TMI Blog2016 (12) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition made u/s 68 as unexplained cash credit on account of consideration received on sale of equity shares - Held that:- Penalty u/s 271(1)(c) is a civil liability and the wilful concealment is not an essential ingredient for attracting civil 16 liability unlike the matter of prosecution u/s 276C. While considering an appeal against an order made u/s 271(1)(c), what is required to be examined is the record which the officer imposing penalty had before him and if that record can sustain the finding that there has been concealment, that would be sufficient to sustain penalty. See UoI vs. Dharmendra Textile Processors (2008 (9) TMI 52 - SUPREME COURT ) The order of the ld. CIT(A) directing the AO to impose penalty u/s 271(1)(c) @ 100% on addition made u/s 68 is confirmed.- Decided in favour of revenue. - ITA No. 5954/MUM/2014 - - - Dated:- 26-10-2016 - SHRI SAKTIJIT DEY(JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) For The Appellant : Shri. Subodh Ratna Parkhi For The Respondent : Shri. B.S. Bisht ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2006-07. The appeal is directed against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced from ₹ 76,70,732/- to ₹ 41,70,732/-, thereby reducing it by ₹ 35,00,000/-. The AO, however, made an addition of ₹ 53,86,564/- to the assessee s income u/s 68 being unexplained cash credit. The AO imposed a penalty @ 150% of the tax sought to be evaded u/s 271(1)(c) of the Act and it comes to ₹ 30,01,597/-. The ld. CIT(A) directed the AO to reduce the quantum of penalty to ₹ 20,01,064/- being 100% of the tax sought to be evaded. 4. The ld. Counsel for the assessee submits, before us, his explanation against penalty (i) on account of estimated business income of ₹ 5,58,372/- and (ii) on account of unexplained cash credit of ₹ 53,86,564/-. 4.1 Against the penalty levied on the addition of ₹ 5,58,372/-, it is submitted that the assessee in the course of statement recorded u/s 132(4) of the Act on 25/01/2006 had stated that his income from business of construction of godowns was around 10%. This statement of the assessee was a general one indicating the approximate rate of net profit which would be earned by the assessee from the said business. The net profit finally declared by the assessee vide his return of income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. The amount credited in the books of the assessee has been received from the above mentioned broker through banking channels. The AO does not dispute this fact. The sale of shares in demat form is also confirmed by the depository participant. In view of the above, it is submitted that penalty under section 271(1)(c) would not be attracted in such a case. 4.3 Reliance was placed by him on the decision in the case of Andaman Timber Industries vs. Commissioner of Central Excise [2015] 281 CTR 0241 (SC); R.W. Promotions (P) Ltd. vs. ACIT (2015) 61 taxmann.com 54 (Bom); CIT vs. Gem Granites (2014) 42 Taxman.com 493 (Mad). 5. The ld. DR submits that the assessee has not filed appeal before the ITAT against the order of the ld. CIT(A)-1, Thane dated 31/07/2008 which arises out of the order of the ACIT, Central Circle-2 ,Thane made u/s 153A r.w.s 143(3) dt. 31/12/2007. Thus, the above order passed by the Ld. CIT(A)- 1, Thane has attained finality. It is further stated that the assessee has only filed appeal before the ITAT against the order of the ld. CIT(A)-1, Thane dated 20/06/2014 which arises out of the penalty order u/s 271(1)(c) passed by the ACIT, Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeal was dismissed by the Customs, Excise and Service Tax Appellate Tribunal. The Hon ble Supreme Court observed that the assessee had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of crossexamination. Even when the assessee disputed the correctness of the statement and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. The Hon ble Court also observed that in the impugned order passed by the adjudicating authority, he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority . The Hon ble Court held that not allowing assessee to cross-examine witness by adjudicating authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which makes impugned order nullity as it amounted to violation of principles of natural justice. In the above case, the assessee questioned the correctness of the statements of the aforesaid two witnesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d communicated. The impugned order holding that cross examination would have been directed if felt was necessary, is hardly a reason in support of coming to the conclusion that no cross examination was called for in the present facts. This reason itself makes the impugned order vulnerable. [Para 11] Thus the assessee was not given an opportunity to cross examine the witnesses whose statement is relied upon by the revenue and the evidence led by the assessee has not been considered. Therefore this is clearly a breach of principles of natural justice. In view of the above, the order of the Tribunal is set aside and the issue is restored to the Assessing Officer for fresh disposal after following the principles of natural justice and in accordance with law.[Para 13] In the above case, during the course of assessment proceedings, the assessee called upon the AO to make available to him the statement recorded of the representatives of Inorbit Nupur which were allegedly adverse to him. Thereafter, the assessee sought cross-examination of the deponents of the statements made on behalf of Inorbit Nupur . Inspite of the above request, the AO passed an assessment order disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so initiated u/s 271(1)(c) of the Act. The CIT(A) observed that the entries relating to on money received from JB Exports are clearly recorded in the seized documents and there is no escape from inevitable and infallible conclusion that the assessee had received on money of ₹ 86,50,250/-. Taking note of the findings recorded by the Tribunal in its order in the quantum appeal, the ld. CIT(A) held that there is no reason for deviating from the view and there is no infirmity in the imposition of penalty u/s 271(1)(c) of the Act. On further appeal, the Tribunal held that the possibility of wrong entry could not be ruled out and allowed the assessee s appeal The short question which was before the Hon ble High Court was whether the order of penalty u/s 271(1)(c) of the Act passed by the AO and confirmed by the ld. CIT(A) was just and proper. The Hon ble High Court held: Factually, the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation and, if the department did not agree with the explanation, then the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 174 Taxman 60(Agra)(TM)(2008), CIT vs. Smt. Rajnidevi A. Chowdhary , ITA No. 1333 of 2008( Bom), CIT vs. Smt. Jamnadevi Agarwal Ors . 328 ITR 656(Bom)(2010) and ITO, Ward 3(2), Thane vs. Paresh Gala , ITA No. 3634/M/07. The assessee submits that in the above cases, similar transaction of purchase and sale of shares are discussed. The last decision relied on by the assessee before the ld. CIT(A) is CIT vs. Reliance Petroproducts(P) Ltd. 322 ITR 158(SC). In this case, the return of income for the A.Y. 2001-02 was filed by the assessee declaring loss of ₹ 26,54,554/- This assessment was finalized u/s 143(3) whereby the total income was determined at ₹ 2,22,688/-. In the assessment, addition in respect of interest expenditure was made. Simultaneously, penalty proceedings u/s 271(1)( c ) were also initiated on account of concealment of income/ furnishing of inaccurate particulars of income. The Hon ble Supreme Court held that merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(1)( c ). In the instant case, the facts are different. The same has been sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings. 6.4 Let us go back to the facts. The assessee had disclosed LTCG of ₹ 52,92,328/- on transaction of purchase and sale of shares. In response to the query raised by the AO, the assessee could not produce during the assessment proceedings, the share certificates, STT challans, Demat account. The AO recorded the statement of Shri Raj Masalia, Principal Officer of M/s DPS Shares Securities Pvt. Ltd through whom the assessee had shown transactions of purchase and sale of shares. In his statement, Shri Masalia admitted that in fact no purchase or sale of shares of M/s Pranett Industries has been undertaken by him on behalf of the assessee and the bills/contract notes supplied by them to the assessee were only accommodation bills. The statement of Shri Masalia was confronted to the assessee by the AO on 18/12/2007. The assessee was asked to explain why the amount of ₹ 53,86,564/- shown as sale price of the shares shall not be treated as unexplained credit u/s 68 of the Act. Then, the assessee filed a revised return of income on 20/12/2007 increasing the business income by ₹ 17,95,551/-. In the case of Vadilal Ichhachand v. CIT (1957) 32 ITR 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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