TMI Blog2017 (2) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... ve rightly imposed penalty irrespective of the fact that the total income including the impugned disallowance was eligible for deduction u/s. 80HHC and 80IA as provisions of section 271(1)(c) read with Explanations appended thereto, in our considered opinion, the eligibility for 100% deductions u/s. 80HHC or 80IA, would not mitigate the rigors of penal provisions for the reason the provisions of section 80HHC and 80IA merely provide for tax holiday on the turnover of assessee, but cannot exonerate the assessee from penal consequences as per provisions of section 271(1)(c) of the Act. - Decided against assessee. - ITA No. 116/Del./2014 - - - Dated:- 25-11-2016 - SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Sh. Sanjay Kapoor, C.A. For The Respondent : Sh. Rajesh Kumar, Sr. DR ORDER Per L.P. Sahu, Accountant Member: This is an appeal filed by the assessee against the order of ld. CIT(A)-IX, New Delhi dated 19.11.2013 for the assessment year 1994-95 challenging the confirmation of penalty imposed u/s. 271(1)(c) of the IT Act, 1961 (hereinafter referred to as the Act ) on the following grounds : 1. The pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s. 80HHC and 30% deduction of income u/s. 80IA of the Act. Penalty u/s 271(1)(c) were initiated against the assessee and after considering the submissions of the assessee, the AO imposed a penalty of ₹ 82,95,000/- vide order dated 25.03.2011 for concealment of income on account of bogus purchases shown to have been made by assessee from Agra suppliers. The appellant challenged the penalty order in appeal before the ld. CIT(A), who confirmed the same vide impugned order. Aggrieved, the assessee is in appeal before the Tribunal. 3. During the course of hearing, the ld. Counsel for the assessee submitted that since there is no variation in the income returned and the income assessed, no penalty is leviable u/s. 271(1)(c) of the Act. It was submitted that the assessee had furnished bill-wise and payment-wise details of the impugned purchases including the statement of accounts of the sellers. Therefore, there is no reason to hold any concealment of particulars of income or furnishing of inaccurate particulars of income, particularly when the payments have been made through banking channels for which bank statement was also filed before the authorities below. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire material available on record. First of all, we feel it appropriate to reproduce the findings of the ld. CIT(A) in appeal of assessee, on the addition/disallowance, on the basis of which the impugned penalty has been imposed u/s. 271(1)(c) of the Act, which reads as under : Ground No. 5 is with regard to addition on account of purchase from Agra parties amounting to ₹ 1,60,23,000/-. I find that detailed investigation was undertaken before making this addition. The A.O along with his Inspector visited Agra to verify the transactions but he could verify only seven parties and several others could not be verified. The ADIT Agra vide letter dated 13.10.1995 had informed that none of the parties were available for verification and were found to be bogus. Similar enquiries were made by CIT (C) II through CIT Agra and traders were found to be non-traceable. In its submissions before the A.O vide letter dated 14.03.1997, the appellant company furnished details giving quantity purchased and explained that payments were through cheques duly recorded in bank account. The A.O did not accept the arguments of the company as it could not refute or rebut the findings given in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Honeywell Dace (India) Ltd. (supra) also does not render any help to the assessee for the reason that in that the dispute of set off of losses was involved in that case, which was not considered relevant for furnishing of inaccurate particulars of income. In the instant case, the assessee has furnished the details of such purchases which were found bogus and from such parties which were not found in existence. 7. The dominant contention of the assessee has been that penalty is not leviable against the assessee, being 100% export oriented unit covered under deduction u/s 80HHC due to which the taxable income returned and assessed is at NIL. The provision of section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. In this case, the details of purchases furnished by the assessee were found inaccurate resulting into concealment of income, as the sellers, from whom the alleged purchases were shown to have been made, were found bogus and nonexistent. It is an admitted fact that the assessee failed to furnish the purchase vouchers and confirmations of the alleged sellers. In view of the above, it is clear that the explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the returned loss. The necessary consequence thereof would be that even if assessee has disclosed nil income and on verification of the record, it is found that certain income has been concealed or has wrongly been shown, in that case, penalty can still be levied.-Saheli Leasing Industries Ltd. (judgment dt. 8th Aug., 2006 of the Gujarat High Court in Tax Appeal No. 1904 of 2005) set aside; CIT vs. Gold Coin Health Food (P) Ltd. (2008) 218 CTR (SC) 359 : (2008) 11 DTR (SC) 185 : (2008) 304 ITR 308 (SC) followed; CIT vs. Elphinstone Spinning Weaving Mills Co. Ltd. (1960) 40 ITR 142 (SC) distinguished. Hon ble Apex Court in the case of CIT vs. Gold Coin Health Food (P) Ltd., 304 ITR 308 (SC) has observed as under : Explanation 4 to s. 271(1)(c) intended to levy the penalty not only in a case where after addition of concealed income, a loss returned, after assessment becomes positive income but also in a case where addition of concealed income reduces the returned loss and finally the assessed income is also a loss; the said Explanation being clarificatory is applicable retrospectively. Hon ble Supreme Court in UOI vs. Dharmendra Textile Processors, 306 ITR 277 has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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