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2017 (1) TMI 1327 - ITAT MUMBAI

2017 (1) TMI 1327 - ITAT MUMBAI - TMI - Levy of penalty u/s.271(1)(c) - surrender of income on account of investigation to buy the peace - bogus purchase - revised return fled - Held that:- During the assessment an information was received from DGIT (Inv.), Mumbai about the four firms engaged in Hawala entries. The name of the four firms were Ganesh Enterprises, Amar Enterprises, Saradge Enterprises and Anshu Mercantile Pvt. Ltd. Notice was given to the assessee but there was no proper reply, ho .....

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ome and furnishing the inaccurate particulars of income in the return. - The surrender of income was not voluntarily and it is a fit case to levy the penalty. Therefore, in view of the law settled in Mak Data P. Ltd. Vs. Commissioner of Income Tax [2013 (11) TMI 14 - SUPREME COURT] we are of the view that it is a fit case to levy the penalty, hence the order passed by the CIT(A) is correct and in accordance with law which is not liable to be interfere with at this appellate stage. - Decided .....

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acts and circumstances of the case and in law, the CIT(A) erred in confirming the levy of penalty of ₹ 8,10,638/- u/s.271(1)(c) being 100% of the tax sought to be evaded without giving proper opportunity to the appellant. 2. Your appellant prays that the appeal be heard on merits and proper opportunity may be granted to the appellant to represent the case. Ground II 1. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the levy of penalty of ₹ 8,10, .....

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e brief facts of the case are that the assessee filed return of income on 28.09.2010 declaring total income to the tune of ₹ 1,18,04,147/- after claiming deduction of ₹ 45,28,365/- u/s.80IC(3) of the Income Tax Act, 1961 ( in short the Act ). The return was processed u/s.143(1) of the Act. Thereafter, the case was selected for scrutiny and statutory notices u/s.143(2) and 142(1) of the Act were issued on 26.08.2011 and sent by post to the address mentioned in the return of income fil .....

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No.C-2, Model Industrial Estate, Off. Aarey Road, Goregaon (E), Mumbai - 400063. The assessee company was in the business of manufacturing and trading of electro mechanical devices. The assessee company was having a manufacturing unit at Baddi in Himachal Pradesh, the profit of which was claimed as deduction u/s.80IC of the Act. Report in form 10CCB was filed in support of the claim u/s.80IC of the Act. It was the second year of assessee s claim u/s.80IC of the Act, having commenced operation in .....

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f the assessee. Thereafter, the penalty proceeding was initiated in which the assessee submitted the reply dated 30.07.2013 in pursuance of notice dated 12.07.2013 which is reproduced below for ready reference:- Without prejudice to the claim of expenditure, the assessee wants to concentrate on the business and wants to buy peace by paying the taxes on this discrepancy. Under the circumstances, the assessee hereby admits that the bills from the above mentioned do not represent purchase from thes .....

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of ₹ 8,10,638/- u/s.271(1)(c) of the Act. The learned representative of the assessee has argued that the assessee wanted to concentrate on the business and wanted to buy the peace by paying the tax on the said discrepancy therefore in the said circumstances, the penalty is not liable to be leviable in the interest of justice specifically in view of the law settled by Hon ble Supreme Court of India in CIT Vs. Suresh Chandra Mittal (2001) 251 ITR 0009 and decided Hon ble High Court of Bomba .....

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aw settled in [2013] 358 ITR 593 (SC) Mak Data P. Ltd. Vs. Commissioner of Income Tax. With due regard to the contentions raised by the learned representative of the parties and perused the record carefully, it came into the notice that the Assessing Officer in the assessment order dated 24.01.2013 added the bogus purchases to the tune of ₹ 27,02,126/- as income of the assessee in view of the letter received from DGIT (Inv.), in which the said company was found to be involved in Hawala ent .....

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ases to be disallowed as expenses and offer to pay the tax. The assessee humbly requests that the discrepancy may kindly be condoned and penalty on the same may be deleted. 5. No doubt this plea has also been taken by the assessee at the time of assessment along with other contention which is also hereby reproduced as under:- 1. With regard to Ganesh Enterprise, the same is a shop near the office of the assessee, and some sundry items are purchased from the same. We are given to understand that .....

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work in various places on the site of the client. The site materials are procure by the office, but during the installation balance materials like cables, are purchased locally by the site incharge. Proper bills are not collected by the site incharge. In many cases the clients demands to show the bill for purchases. To counter this issues the assessee has made arrangement with the abovementioned parties who give the bills against the said purchases. The said parties are paid by cheque, the cash .....

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nder the circumstances the assessee hereby admits that the bills from abovementioned do not represent purchases from those parties, and offers the said purchases to be disallowed as expenses, and offers to pay the tax. The assessee humbly requests that the discrepancy may kindly be condoned and penalty on the same may be deleted. 6. The bogus purchase was added to the income of the assessee on account of the letter dated DGIT(Inv.) in which the Sales Tax authorities has arrived at this conclusio .....

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urt of India in CIT Vs. Suresh Chandra Mittal (2001) 251 ITR 0009 speaks about the facts that the assessee surrender the additional income by way of revised return after the persistent query by the Assessing Officer. Once the revised return have been regularized by the revenue the explanation of the assessee was that he has declared the additional income to buy peace and to come out of vexed litigation could be treated as bonafide thus the penalty u/s.271(1)(c) was not leviable. Whereas in the i .....

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le to the facts of the case. Moreover the law relied by the departmental representative speaks that surrender of income on account of investigation to buy the peace is not voluntarily and statute does not recognize these type of defenses under the explanation 1 to section 271(1)(c) of the Act. Admission of bogus purchases leads to the concealment of income and furnishing the inaccurate particulars of income in the return. In case title as Commissioner of Income Tax Vs. Shiv Kumar Jaiswal, the As .....

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