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2016 (3) TMI 81 - ITAT DELHI

2016 (3) TMI 81 - ITAT DELHI - TMI - Penalty u/s 271(1(c) - accommodation entry - Held that:- There is no doubt that the AO has initiated the penalty proceeding by making the addition on the basis of information of receiving the accommodation entries by the of the assessee which was detected during the search and survey proceedings. Though there was confusion about the names of the parties from whom the assessee has received the amount however ultimately the assessee admitted to have received th .....

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dmitted this amount as income then no further investigation was required on the part of the AO to prove that this amount was received on account of accommodation entries received by the assessee.

As relying on Hon'ble Supreme Court in the case of Mak Data Vs. CIT [2013 (11) TMI 14 - SUPREME COURT ] the penalty levy u/s 271(1)(c) is confirmed. - Decided against assessee - ITA No. 1415/Del/2015 - Dated:- 22-1-2016 - Vijay Pal Rao, JM For the Appellant : Shri K Sampath, Adv For the Respo .....

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. The assessee filed its return of income on 28.10.2005 declaring total income of ₹ 6,49,080/- which was processed u/s 143(1). Subsequently, during the course of search and survey proceeding carried out by the department it was noticed that various parties were involved in bogus entries transaction by taking cash and giving entries through cheques in the various forms like loan, share application money and sale or purchase of shares. It was found that share application money of ₹ 6 l .....

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s surrendered this amount of ₹ 6 lac to taxing. Accordingly, the AO made an addition of the said amount of ₹ 6 lac in the hands of the assessee being assessee's own money. Subsequently, the AO initiated penalty proceeding u/s 271(1)(c) and levy a penalty of ₹ 2,19,555/- being 100% of tax sought to be evaded vide order dated 20.09.2013. The assessee challenged the action of the AO before learned Commissioner of Income-tax (Appeals) but could not succeed. 4. Before this Tribu .....

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three parties along with PAN, therefore the identity of creditors and genuineness of the transaction was explained by the assessee. The ld AR has pointed out that the assessee surrendered this amount in the assessment proceeding to avoid the litigation, however when the assessee had filed necessary evidence along with PAN of these creditors then the penalty proceedings being separate from the assessment proceedings, the AO should have considered the same and no penalty can be levied once the ass .....

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applicable in the facts and circumstances of the present case. The surrender of this amount is not made in statement of the assessee, therefore, the self surrender is not applicable in the case of the assessee. When the assessee has explained the source of this amount by supporting evidence then though the explanation was not relevant for the purpose of the assessment as the assessee surrendered this amount however, the same is very relevant for the purpose of levy of penalty u/s 271(1)(c). The .....

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nd that all the facts relating to the same and material to the computation of his total income have been disclosed by him. Therefore, even if an addition is made if the explanation of the assessee falls in clause-B of the explanation 1 of Section 271(1)(c) then no penalty can be levied. He has also relied upon the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. Steel Centre, 51 Taxmann.com 127 (Kar) and submitted that the Hon'ble high court has held that for impositio .....

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elied upon the decision of Hon'ble Jurisdictional High Court in the Case of CIT Vs. Nova Promoters and Finlease Pvt. Ltd. reported on 342 ITR 0169, as well as the decision in the case of CIT Vs. N. P. Portfolio (P) Ltd. 264 CTR 258 (Del) and submitted that mere giving the PAN No. of the party itself would not prove the creditworthiness and genuineness of the transaction. She has also relied upon the judgment of the Hon'ble Supreme Court in the case of MAK Data Pvt. Ltd. Vs. CIT 358 ITR 5 .....

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ever ultimately the assessee admitted to have received these amounts from three parties and decided to surrender this amount for taxation. Hence, the assessee has surrendered this amount to tax which is not voluntary act on the part of the assessee, but because of the proceeding initiated by the AO, after this fact of accommodation entries was detected in the search and survey proceedings. Therefore, the surrender of the amount by the assessee pre-empts the further investigation during the asses .....

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ibunal has not properly understood or appreciated the scope of Explanation 1 to Section 271(1)(c) of the Act, which reads as follows:- "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 fails 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 ab .....

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by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is .....

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the income tax department. Statute does not recognize those types of defences under the explanation 1 to Section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the .....

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een impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is cl .....

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