Case Law Details
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?”
In the present case, the assessee’s cash payments were concededly not the amount which was disallowed; they had no co-relation to what could not be established, and were disallowable. Further, the judicial record would show that when the AO decided to initiate penalty proceeding, he had no material to conclude that the assessee had concealed income or provided inaccurate particulars. The assessee did provide particulars, but could not back up its claim with confirmation; its explanation was that the payees insisted on immediate payment, to fulfill their contractual commitment to their suppliers. The payees were small vendors, willing to ensure supply of materials to the assessee’s site. Clearly, a case for business expediency had been urged. Most importantly, the material which led to the penalty order –i.e. absence of the payees at their places or address provided, was gathered after notice under Section 271 (1) (c) was issued. The assessee complained of this procedure, calling it unfair, as it ought to have been provided with opportunity in this regard during the assessment and that material which did not exist at time of initiation of the penalty proceeding ought not to have been put against it. 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; the appeal is accordingly dismissed. No costs.
HIGH COURT OF DELHI
Pronounced on : 11.10.2012
Please become a Premium member. If you are already a Premium member, login here to access the full content.
