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2017 (1) TMI 740 - ITAT MUMBAI

2017 (1) TMI 740 - ITAT MUMBAI - TMI - Penalty levied under section 271(1)(c) - undisclosed income on account of bogus purchases and sales - Held that:- On an appreciation of the material on record we are inclined to concur with the view of the CIT(A) that the explanation put-forth by the assessee in the penalty proceedings was a plausible one, inasmuch as, the circumstances on which the additional income was offered was because the disputed parties with whom these transactions were made were no .....

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eral principles of law in respect of penalty for concealment of income, does not grant the assessee automatic immunity from penalty on account of surrender or voluntary disclosure of income. As per the provisions of Explanation 1 to section 271(1)(c) of the Act, the question is whether the assessee has offered any explanation for concealment of income or furnishing of inaccurate particulars of income. In the case own hand we find that the requirement laid down by the Hon’ble Court has been met b .....

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f assessee - ITA No. 5967/Mum/2014 - Dated:- 11-1-2017 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain , Judicial Member For The Appellant by: Shri Rajesh K. Arvind For The Respondent by: Shri Vimal Punmiya ORDER Per Jason P. Boaz, A.M. This appeal by Revenue is directed against the order of the CIT(A)-34, Mumbai dated 31.07.2014 for A.Y. 2010-11 deleting the penalty of ₹ 14,53,833/- levied under section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act'). 2. .....

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ses of the assessee. In the course of survey statement of Shri Manoj Sharma, partner in the assessee firm was recorded wherein he admitted income of ₹ 47,04,960/- as difference of disputed/bogus purchases and sales for the year under consideration. The assessment was completed under section 143(3) of the Act vide order dated 28.01.2013, wherein the income of the assessee was determined at ₹ 2,95,08,260/-, inter alia, mainly on account of undisclosed income of ₹ 47,04,960/- admi .....

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ssee furnished its reply (extracted on pg. 4 of the penalty order) submitting that the income in respect of disputed/bogus purchases of ₹ 47,04,960/- was made only due to the fact that the parties referred to in the order of assessment to/from whom sales and purchases were made had disowned the transactions and did not cooperate with it and therefore the assessee was not in a position to substantiate its claim with evidence to prove that the dealings with these parties were in order. The A .....

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ties that they have neither made any purchase/sales and are simply involved in issuing of bills. In that view of the matter, the AO proceeded to levy penalty of ₹ 14,53,833/- under section 271(1)(c) of the Act @100% of tax sought to be evaded on such purchases amounting to ₹ 47,04,060/-. 2.3 Aggrieved by the order levying penalty of ₹ 14,53,833/- under section 271(1)(c) of the Act for A.Y. 2005-06, the assessee preferred an appeal before the CIT(A)-34, Mumbai. The learned CIT(A .....

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u/s.271(1)(c) of ₹ 14,53,833/- on the addition made on the basis of admitted undisclosed income of Rs,47,04,960/- during the course of survey u/s. 1 33A of the I.T. Act. which proved concealment of income. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in concluding that the addition is on account of offered & accepted income which does not mean that the assessee has agreed for penalty. 3. On the facts and in the circumstances of the case and in l .....

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hat the onus to establish the identity and genuineness of any purchase appearing in the books lies with the assessee which assessee had failed to satisfy during the assessment proceedings. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that the assessee did not prefer appeal against the order passed u/s.143(3) of the Act. 6. The appellant prays that the order of the CIT(A) be set aside and matter may be decided according to law. The app .....

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case of Mak Data P. Ltd. vs. CIT (2013) 358 ITR 593 (SC). 3.3.1 Per contra, the Ld. Representative for the assessee placed strong support on the impugned order of the CIT(A) deleting the penalty levied under section 271(1)(c) of the Act for the assessment year 2005-06. The Ld. Representative for the assessee reiterated the factual submissions and legal propositions put forth by it before the CIT(A) and extracted at para 3.2 at pages 3 to 19 thereof in further written submissions filed before th .....

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e made a ground for treating the assessee s case as erroneous, fictitious or concealment, merely because the non-acceptance of other parties to the transactions entered to with the assessee, and should not be the reason behind levy of penalty under section 271(1)(c) of the Act. (iii) Penalty under section 271(1)(c) of the Act not exigible only for the reason that no appeals were filed against the quantum additions, as penalty proceedings are different from assessment proceedings. (iv) While pena .....

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l No.5457/Mum/ 2011 dated 02/09/2016 and (ii) Dharni Developers v. ACIT (2015) (40 ITR (Tribunal) 120) (Mumbai -Trib). 3.3.2 An affidavit dated 10/6/2016 sworn to by Shri Manoj Sharma, Partner in the assessee firm has also been filed in which it is stated that pursuant to the survey action under section 133A of the Act in the assessee s case on 08/01/2013, additional income was declared for three years as under on the same income:- S.No. Asst.Year Amount in (Rs.) 1. 2009-10 59,77,088 2. 2010-11 .....

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the penalty levied under section 271(1)(c) of the Act be upheld and Revenue s appeal dismissed. 3.4.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. On a perusal of the impugned order, it is seen that the CIT(A) has deleted the penalty of ₹ 14,53,833/- holding as under at paras 3.3 to 3.6 as under:- 3.3 I have carefully considered the above submissions of the appellant, material available on reco .....

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ncome of the assessee as "undisclosed income' offered by the assessee on account of bogus purchases and bogus sales thereof The said "undisclosed income" 0 ₹ 47,04,960/- was offered by the assessee, as a result of survey action u/s.133A conducted on 08.01.2013 as the business premises of the assessee firm. Addition was made on the basis of income offered by the appellant as undisclosed income on account of the difference of bogus purchase and sales. Penalty was levied by .....

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Claim not substantiate with document cannot be lead to inaccurate particulars. Therefore, the same cannot be subjected to initiation of penalty proceedings under the pretext of concealment of income or furnishing of inaccurate particulars u/s 271(1)(c). As the addition was made offered by appellant and accepted by AO does not mean that appellant is also agree for the penalty. Thus, in case of addition made on agreed basis penalty cannot be levied because addition was made because of concealment .....

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of his income on account of the difficulty encountered by him in securing necessary vouchers and receipts. That conduct of the assessee according to the Revenue was by itself sufficient to show that there was concealment. The Supreme Court in the case of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705, has pointed out that not every case of nondisclosure warrants imposition of penalty as the assessee may forgo a deduction or offer higher sums for taxation for a hundred and o .....

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ns offered in the case has rightly been held by the Tribunal to be relevant reasons. The question referred to us is therefore, answered in favour of the assessee and against the Revenue. In present case also appellant offered income because of non-corporation of party and his inability to prove transaction with supporting documents. But does not mean that there is concealment of income. 3.5. I further reply on following decisions for my view that penalty cannot be levied on addition made on agre .....

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LLOWED 3.4.2 From a perusal of the finding of the CIT(A) in the impugned order it is seen that the addition of ₹ 47,04,960/-, on the basis of which penalty under section 271(1)(c) of the Act was levied by the Assessing Officer, was on account of undisclosed income on account of bogus purchases and sales. On an appreciation of the material on record we are inclined to concur with the view of the CIT(A) that the explanation put-forth by the assessee in the penalty proceedings was a plausible .....

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case of Mak Data P. Ltd. (2013) 358 ITR 593(SC) while considering the provisions of Explanation 1 to section 271(1)(c) of the Act observed that the general principles of law in respect of penalty for concealment of income, does not grant the assessee automatic immunity from penalty on account of surrender or voluntary disclosure of income. As per the provisions of Explanation 1 to section 271(1)(c) of the Act, the question is whether the assessee has offered any explanation for concealment of in .....

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tly uphold her order directing the Assessing Officer to delete the penalty levied in the case on hand for assessment year 2009-10. Consequently, Revenue s grounds raised at S.No.1 to 6 are dismissed. 3.4.2 Another contention of the assessee raised in the course of hearing before the Bench was that penalty under section 271(1)(c) of the Act may be levied either for concealment of particulars of income or furnishing of inaccurate particulars of income and that the Assessing Officer is entitled to .....

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iculars of income leading to concealment. In these circumstances, it is contended that the penalty levied under section 271(1)(c) of the Act in the case on hand is not sustainable. Even though this legal issue may not have been urged before the authorities below, since the same is a purely legal issue and all facts relating thereto are available on record. The same are admitted for adjudication before us in this appeal in keeping with the decision in the case of the Hon ble Apex Court in NTPC (2 .....

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ated 02/09/2016, wherein following the decision in the case of Dharni .Developers (2015) (61 taxman.com 208), it has been held as under at para 6 and 7 thereof:- 6. The identical observations have been made by the Assessing Officer in other years under consideration also. Since the penalty notices are issued during the course of assessment proceedings, in our view, the said notices have to be read along with the assessment order. Accordingly, even if the Assessing Officer has failed to strike do .....

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