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II. Useful Case Laws:
1. CIT Vs. Vatika Construction Pvt. Ltd., ITA 1246/2010, Pronounced on: 11.10.2012, High Court of Delhi
Whether the disclosure/admission of Assessee of taxing the income @ 8% when faced with detailed enquiry is a voluntary surrender and not liable for penalty under section 271(1)(c) of the Act?”
This Court is of opinion that the objection is well-founded, because the AO did not have the benefit of such material, and therefore could not have, only on the basis of the assessee’s offer to be taxed at 8% on gross receipts, have concluded that it had provided inaccurate particulars in its returns. Moreover, the course of action suggested by the AO was in fact accepted by the assessee, as reasonable. In these circumstances, the imposition of penalty was not justified. The court therefore, is of opinion that there is no infirmity in the impugned order of the Tribunal. The question of law is therefore answered against the revenue, and in favour of the assessee;
(Please click here for judgment)
2. CIT Vs. GOYAL M.G. GASES P. LTD, ITA No. 58/2008, PRONOUNCED ON: 19.10.2012, High Court of Delhi
Whether the ITAT was correct in law in deleting the penalty ignoring the material fact that the transaction was treated as sham by ITAT as well as by this court (227 ITR 536) in the quantum proceedings?”
If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bonafide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self Assessment under Section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by a malafide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have.” The explanation given by the assessee for the depreciation claim, is neither bonafide, nor substantiated. Therefore, the cancellation of penalty was unwarranted.
(Please click here for judgment)
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