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Case Law Details

Case Name : Darwabshaw B Cursetjee Sons Ltd Vs Income Tax Officer (ITAT Kolkata)
Appeal Number : I.T.A No. 695/Kol/2010
Date of Judgement/Order : 19/06/2012
Related Assessment Year : 2003-2004
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Just because a claim is supported by a CA’s opinion, it cannot absolve assessee from penalty u/s 271(1)(c)

A plain look at the legal opinion obtained from Vakharia & Associates, which learned Accountant Member has reproduced in his order, shows that all that this tax consultant has opined is that the CBDT circular dated 23rd January 2001 ceases to hold good in law in view of Hon’ble Bombay High Court’s judgment in the case of Bhor Industries Ltd (supra). There cannot indeed be any quarrel with this proposition, but then this expert advice does not deal with the provisions of Section 35 DDA which were introduced on the statute after the issuance of the circular in question. The law was amended with effect from 1st April 2001 and Section 35 DDA was inserted with effect from that date.

The assessee himself has followed the prescription of Section 35DDA in the immediately preceding assessment years, and even this expert opinion does not hold that the provisions of Section 35 DDA, for whatever reasons, will not come into play in respect of VRS payments. There was thus no reason for assessee to deviate from the tax treatment being given to the VRS payments in the preceding assessment years. The onus is on the assessee to prove that the explanation is bonafide but there is nothing from the assessee to even indicate, leave aside proving, that there was any reason to believe that the provisions of Section 35 DDA will not apply to the VRS payments. The expert advice did not deal with this aspect at all. One can perhaps even understand ignorance about a legal provision, such as of Section 35 DDA, but once the assessee is on record not only being aware about this provision but also preparing the income tax return in the light of the said provision, there cannot be any justification about assessee ignoring the clear mandate of the same provision in the subsequent assessment years. Such an action on the part of the assessee, in my considered opinion, cannot be said to be bonafide. In my humble understanding, the explanation of the assessee is not acceptable and I reject the same. In any case, expert advice obtained by the assessee from Vakharia & Associates lacks credibility and just because the assessee’s claim is supported by a chartered accountant’s opinion, this fact per se cannot absolve the assessee from penalty under section 271(1)(c). In the case of CIT Vs Escort Finance Limited (328 ITR 44), Hon’ble Delhi High Court has rejected assessee’s reliance on expert advice to avoid the penalty


I.T.A. No.: 695/ Kol/ 2010 – Assessment year: 2003-04

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