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In the present case, the AO had levied penalty under s. 271(1)(c) of the Act, for furnishing inaccurate particulars of income. It is not under dispute that the assessee had claimed wrong depreciation on account of additions made in the machinery and factory building accounts, which has been surrendered by the assessee to buy peace of mind. The explanation had been submitted during the assessment proceedings as well as in the penalty proceedings.
We are of the view that the Commissioner of Income Tax (Appeals) as also the Tribunal have approached the issue correctly. The question whether the sale of the stock options would result in long term capital gains or short term gains was not very clear at the time when the respondent/ assessee filed his return for the assessment year 2002-03.
Assessing Officer was carried away by the original return filed by the assessee, wherein originally the income admitted in the course of search was not returned by it. But the fact is that the assessee had filed a revised return before completing the assessment.
The provisions of Penalty levied u/s 272B of Income Tax Act, 1961 are prospective i.e. it is applicable from the date of insertion of sub-clause (iv) to section 139A(5B) of the Act i.e. 01.06.2006.
In the present case, the first show cause notice for initiation of proceedings was issued by the AO on 25.03.2003 and was served on the assessee on 27.03.2003. Obviously, the later period also expired on 30.09.2003 when six months expired from the end of the month in which the action for imposing the penalty was initiated. The order as passed by the Joint Commissioner of Income Tax for the penalty under Section 271D on 28.05.2004 was clearly hit by the bar of limitation and has rightly been set aside in the orders impugned.
Having been served with a legal notice for the levy of penalty u/s. 271B, it was incumbent on the assessee to cause to comply with the provision, at least for the second year and, in any case, seek legal opinion in its respect. Rather, it could have, on its own, requested the AO not levy the penalty for that year (i.e., A.Y. 2006-07), explaining that the non-audit of its accounts u/s. 44AB stood caused only due to its ignorance of law,
According to section 271A, if the assessee fails to keep and maintain any such books of account and other documents as required by section 44AA and the Rules in any previous year, penalty is leviable. Section 44AA(2)(i) and (ii) provides that every person carrying on business shall keep and maintain such books of account and other documents as may enable the AO to compute his total income in accordance with the provisions of this Act.
Assessee entered into a collaboration agreement with ‘D’ for purchase of land on its behalf and development thereof by ‘D’. ‘D’ purchased land from farmers on behalf of the assessee through its agent ‘J’. In lieu of the consideration paid by ‘D’ for purchase of land, its account was credited by way of journal entries. ‘J’ had made payments in cash to the farmers in order to effect purchases.
In the instant case, the ITO(TDS) while going through the quarterly return in Form No.26Q, filed by the assessee noted that it has omitted to quote PAN/had quoted invalid PAN in 196 cases. As regards the reasonable cause,it was pleaded on behalf of the assessee that TDS was deducted and deposited in time in government Treasury. The default is only with regard to the wrong quoting of PAN of 196 of the deductees, such deductees quoted wrong PAN.
The Tribunal while examining this issue went purely by the facts of the case and held that the difficulties in non-production of the documents as was required under the statute was on account of shifting of branch of the bank shortly before the date of the survey and afterwards within a period of two weeks they were furnished before the Assessing Officer. Since, these documents at the time of survey were not presented, it was inferred that they were collected subsequently in post survey period.
