v. CWT [(1980) 122 ITR 114] 10.Acit Circle-4(1) Visakhapatnam V. Sri Ganta Srinivasa Rao Visakhapatnam. [2016 SCC ONLINE ITAT 1631] II - 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) 8/24 http://www.judis.nic.in T.C.A.No.266 of 2018 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 Vs Raj Trading Co. [(1996) 217 ITR 208 (Raj.)] 5. CIT vs Samson Perinchery [(2017) 392 ITR 4 (Bom.)] IV - Sec 271 (1) (C) of IT Act Satisfaction of AO is essential while holding penalty: 1. Mak Data P. Ltd vs Commissioner Of Income Tax- (2013) 358 ITR 593 2. D.M. Manasvi - 86 ITR 557 (SC) 3. CIT vs. SSA Emerrald Meadows - ITA No. 380/2015 (Kar) 4. PCIT vs M/S Deccan Mining Syndicate Pvt - 2018 I.T.A. No.501/2017 (Kar HC) 5. Madhushree Gupta Vs UOI - 317 ITR 143(Del) 6. Commissioner of Income Tax vs. Dee Control and Electric Pvt. Ltd (2017) 100 CCH 0185 AllHC 7. CIT vs. Jain Export Private Ltd - ITA No.235/2013 8. CIT vs. MWP Ltd - ITA No.332/2007 9. CIT vs. Rucha Engineers Pvt. Ltd 2015-ITRV-HC-MUM-025 10.CIT vs. Dalmia Dyechem Industries - ITA No.1396/2013. 9/24 http://www.judis.nic.in T.C.A.No.266 of 2018 V - Question of Law can be raised at any stage: K. LUBNA & ORS. VS BEEVI & ORS (2020) CIVIL APPEAL NOs.2442-2443 OF 2011 SC. 7.Per contra, M/s.K.G.Usharani, learned Standing Counsel for respondent/revenue submitted that first appellate authority and Tribunal after examining factual position concurrently held that assessee is liable for payment of penalty and there is no substantial question of law arising for consideration in this appeal. conduct of assessee in concealing income by not mentioning sale of windmill and lands will clearly establish lack of bonafides on part of assessee. To demonstrate conduct of assessee, learned standing counsel referred to list of dates and pointed out that conduct of assessee will clearly show that concealment was motivated and intended to benefitthe assessee. Further it is submitted that at no earlier point of time, assessee challenged validity of notice dated 12.03.2015 and assessee is precluded from raising such contention before this Court for first time. Further it is submitted that defect in notice issued at first instance, which was never canvassed by assessee at any point of time and now canvassing for first time 10/24 http://www.judis.nic.in T.C.A.No.266 of 2018 before this Court cannot be substantial question of law. learned Standing Counsel referred to return of income filed on 26.09.2012 and pointed out that under head 'capital gains', assessee has shown 'Nil' in all columns. That apart, assessee never filed revised return and for first time, assessee admitted to do so on 1st March 2017 when matter was before Tribunal. This will clearly establish that conduct of assessee is not bonafide. Further it is submitted that penalty proceedings cannot be set aside merely on ground that return of income and assessed income was loss. In this regard, placed reliance on decision of Hon'ble supreme Court in CIT vs. Shree Chowatia Tubes (India) (P) Ltd. [(2017) 80 Taxmann.com 388]. Further, it is submitted that non-disclosure of capital gains came to light based on annual information report and that is how Assessing Officer came to know that sale of land and windmill were not admitted by assessee in return of income, which led to issuance of notice under Section 143(2) of Act. assessee never declared anywhere in return of income about sale of lands and windmill and copy of annual report was not placed before Assessing Officer or before CIT(A). learned standing counsel placed reliance on decisions in case of 11/24 http://www.judis.nic.in T.C.A.No.266 of 2018 N.G.Technoligies (In Liquidation) vs. Commissioner of Income Tax [(2016) 70 Taxmann.com 37 (SC)], Kuldeep Wines vs. Commissioner of Income Tax [(2014) 52 Taxmann.com 248(SC)], Jivanlal and Sons vs. Assistant Commissioner of Income Tax [(2019) 103 Taxmann.com 208(SC)], Hamirpur District Cooperative Bank Ltd. vs. Commissioner of Income Tax, Kanpur [(2020) 113 taxmann.com 447 (SC)], Sundaram Finance Ltd. vs. Deputy Commissioner of Income Tax [(2018) 99 taxmann.com 152 (SC)] and [(2018) 93 taxmann.com 250(Madras)] and Chemmancherry Estates Co. vs. Income Tax Officer, Ward-VIII(2) [(2019) 111 taxmann.com 66 (Madras)]. 8.After elaborately hearing learned counsels on either side and carefully perusing materials placed before this Court including decisions relied on by learned counsels on either side, first issue to be considered is whether notice dated 12.03.2015 issued under Section 274 r/w. 271(1)(c) of Act is defective. argument of M/s.S.Yogalakshmi, learned counsel for appellant is that notice stated that it appears to Assessing Officer that assessee concealed particulars of income or furnished inaccurate particulars of income. It is argument that word 'or' has been 12/24 http://www.judis.nic.in T.C.A.No.266 of 2018 used and not 'and' . Assessing Officer did not apply his mind while issuing notice to state as to whether he was of prima facie view that assessee concealed particulars of income or furnished inaccurate particulars of income. Therefore it is submission that this defect is inherent, which goes to root of matter and all consequential proceedings would have to be rendered as nonest. Among decisions, which were relied on by M/s.S.Yogalakshmi, learned counsel for appellant, emphasis was laid on decision in Manjunatha Cotton and Ginning Factory. This decision is pressed into service to substantiate her contention that if notice does not specify as to which limb of Section 271(1)(c) is attracted, penalty proceedings are vitiated. Unfortunately, no such contention was advanced by assessee at any earlier point of time and for first time before this Court such contention is advanced. submission of learned counsel is that this, being question of law, can be raised. We do not agree with submission for more than one reason. Firstly defect in notice, if according to assessee would result in jurisdictional error, is not merely pure question of law, but mixed question of fact and law. If such is position, vigilant assessee, more particularly, listed Company like assessee before us should point out factual issue at very first 13/24 http://www.judis.nic.in T.C.A.No.266 of 2018 instance. If that was not done by assessee, then it goes to show that assessee was not prejudiced by use of expression 'or'. 9.This very question was considered in case of Sundaram Finance Ltd., wherein identical submission was made by assessee by placing reliance on Manjunatha Cotton and Ginning Factory. Court taking note of fact that authorities concurrently rejected explanation offered by assessee and refused to interfere with factual finding. In paragraph 16 of judgment, argument regarding defective notice was considered and answered against assessee which is quoted herein below: 16. We have perused notices and we find that relevant columns have been marked, more particularly, when case against assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, contention raised by assessee is liable to be rejected on facts. That apart, this issue can never be question of law in assessee's case, as it is purely question of fact. Apart from that, assessee had at no earlier point of time raised plea that on account of defect in notice, they were put to prejudice. All violations will not result in nullifying orders passed by statutory authorities. If case of 14/24 http://www.judis.nic.in T.C.A.No.266 of 2018 assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit effective reply, it would be different matter. This was never plea of assessee either before Assessing Officer or before first Appellate Authority or before Tribunal or before this Court when Tax Case Appeals were filed and it was only after 10 years, when appeals were listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in notice, it had caused no prejudice to assessee and assessee clearly understood what was purport and import of notice issued under Section 274 r/w, Section 271 of Act. Therefore, principles of natural justice cannot be read in abstract and assessee, being limited company, having wide network in various financial services, should definitely be precluded from raising such plea at this belated stage. 10.The SLP filed by assessee against above decision was dismissed, [(2018) 99 taxmann.com 152 (SC)]. Further, we find that in reply given by assessee on 08.04.2015, assessee would state that there is no concealment any income or furnishing any inaccurate particulars. Therefore, assessee understood notice to be notice for concealment of any income or furnishing any 15/24 http://www.judis.nic.in T.C.A.No.266 of 2018 inaccurate particulars and therefore assessee cannot be permitted to raise contention before this Court for first time alleging defect in notice. Thus, in considered view of this Court, assessee is precluded from raising any such contention regarding validity of notice. 11.M/s.S.Yogalakshmi, learned counsel for appellant strenuously contended that assessee acted bonafidely, voluntarily disclosed details, that there was no intention to suppress material, that sale of lands and windmill were disclosed in annual report and that without considering this aspect, Assessing Officer has levied penalty. 12.Among decisions relied on, emphasis was laid on decision in case of CIT vs. Pricewaterhouse Coopers Pvt. Ltd. To answer this issue, it would be first necessary to examine factual position and to assess conduct of assessee, which is being projected as being absolutely bonafide. return of income was filed by assessee on 26.09.2012. notice under Section 143(2) was issued on 13.08.2013 for which there was no response and Assessing Officer issued notice Section 142(1) dated 09.09.2014 16/24 http://www.judis.nic.in T.C.A.No.266 of 2018 calling for details. assessee submitted their reply dated 22.09.2014 in which, admittedly no information was disclosed about sale lands and windmill. On 03.03.2015, letter was filed by assessee, which is in response to notice under Section 143(2), in which, assessee states that due to oversight, they had not offered capital gains in their return and attached summary of total income adjusting profit on LTCG and STCG. To be noted, assessee did not file revised return. assessment was completed under Section 143(3). In response to penalty notice dated 12.03.2015, assessee stated that there is no concealment of income or furnishing of any inaccurate particulars and therefore, Section 271(1)(c) will not stand attracted. Further opportunity was given to assessee and submissions were made, after which, Assessing Officer considered and levied penalty which order has been affirmed by CIT(A) and Tribunal. From above dates and events, it is seen that assessee took 19 months to respond to notice dated 13.08.2013 issued under Section 143(2) and for first time stated that due to oversight sale of lands and windmll have not been offered under capital gains. It is not in dispute that assessee did not disclose about sale of lands and windmill in return of income. This is clear from perusal of return of 17/24 http://www.judis.nic.in T.C.A.No.266 of 2018 income and in relevant column, it is stated as 'Nil'. assessee relies upon annual report and substantial portion of report was read to us by learned counsel to impress upon us that assessee's non-disclosure was bonafide and inadvertent mistake. Firstly, this annual report is not report, which is filed under Income Tax Act. Furthermore, on facts, it is admitted that this annual report was never filed with Income Tax Department. That apart, Chartered Accountant has reported captial gains as Nil and this has been signed by Managing Director of Company. If such is factual position, it will not only be case of filing inaccurate particulars, but also case of concealment of income. information came to Department through AIR, which was forwarded by Registration Department and after verifying same, when notice was issued under Section 143(2), assessee, for first time statef that due to inadvertence, they did not disclose particulars relating to capital gains. above facts will clearly show that assessee did not act bonafidely and belated explanation sought to be offered deserves to be rejected. 13.One more attempt made by assessee was 24 months after assessment were completed by attempting to file revised 18/24 http://www.judis.nic.in T.C.A.No.266 of 2018 statement of income on 01.03.2017. This statement can never improve case of assessee nor exonerate them from penalty. Another contention advanced by M/s.S.Yogalakshmi is that Assessing Officer had not recorded his satisfaction that penalty proceedings have to be initiated, by relying to decision in case of D.M.Manasvi to support argument that enire circumstances should have been considered, more particularly, financial distress to which assessee was thrown. 14.We have carefully perused penalty order dated 25.09.2015 and we find that Assessing Officer considered all factual aspects raised by assessee and rejected same to be absolutely without bonafides. decisions relied on by assessee were also taken note of and each of decisions was dealt with. Assessing Officer placed reliance on decision of 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 assesee from mischief of penalty proceedings under Section 271(1)(c) of Act. Therefore, we find that penalty order is reasoned order. 19/24 http://www.judis.nic.in T.C.A.No.266 of 2018 15.The learned counsel had argued that defect in penalty notice is question of law which can be raised by assessee at any point of time. We have considered this submission and we have rejected it. learned counsel relied on decision of Hon'ble Supreme Court in case of K.Lubna to submit that if factual foundation for case has been laid and legal consequences of same having been examined, examination of such legal consequences would be pure question of law. We have noted factual position. assessee understood notice to be under both heads, namely, furnishing of inaccurate particulars and concealment of income. This is evident from assessee's reply dated 08.04.2015 to show cause notice dated 12.03.2015. Therefore, decision in case of K.Lubna does not help assessee, as there is no substantial question of law arising from such contention. 16.The learend counsel argued that financial condition of assessee Company was also relevant factor to assess their bonafides. This contention cannot be accepted because settled legal position is that penalty cannot be cancelled on mere ground that return of income and assessed income was loss. In said decision, Hon'ble Supreme Court had relied upon decision in 20/24 http://www.judis.nic.in T.C.A.No.266 of 2018 case of Commissioner of Income Tax vs. Gold Coin Health Food Pvt. Ltd. [(2008) Vol. 304 ITR 308], wherein it was held that Explanation 4(a) to Section 271(1)(c)(iii) is intended to levy penalty not only in case where after addition of concealed income, loss returned, after assessment becomes positive income, but also in case where addition of concealed income reduces returned loss and finally assessed income is also loss or minor figure. In this regard, it will be beneficial to refer to decision in Union of India vs. Dharmendra Textile Processors [(2008) 306 ITR 277(SC)], which has been referred to and relied on in case of N.G.Technologies Ltd. 17.As against ecision in case of Jivanlal and Sons, Special Leave Petition filed against decision of High Court which confirmed penalty order passed by Tribunal rejecting assessee's explanation that it had claimed deduction on wrong advice given by Chartered Accountant was dismissed. operative portion of judgment of High Court of Bombay in [(2019) 103 taxmann.com 207(Bom) is as follows: 2.We are unable to agree for more than one reason. assessee is Firm. It was throughout being advised and represented by Chartered 21/24 http://www.judis.nic.in T.C.A.No.266 of 2018 Accountant. Tribunal rightly proceeded on basis that Chartered Accountant is deemed to be aware of law and its intricacies. Being professional, he could not have committed mistake as was attributed to him. tax paid is undisputedly inadmissible expenditure from profits of business. Hence this amount should have been statutorily added back. Further, from computation of income, assessee added back certain inadmissible expenditure. However, he excluded amount of income tax paid to extent of Rs.48,90,114/-. Thus, addition was only partial and not full. Unless and until legal provision then in force permitted exclusion of amount of income tax already paid, Chartered Accountant could not have done this. Chartered Accountant cannot feign ignorance of Section 40(ii) of Income Tax Act as he is well trained and well versed in law representing not only assessee, but various other clients. As far as assessee's malafide intention is concerned, burden was entirely on assessee to then show in terms of Explanation-I to provision permitting imposition of penalty that such intention never existed when above act was committed. For that, there was no material either in form of evidence of assessee or affidavit of Chartered Accountant. Hence Commissioner was right, according to Tribunal, in imposing this 22/24 http://www.judis.nic.in T.C.A.No.266 of 2018 penalty. attempt to blame Chartered Accountant cannot result in assessee's exoneration and claimed in absolute terms. In circumstances, penalty was rightly imposed. 18.Thus, for above reasons, we find that order passed by Tribunal does not call for any interference and Substantial Questions of law framed for consideration have to be answered against assessee. 19.In result, tax case appeal is dismissed and Substantial Questions of law are answered against assessee. No costs. Consequently, connected miscellaneous petitions are closed. (T.S.S.J.) (V.B.S.J.) 25.08.2020 Speaking (or) Non Speaking Order Index : Yes (or) No Internet : Yes (or) No cse To Income Tax Appellate Tribunal, Madras 'A' Bench. 23/24 http://www.judis.nic.in T.C.A.No.266 of 2018 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J cse Pre-delivery judgment made in TCA.No.266 of 2018 and C.M.P.Nos.4876 & 4877 of 2018 25.08.2020 24/24 http://www.judis.nic.in Gangotri Textiles Ltd. v. Deputy Commissioner of Income-tax, Corporate Circle 2, Coimbatore
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