In a recent decision in Samson Maritime Ltd v. CIT, the division bench of the Bombay High Court held that disclosure made by the assessee after the initiation of the assessment proceedings would not amount to ‘Voluntary Disclosure’.
The bench comprising of Justices M.S Sanklecha and A.K.Menon, based on the said finding, have confirmed the penalty order issued against the assessee.
The assessing officer initiated assessment proceedings against the assessee which was resulted in a voluntary disclosure by the assessee who stated that it had committed a mistake in debiting foreign exchange loss to its determine non tonnage income, when in fact, no foreign exchange loss was involved in respect of its non tonnage business. The Department initiated penalty proceedings against the assessee on ground that since the same was disclosed during the course of assessment proceedings, the same cannot be termed as “voluntary disclosure” and therefore, penalty under section 271(1)(a) of the Income Tax Act was imposed on the assessee.
Challenging the penalty order, the assessee contended that the assessment order completed was accepted by them without any objection and the defect pointed out by the authorities was nothing but a mere mistake for which, no penalty can be attributed.
Rejecting the contentions, the bench noted that the records would show that the notice containing an annexure, seeking details of expenses debited to Profit and Loss Account, along with details of foreign exchange expenses, were issued to the appellant on 14th January, 2009.
Further, the appellant had stated that the alleged mistake on its part was pointed out by a letter dated 23rd September, 2009 during assessment proceedings where it stated that it had committed a mistake in debiting foreign exchange loss to its determine non-tonnage income, when in fact, no foreign exchange loss was involved in respect of its non tonnage business. “Thus, it is clear that so-called mistake as claimed by the appellant-assesssee, was only after notices dated 14th January, 2009 were issued under Sections 142 and 143 of the Act. It was only an attempt to Pre-empt the Revenue finding out the appellant had furnished inaccurate particulars. Therefore, it cannot be said that it was voluntary disclosure.”
Read the full text of the Judgment below.
