TMI Blog2010 (5) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... he explanation furnished by the assessee cannot be treated as bona fide Regarding the third condition that all the facts relating to the explanation and computation of income has been disclosed by the assessee - in the present case details of the identity of the creditor or of the broker or of the terms and conditions of the purchase or of attempts to import the goods from Singapore, or of attempt to return the money and or, of attempt to settle the dispute have not been provided - penalty is leviable under Explanation 1(B) to Sec. 271(1)(c) in respect of addition of Rs.7 lakh - In the result, appeal filed by the assessee is partly allowed - ITA No. 702/Ahd/2008 - - - Dated:- 28-5-2010 - Shri T.K. Sharma, Judicial Member, and Shri D. C. Agrawal, Accountant Member Appellant by :- Shri Deepak Bhatia, AR Respondent by: - Smt . Jyoti Laximi, SR-DR ORDER PER D.C.Agrawal, Accountant Member:- This appeal is filed by assessee raising following grounds:- 1. That Hon ble C.I.T.(A) has erred in confirming the Penalty of Rs.2,83,412/- u/s.271(1)(C) of the Income Tax Act, 1961. 2. The only issue involved in this appeal that Ld. CIT(Appeals) has confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence matter could not be settled. 1.11.15 Regarding the addition of Rs.90,000/- on disallowance of Hotel promoting business and that it can not be proved documentarily. 1.11.16 The bonafide of the assessee company s case is evident from the huge unabsorbed loss/depreciation and that there is no income despite the addition. 1.11.17 No satisfaction of concealment was reached by the assessing officer at the time of initiating the penalty proceedings and hence no penalty can be imposed. Assessing Officer rejected the explanation and observed that:- i) No evidence regarding identity of the creditor who paid the sum was furnished ii) The details of the broker, through whom money was rightly received were not given iii) Not giving on the ground that broker is not receivable iv) There is no evidence that credit was in the nature of advance v) Creditworthiness of the alleged creditor was not established vi) Even today said sum has remained unclaimed from the said creditor and neither the goods has been supplied to them nor money has returned to them. He accordingly levied the penalty of Rs.2,83,412/- by treating the sum of Rs.7.90 lakhs as concealed income. 5. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of the person who attended the meeting were not furnished. The incurring of expenditure was not disputed. what was disputed was business purposes of the expenditure. Penalty cannot be levied in view of the decision of Hon ble Gujarat High Court in the case of Sayaji Iron Engg. Co. v. CIT(2002) 253 ITR 749 (Guj) and also as per the decision of Hon ble Supreme Court in the case of T.Ashok Pai v. CIT (2007) 292 ITR 11 (SC) and in the case of Dilip N. Shroff v. JCIT (2007) 291 ITR 51 (SC). Further decision of Hon ble Kerala High Court in the case of CIT v. P.K. Narayanan 238 ITR 905 (Ker) and in the case of Shivlal Tak v. CIT (2001) 251 ITR 272 (Raj) support the view of assessee. 7. On the other hand, Ld. SR-DR submitted that penalty is leviable under explanation 1B to Sec. 271(1) as explanation furnished by the assessee is not bona fide. He has not been able to substantiate the explanation furnished by it and the material facts necessary for assessment and in support of explanation have not been furnished. 8. We have considered the rival submissions and perused the materials facts on record. In our considered view penalty u/s.271(1) in case of addition of Rs.90,000/- ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any proceedings under this Act, is satisfied that any person (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. he may direct that such person shall pay by way of penalty, (i) ****** (ii) ****** (iii) In the eases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act, (A) such person falls to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be proved that failure of the assessee to furnish evidence in support the claim was beyond his control. Assessee has to prove or furnish evidence that circumstances existed which disabled him to furnish the evidence in support of his claim. The third condition is that all the facts relating to the claim and material to the computation of its total income has been disclosed by him. It means that all the material facts which are relevant for computation of income of the assessee have been disclosed to the Department not merely during the assessment proceedings but in the return of income. 10. When we examine the facts of the present case, we notice that assessee did not furnish any evidence about identity of the creditor or of the broker through whom it was claimed that cheques were received as advance against alleged purchase of the goods to be imported by the assessee. If same broker is providing cheques to the assessee as advance against purchase to be made by his client, he should necessarily submit a covering letter and place order for purchase. There should be details about Ph. No. of the alleged purchaser, or of the broker. In the present case, there is no identification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of any step in the whole process of transaction then it can be said that explanation furnished by the assessee is not bona fide. It is nothing but a bald claim. There is nothing to show that the details of the funds as claimed by the assessee have actually come from the alleged purchaser or of alleged transaction or of allege failure of the transaction. Thus the explanation furnished by the assessee cannot be treated as bona fide. 11. Regarding the third condition that all the facts relating to the explanation and computation of income has been disclosed by the assessee, we are of the view that in the present case details of the identity of the creditor or of the broker or of the terms and conditions of the purchase or of attempts to import the goods from Singapore, or of attempt to return the money and or, of attempt to settle the dispute have not been provided. In view of these all the three ingredients laid down in explanation 1(B) are fully satisfied and, therefore Assessing Officer can deem the addition as income in respect which the assessee has concealed the income or furnished inaccurate particulars of income. As a result, we hold that penalty is leviable under Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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