The assessee has filed a loss return and has a loss of around , Rs. 5 lacs. The file is now under scrutiny and the A.O. disallows some expenses and computes the total income again which stands as Rs 2.5 lack (loss).
Now can also initiates panelty proceedings under sec 271(1)(c). Can he do so and if so what can be the scope of panelty as the sec states panelty on tax sought to be evaded..and this return being a loss return.
To the extent of excess loss claimed can be treated as tax sought to be evaded. The penalty is 100% to 300%
To the extent of excess loss claimed can be considered to find out tax sought to be evaded. The penalty is 100% to 300% of tax portion
Penalty proceedings are seperate proceedings. Mere fact that some expenses have been disallowed, ot will not attract penalty. The assessing officer has to be satisfied that there was a motive to evade taxes. The Ao has to be satisfied that the assessee has furnished inaccurate particulars of income or has cocealed the income. Here the overall circumstances has to be looked into.
penalty leavied u/s 271(1)(c) for diwallowance of expenses on estimation basis like 1/3rd disallowance for no vouchers produced or 20% disallowance as expenses may be of personal in nature. what are the case laws for not leaving penalty under such circumstances
rajendra karia
Bharat Shah & Associates
Mumbai
CA Inter
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Kozhikode
CA Inter
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