Penalty U/s. 271(1)(c) on CA Firm for Concealment of Income

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1. s.srinivasan says:

   the fact that the CIT (Appeals ) deleted the addition , gives a great force to the fact that it is one of the views and where two views are possible, there should not be any penalty as has been decided in many cases, and in all possibility the penalty will not be sustained

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   January 6, 2012 at 4:09 pm
2. CA Hemant Bafna says:

   Dear Sir,
   Considering above can yourself or the AO or the Tribunal who have identified the above receipt as revenue receipt on the basis of point as follows ” Thus it can be said that the assessee only parted with particular fruits of the tree and not the tree itself.” can the Assesing officer say that what is the revenue that tree would have yielded in the particular assessment year or we can say that what fruits have been the tree not dissected would the tree have yielded in the year or coming years it is not certain, however it can be made certain only on experience of past years, what was paid can be said is goodwill for work the have jointly carried out and goodwill is a capital receipt, in my point of view the AO and tribunal has not justified the case, even they have looked it from the single angle of revenues received from one accountancy firm to the other, the case has to be looked keeping in mind the whole substance.

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   September 17, 2011 at 10:05 pm
3. CA UMA KOTHARI says:

   We find that many times even correctness of judgments of the Supreme Court have been doubted and judgments of Supreme Court have even been reversed by larger bench of the Supreme Court. This does not mean that view taken by smaller bench of the Supreme Court or before that the High Court or Tribunal was wrong. the other views taken are also possible views on the matter. In some cases we have noticed that three appellate courts namely the CIT(A)/ the Tribunal and the High Court have taken a particular view and all disagreed with the view taken by the AO. Then when matter came before the Supreme Court, the Supreme Court reversed views taken by three appellate courts and affirmed view taken by the primary authority that is the ITO/ AO. This does not mean that the views expressed by three appellate authority/ court were wrong – they were also a possible view.

   In this case the CA firm has taken a view, and that view was considered a possible view by the partners of CA firm who are naturally CA. Thus even if a legal opinion was not filed before authorities during assessment or quantum appeal, that should not be a ground to levy penalty holding that the sum is obviously a revenue receipt.
   In my view also the comments passed by honorable Tribunal against concerned CA or CA firm are premature and not proper. What will happen if ultimately the impugned receipt is held as ‘capital receipt’. Whether, the honorable Tribunal will withdraw the serious comments passed against CA. Even if the impugned sum is ultimately held to be revenue receipt, it cannot be said that the issue was not contentious. Had it been free from all doubts, the High Court would not have admitted appeal on the same issue as involving a substantial question of law.
   It would be proper for the assessee to apply for rectification. It would be much better if Tribunal itself suo motu withdraw such comments from its order.

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   September 16, 2011 at 3:27 pm
4. DEV KUMAR KOTHARI says:

   I think that counsels could not properly place fact, it is probable that legal opinion was not considered necessary to obtain earlier because assesses being a CA firm, its partners could have a reasonable view about character of receipt being ‘capital receipt’, therefore, any independent legal opinion was not necessary. In fact the firm should have submitted opinion of partners at the assessment stage. And if the AO wanted independent opinion, then legal opinion from advocates could be submitted at assessment stage itself.
   When the High Court has admitted appeal on substantial question of law as to receipt being capital receipt or revenue receipt, the matter definitely involves contentious issues on which the High Court has felt necessary to express an opinion by answering the question. In such circumstances, the Tribunal could have kept the hearing of appeal against penalty in abeyance, as a better course of action, and for that the assessee should have made a request.
   Capital or revenue is not a simple aspect. With due respect, the Tribunal should not have considered it so simple, in the given case, when appeal against quantum addition is pending duly admitted by the High Court. furthermore, in such circumstances some observations of the Tribunal like “… If it is so, we are unable to understand how the assessee can discharge its role as a professional consultant, auditing number of clients, giving them valuable advices on the accounting and taxation aspects. It is unimaginable that a professional firm like the assessee, will tend to have any doubt on such a simple proposition of professional receipt…..” are unfortunate and indicative of expressing doubts on the professionals.
   Many of judgments of Tribunal are also reversed by High Courts and / or The Supreme Court. It does not mean that Tribunal can not perform its functions properly. There can be different views, and many times the same person can have different views when working in different circumstances or in different mood. We find even judgments of judges or Tribunal members differing widely due to fact that after all judges are also human being. If a senior counsel say something, judge may agree, whereas when a junior counsel says same thing the judge may not agree. This is result of god made nature and behavior of human being.

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   September 15, 2011 at 5:50 pm