TMI Blog2014 (4) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... II, Ahmedabad, dated 22.09.2012 for assessment year 1989-90. The sole ground of Revenue s appeal is against deleting penalty of Rs.4,91,124/- levied by the Assessing Officer without appreciating facts that transaction were found bogus and parties had only issued bills in favour of the assessee. Even the revised return was filed by the assessee after complete enquiries by the A.O. The CIT(A) erred in not considering the decision of Hon ble Delhi High court in the case of CIT vs. Usha International (348 ITR 485). 2. In this case, the A.O. completed the assessment u/s. 143(3) of the IT Act on 30.11.1990 and addition on account of bogus trading loss was made at Rs.7,81,149/- and finally income was determuined of Rs.8,38,500/- against the net profit of Rs.90,145/-. For this, the ld. A.O. initiated penalty proceeding u/s. 271(1)(c) for concealment of income and furnishing inaccurate particulars of income. Before imposing penalty u/s. 271(1)(c), the A.O. gave reasonable opportunity of being heard, which was availed by the assessee. After considering the assessee s reply, the A.O. observed that during the course of assessment proceeding u/s. 143(3) of the IT Act, the books of account fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at C. Shah, brother of Shri Prakash C. Shah. He did not see the goods at all. Again he revealed that while the bills were received in the month of May, 1989, the dates were of January and February 1989. Shri Harmit B, Patwa, proprietor of Ridhi Sidhi corporation and Shri Dixit B. Patwa, proprietor of Nimol Dyechem, Jitendra Chemicals and J.K. Chemicals were also examined under oath u/s..131 of the I.T.Act. On collecting additional facts and relevant bills, it emerged that these entities, together with the assessee's group of companies had indulged in a network of transaction, which ended up with Rajradhe Finance Ltd. and Geera Finance Ltd. creating a bogus loss on paper and the companies of the Patwa group showing a profit. No actual delivery was effected in any transaction. The A.O. concluded that assessee was indulged in bogus purchase and sale transaction to reduce its profit with a view to avoid payment of tax on the same. The ld. A.O. at the time of assessment gave reasonable opportunity of being heard after recording the statement, he also forwarded the copy of statement of Shri Prashant P. Vakil and offered cross examination of the witness. The assessee was asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chemicals P. Ltd. The purchases made from other connected parties were not examined by the Assessing Officer. The Assessing Officer also allowed opportunity to the appellant-company to cross-examine the above mentioned two persons but it did not avail this opportunity and filed a revised return of income. It may be mentioned that the loss arising from purchases made from the above two parties amounted to Rs.7,26,125 whereas the total loss with regard to purchases and sales relating to various connected parties amounted to Rs.7,81,149. During the course of the assessment proceedings the Assessing Officer only proposed disallowance of loss of Rs.7,26,125. However, the appellant-company surrendered the entire loss of Rs.7,81,149 in the revised return of income. As mentioned above, it declined to cross-examine the two persons for the reason that they were close friends of the directors of the appellant-company and probably they disowned the purchases for the reason that the same may not have been accounted by them in their books of account. The appellant-company felt that crossexamination may result into embarrassment of the aforesaid two friends of the directors. Therefore, a revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious judicial pronouncements referred to above. Accordingly, the penalty of Rs.4,92,124 is deleted. 4. Now the Revenue is before us. Ld. Sr. D.R. vehemently relied upon the order of the A.O. and argued that the assessee has concealed the income, which has been admitted by it by revising the return when cornered by the A.O. through investigation on the bogus purchase. The A.O. recorded the statement of Shri Prashant P. Vakil and Shri Chandravadan N. Shah on oath u/s. 131 and admitted that they have simply given the accommodation bill to the assessee. Thus, concealment of income has been established by the A.O. He further relied upon in case of CIT vs. Usha International Ltd. [2012] 27 taxmann.com 227 (Delhi), wherein identical issue was that revised return was filed by it only when it was detected and Income Tax Authority had collected material on the basis of which it could be said that the claim of deduction was false or bogus. Therefore, Hon ble Delhi High Court confirmed the penalty u/s. 271(1)(C). He further relied in case of CIT vs. Lallubhai Jogibhai Patel [2004] 134 TAXMAN 381 (Guj.), wherein investment in car was suppressed by the assessee at Rs.31,000/-. The Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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