Asstt. CIT v. Harvey Heart Hospitals Ltd.

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The Tax PublishersITA. No. 1397(Mds)/2012 2013 TaxPub(DT) 0216 (Chen-Trib) : (2013) 052 (II) ITCL 0302 : (2012) 020 ITR (Trib) 0722 INCOME TAX ACT, 1961 --Penalty under section 271(1)(c)--Furnishing of inaccurate particulars of income Failure to furnish evidences in respect of expenditure incurred on research and development--Assessee disclosed nil income in the return filed for concerned assessment year and claimed expenditure of salary, wages, bonus, travelling expenses, etc., on account of research and development. Assessing officer disallowed the claim of expenditure as the assessee had not carried out any business during the previous year and no details or evidences were furnished in respect of said expenditure before him. Assessing officer also levied penalty under section 271(10(c) as it was a case for concealment of income and for filing inaccurate particulars in claiming the above expenditure. *Held:* Was justified as there was no circumstance prevailing to hold the view that the assessee had carried out any research and development activity when the entire business of assessee had come to a standstill and all the assets were sold to another company. Therefore, the claim of expenditure made by the assessee-company amounted to a false claim and it was a clear case of concealment of income by furnishing of inaccurate particulars. Moreso, furnishing of inaccurate particulars was highlighted not only by evidence but also by the stoppage of business carried on by the assessee-company which justified the levying of penalty under section 271(1)(c). Income Tax Act, 1961 Section 271(1)(c) IN THE ITAT, Chennai 'A' Bench O. K. Narayanan, V.P. & Challa Nagendra Prasad, J.M. Asstt. CIT v. Harvey Heart Hospitals Ltd. I. T. A. No. 1397(Mds)/2012 A.Y. 2006-07 15 November, 2012 Appellant by : Shaji P. Jacob Respondent by : C. V. Rajan ORDER *O. K. Narayanan, V.P.* This appeal is filed by the Revenue. The relevant assessment year is 2006-07. The appeal is directed against the order of the Commissioner (Appeals)-I at Chennai, dated 2-4-2012. The appeal arises out of the penalty order passed under section 271(1)(c) of the Income Tax Act, 1961. 2. A search under section 132 was conducted in the premises of M/s. Harvey Heart Hospitals Ltd. and Dr. M. P. Naresh Kumar on 14-12-2005. M/s. Harvey Heart Hospitals Ltd. is the assessee before us. 3. The assessee, M/s. Harvey Heart Hospitals Ltd., was incorporated in 1996. Dr. M. P. Naresh Kumar, a renowned cardiac surgeon, is the managing director of the company. He was also one of the promoters of the company. The assessee-company has not carried out any business activity in the previous year relevant to the assessment year under appeal. This is because the assessee-company has sold all its fixed assets to M/s. Harvey Health Care Ltd. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA. No. 1397(Mds)/2012
2013 TaxPub(DT) 0216 (Chen-Trib) : (2013) 052 (II) ITCL 0302 : (2012) 020 ITR (Trib) 0722

INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--Furnishing of inaccurate particulars of income Failure to furnish evidences in respect of expenditure incurred on research and development--Assessee disclosed nil income in the return filed for concerned assessment year and claimed expenditure of salary, wages, bonus, travelling expenses, etc., on account of research and development. Assessing officer disallowed the claim of expenditure as the assessee had not carried out any business during the previous year and no details or evidences were furnished in respect of said expenditure before him. Assessing officer also levied penalty under section 271(10(c) as it was a case for concealment of income and for filing inaccurate particulars in claiming the above expenditure. Held: Was justified as there was no circumstance prevailing to hold the view that the assessee had carried out any research and development activity when the entire business of assessee had come to a standstill and all the assets were sold to another company. Therefore, the claim of expenditure made by the assessee-company amounted to a false claim and it was a clear case of concealment of income by furnishing of inaccurate particulars. Moreso, furnishing of inaccurate particulars was highlighted not only by evidence but also by the stoppage of business carried on by the assessee-company which justified the levying of penalty under section 271(1)(c).

Income Tax Act, 1961 Section 271(1)(c)

IN THE ITAT, Chennai 'A' Bench

O. K. Narayanan, V.P. & Challa Nagendra Prasad, J.M.

Asstt. CIT v. Harvey Heart Hospitals Ltd.

I. T. A. No. 1397(Mds)/2012

A.Y. 2006-07

15 November, 2012

Appellant by : Shaji P. Jacob

Respondent by : C. V. Rajan

ORDER

O. K. Narayanan, V.P.

This appeal is filed by the Revenue. The relevant assessment year is 2006-07. The appeal is directed against the order of the Commissioner (Appeals)-I at Chennai, dated 2-4-2012. The appeal arises out of the penalty order passed under section 271(1)(c) of the Income Tax Act, 1961.

2. A search under section 132 was conducted in the premises of M/s. Harvey Heart Hospitals Ltd. and Dr. M. P. Naresh Kumar on 14-12-2005. M/s. Harvey Heart Hospitals Ltd. is the assessee before us.

3. The assessee, M/s. Harvey Heart Hospitals Ltd., was incorporated in 1996. Dr. M. P. Naresh Kumar, a renowned cardiac surgeon, is the managing director of the company. He was also one of the promoters of the company. The assessee-company has not carried out any business activity in the previous year relevant to the assessment year under appeal. This is because the assessee-company has sold all its fixed assets to M/s. Harvey Health Care Ltd.