9911796707
TMI Blog2016 (9) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of 11/02/2014. Then to comply with time limit, he rushed to file the appeal but the assessee was not available on 11/02/2014. Regarding this statement, affidavit of the assessee was filed, in which, he stated that for the purpose of his business, he had gone to Japan and returned on 12/02/2014. Due to which, there was one day delay in filing the appeal and prayed to condone the delay. 2.1 The DR has raised objection and prayed that appeal may be dismissed on the basis of condonation of delay. 2.2 We have perused the submission made by the AR of the assessee as well as the affidavit sworn by the assessee and find that there is no laches on the part of the assessee and therefore, we condone the delay of one day in filing the appeal. 3. The assessee derives income from trading of precious and semi precious stones and filed his return for the year under consideration on 31/10/2006 declaring total income of Rs. 5,94,260/-. The case was selected for scrutiny U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer after scrutiny assessment, assessed the income of the assessee at Rs. 33,30,963/-. Against the said assessment, the assessee filed appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... howroom and the business of direct export of diamonds, silver articles / jewellery out of India and that it was the first year of the assessee's business. Hence, there is merit in the contention of Ld.AR that the case of M/s Kanchwala Gems for A.Y. 1997-98 was not comparable with the appellant's case for A.Y.2006- 07. Therefore, it is held that Ld.AO was not correct in applying the GP rate of 30% in the appellant's case, following the GP rate of 30% upheld in the case of M/s Kanchwala Gems in A.Y. 1997-98, and thereby, in making a further addition of Rs. 21,52,125/-, over and above the addition of Rs. 5,84,578/- made on account of the(, 25% disallowance out of the unverified purchases. Accordingly, the addition made by the AO, to the extent of Rs. 5,84,578/- is sustained and the balance addition of Rs. 21,52,125/- is directed to be deleted." 3.1 Against the said order, the assessee has not filed the appeal, thus the order in respect of amount of Rs. 5,84,578/- has accepted and become final. After giving the appeal effect on the basis of the ld CIT(A)'s order, the income of the assessee was revised to Rs. 11,78,838/-. The penalty proceedings U/s 271(1)(c) of the Act was initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts it is clear that addition made by the A.O. and confirmed by the ITAT is not on mere estimate of gross profit. By indulging into bogus purchases, appellant furnished inaccurate particulars of income and accordingly addition was made/confirmed to the extent of 25% of bogus purchases. The decision relied upon by the appellant are relating to penalty levied on pure estimate of income and not on any adverse findings relating to purchases. Therefore, these decisions do not support to the appellant's claim. Since appellant could not prove the purchases from these parties genuine, the addition based on such factual findings cannot be treated as mere estimate of income. Accordingly, I hold that appellant furnished inaccurate particulars of income resulting in addition to trading result. Penalty levied by the A.O. is therefore, confirmed." 5. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that from the findings given by the CIT(A) in quantum appeal, it can be noted that there is no dispute that purchases were made by the assessee and these goods were exported. In this order he only presumed that assessee must have made purchases from some parties, other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n lower rate compared to purchase of same item from other parties. He relied on the following case laws:- (i) Kamlesh Dangayach Vs. ACIT 32 CCH 258 (Jaipur) (Trib.) (ii) Chempure Vs. ITO 29 CCH 40 (Mum.) (Trib.) The ld AR further submitted that the decisions relied by AO in the penalty order only lays down a law that after insertion of Explanation 1, it is not required by the revenue to prove the mens rea. Though it is admitted position of law that revenue is not to prove the willful neglect or fraud on part of the assessee but at the same time where assessee offers an explanation which is not found false or where the explanation offered is bonafide and all facts relating to the same and material to the computation of total income is disclosed, no penalty can be levied. In present case, assessee has co-related the purchases made from these three parties with the export sale. Thus, the fact of purchases is proved. The Ld. CIT(A) has himself admitted these facts in the quantum order but only on the assumption that purchases might have been made from some other parties by inflating the cost of purchase justified the disallowance of 25% of unverified purchases on estimate basis. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his whims and fancies. The AO cannot initiate a penalty for one charge and then ambush the assessee by levying penalty on a different charge because the initial onus to explain and rebut the charge is upon the assessee. If charge itself is vague and not clear, then the onus cast upon the assessee under Explanation itself gets vitiated as assessee is precluded from a chance to give a specific rebuttal on that charge. 6. Reliance in this connection is placed on the following cases:- (i) ACIT & Anr. Vs. Dipesh M Panjwani & Anr. 46 CCH 0322 (Mum.) (Trib.) dated. 18.03.2016 (ii) Roshan Lal Tilak Raj & Co. Vs. ITO 46 CCH 0130 (Asr.) (Trib.) dated 22.01.2016 (iii) Tristar Intech P. Ltd. Vs. ACIT 43 ITR (Trib.) 0279 (Del.) dt. 07.09.2015 (iv) CIT vs. M/s Manjunatha Cotton & Ginning Factory & Ors. 359 ITR 565 (Kar.) HC) (v) Radha Mohan Maheshwari Vs. DCIT order dt. 18.03.2016 in ITA No.773/JP/13 (vi) Shankar Lal Khandelwal Vs. DCIT order dt. 11.03.2016 in ITA No. 878/JP/13 6. At the outset, the ld DR has submitted as under:- As per provisions of section 271(1) (c), the assessee is liable to penalty if he has "concealed particulars of his income" or he has "furnished ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to gross or wilful neglect on his part. It was observed that in cases of concealment of income and tax evasion, the modus of concealment is obviously within the special knowledge of the assessee. Consequently, in cases of blatant evasion, the Legislature was compelled to take off the impossible burden of establishing facts which are obviously in the special knowledge of the assessee alone. The onus was, therefore, rightly placed on the shoulders of the assessee who alone could reasonably discharge the same. The insertion of the Explanation and the omission of the word 'deliberately' was not merely declaratory of the existing law but designed to effect a change in law. " The findings of the judgment of the Punjab and Haryana High Court were approved by the Hon'ble Supreme Court in the case of Chuharmal Vs CIT reported in 172 ITR 250(SC). The jurisdictional High Court in the case of CIT Vs Goswami Chandralat Bahuii in 125 ITR 700(Raj) has held as under:- " the finding given in the assessment proceeding would be relevant and admissible material in penalty proceedings, those findings cannot operate as res judicata because the considerations that arise in penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f hearing before me, has specifically referred to paragraph 60 and 61 of the report, i.e., Manjunatha Cotton & Ginning Factory, which reads as under: "60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(l)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt have noticed that the penalty u/s 271(l)(c) can be levied for two specific offences; one is concealing the particulars of income and second for furnishing of inaccurate particulars of income. The Assessing Officer cannot initiate penalty proceedings for one offence and then finally levy the penalty for another offence, because in such circumstance the assessee will not get proper opportunity to explain the charge levelled against him. Their Lordships have also noticed that the facts of some cases may attract both the offences and in some cases there may be overlapping of these two offences, but in such cases the initiation of penalty proceedings should also be for both the offences. In my opinion, under the facts of the assessee's case, it may attract both the offences, i.e., the concealment of income as well as furnishing of inaccurate particulars of income and therefore, the Assessing Officer rightly initiated the penalty proceedings for both the offences. In the penalty notice also both the offences were mentioned and therefore, the assessee got the adequate opportunity to explain its stand with regard to both the offences. Thereafter, the Assessing Officer levied the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts material to the computation of total income of any person such person fails to offer an explanation or offers explanation which is found by the Assessing Officer to be false or such person offers an explanation, which he is not able to substantiate or fails to prove that such explanation is bona fide and with all the facts relating to the same and material to the computation of his total income have been disclosed by him. This is not denied that the particulars of provisions of doubtful debts have duly been shown by the assessee and debited in the audited profit and loss account. It is also not denied that the assessee has submitted the explanation in reply to show cause notice issued by the Assessing Officer. Even though the Assessing Officer, in our opinion, failed to discharge his onus as he was not sure at the initiation of penalty u/s 271(1)(c) for which specific charge penalty has been initiated by the Assessing Officer. Even while levying the penalty also, the Assessing Officer simply relied on the Explanation to Section 271(1)(c) even though he levied the penalty for furnishing the inaccurate particulars of income. This is apparent from the provisions of Section 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and then his conclusion for levying the penalty u/s 271(l)(c) was as under:- ". . . in this case assessee company was engaged in undisclosed investment in purchase of agricultural land wherein the real transaction was recorded at a lesser value in the regular books of account. The Directors of the Company admitted the same. Further, during course of survey the fact was proved that assessee had concealed the correct particulars of income by not showing correct position of stock in books and as such assessee has shown lesser business profit which was detected by the department. Hence, assessee company furnished of inaccurate particulars of income by disclosing lesser business income which leads to attract penal provisions by virtue of section 271(l)(c). In view of totality of the facts and keeping in view the provisions of section 271(l)(c) as well as submission of the assessee, the assessee is found guilty of furnishing of inaccurate particulars of income to the extent of Rs. 3,02,33,672/- within the meaning of sec. 271(l)(c) and, therefore, penalty u/s 271(l)(c) is imposed on the concealed income as per working given below. . . . " 30. From the above, it is evident that after d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases made by the applicant and after following a due process, the Assessing Officer enquired from the assessee about the purchases made from three parties discussed in detail in paragraph No. 1 of the assessment order, but the assessee failed to produce the parties. The Assessing Officer thereafter, tried to examine the said parties after issuing the summons but the summons returned unserved as the concerned parties were non-existent. Thereafter, the Assessing Officer made enquiries by sending the Inspector but the addresses give by the assessee was not found. Therefore, the Assessing Officer had treated the purchases as bogus and disallowed 25% of such purchases by invoking the provisions of Section 145(3) of the Act. The same was confirmed in the appeal by the ld. CIT(A). No appeal was filed before the Tribunal. 9. Before us, it was contended by the ld AR of the assessee that the order was passed on presumption and there was no quarrel with respect to export of articles and it was submitted that the order of the Assessing Officer and the ld. CIT(A) was passed on presumption. It was further submitted that the assessment proceedings and the quantum proceedings are separate proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion de novo regarding initiation of penalty proceedings. In the facts of the present case, where the disallowance of the commission payment has been upheld by this Court, on account of the Assessee failing to furnish the true and correct particulars, the initiation of the penalty proceedings against the Assessee under Section 271 (1) (c) of the Act is perfectly justified. 45. The decision in CIT v. Reliance Petroproduts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) proceeded on the basis that no information given in the return was found to be incorrect or inaccurate. It was in that context that it was observed that the mere making of an incorrect claim would not tantamount to furnishing inaccurate particulars. Here the question is not mere making of a wrong claim but in making a claim that is demonstrably false. With the Assessee failing to establish the genuineness to the commission payments the essential conditions for attracting penalty under Section 271 (1)(c) of the Act stood fulfilled. In our view, the appeal of the assessee is liable to be dismissed and accordingly, we dismiss the same. 10. In the result, the assessee's appeal is dismissed. Order pronounced in the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
