1. CIT Vs. Mathura Commercial Co., IT Appeal No. 54 of 2003, Date of Order: 15.01.2014, Allahabad High Court
Section 271(1)(c) of the Income Tax Act, 1961
Whether
the penalty u/s 271(1)(c) can be levied merely on the fact that assessee
surrendered outstanding balance of creditors while filing revised
return of income, considering inaccurate particulars furnished by the
assessee.
Held_No
In the instant
case, the AO doubted the genuineness of outstanding liabilities of the
assessee and directed to produce confirmation for such amounts. In
response, the assessee has filed a revised return by surrendered few
outstanding amounts for which confirmations could not produce. The AO
held that the assessee deliberately concealed the income and furnished
incorrect particulars without appreciating explanation furnished by the
assessee.
It is settled
law that the penalty is leviable u/s 271(1) (c) of the Act where any
person has concealed the particulars of his income or furnished
inaccurate particulars of such income. The present is not a case of
concealment of particulars of any income of the assessee. It may be the
case where the assessee furnished inaccurate particulars. The assessee
has furnished the explanation for filing a revised return as the dealers
being belonging to particular community had left the Town during riots
due to Ram Janma Bhumi and Babari Masjid dispute or otherwise refused to
give confirmation letter. The hon’ble high court held that in the said
circumstances, it cannot be said that he filed any inaccurate
particulars on which penalty could have been imposed u/s 271 (1) (c) of
the Act.
(Please click here for judgment)
2. CIT Vs. M/s Lakhani Marketing Incl., ITA No. 970 of 2008
(O&M), Date of Decision: 02.04.2014, Punjab & Haryana High Court
Section 14A of the Income Tax Act, 1961
Whether the provisions of section 14A are also applicable in case where assessee has not earned any tax free income.
Held_No
In the instant
case, the assessee contented that there was no dividend income and
thus, provisions of Section 14A are not applicable. However, the revenue
raised the contention that assessee had yielded dividend income which
was not forming part of total income by virtue of Section 10(33) and
hence interest liability claimed for deduction from the income was
impermissible.
On appeal, the Tribunal
held that, unless and until, there is receipt of exempted income for
the concerned assessment years (dividend from shares), we are of the
view, Section 14A of the Act cannot be invoked. From the reading of section 14A, it is clear that before making any disallowance the following conditions are to exist:-
a) That there must be income taxable under the Act
b) That this income must not form part of the total income under the Act
c) That there must be an expenditure incurred by the assessee
d) That the expenditure must have a relation to the income which does not form part of the total income under the Act.
The Hon’ble High Court has held that
since the assessee did not make any claim for exemption. In such a
situation, section 14A could have no application. The reliance is placed
on CIT vs. Hero Cycles Limited, (2010) 323 ITR 518 (P & H).
Moreover, the AO has not established the nexus between invested funds
and the interest bearing funds and it is clear that interest bearing
funds have not been utilized for investment for purchase of shares.
Case referred: CIT vs. Winsome Textile Industries Limited, IT Appeal No.504 of 2008, decided on 25th August, 2009
(Please click here for judgment)
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