TMI Blog2019 (6) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... ived there on will undisputedly takes the character of concealment of income and hence in view of the above discussion, we decline to interfere with the order of the CIT (A). - Decided against assessee. - ITA No. 3497/Del/2016 - - - Dated:- 13-6-2019 - Shri H.S. Sidhu, Judicial Member And Shri B.R.R. Kumar, Accountant Member For the Appellant : None For the Respondent : Sh. N.K. Bansal, Sr. DR ORDER PER B.R.R. KUMAR, A.M.: The appeal was filed 13.06.2016 and notice has been issued to the assessee by the Tribunal on 29.04.2019 by RPAD intimating the date of hearing on 12.06.2019. On the designated date nobody appeared on behalf of the assessee nor any letter of adjournment is filed before us. Hence, the matter is being adjudicated based on the materials available on record. 2. The brief facts of the case are that subsequent to the information received pertaining to financial affairs of the assessee by the Income-tax Department, a survey u/s. 133A was conducted at the business premises of the assessee. During the survey, it was found that the assessee is running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 271 (1)(c) are met. Explanation 1 to Sec 27(1 )(c) sets out the circumstances which justifies levy of penalty. It reads as under: Explanation 1. Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B). Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section be deemed to represent the income in respect of which particulars have been concealed. The implication of the Explanation as under: (1) Every difference between reported and assessed income needs an explanation. (2) If no explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was signed by Sh. G.S.Saluja in the capacity as Proprietor. 4.1.2 4.1.3 From the above, it is clear that as per Explanation 1 to section 271, all the above conditions found to be applicable in the case of the appellant. Appellant during the assessment, penalty and even appellate stage failed to offer any cogent reply duly supported with documentary evidence to substantiate his claim. For the reasons discussed above in the penalty order, it is established beyond doubt that, whatever explanation has been given by the assessee has been found to be not reliable. Subsequent to the survey proceedings, altogether new submissions have been made. At the time of survey proceedings, it was admitted that assessee was the proprietor of M/s AVI Impex but later it was claimed that this concern was the AOP of M/s Gunjeev Saluja and others and it came to existence on 22.11.2003. But considering the detailed discussion on the above issue clearly establish that whatever claim has been made is devoid of any merit as entire claim is nothing but an after-thought to mitigate the tax liability and even the malafide intent of the assessee in the entire factual circumstances gets es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings and prosecution. (i). AO after verifying the details of share application money accepted the surrender made by the assessee and accordingly concluded the assessment u/s 143(3). AO also initiated penalty proceedings for concealment of income and not furnishing true particulars of income and imposed penalty of ₹ 14.61 lakhs. On appeal, CTT(A) confirmed the order of AO. On further appeal, ITAT allowed the plea of the assessee on the ground that there was no concealment and amount was voluntarily surrendered by assessee. Aggrieved by the order of ITAT, revenue took the matter to High court who pronounced the judgment against the assessee confirming the order of the AO. On appeal to Supreme Court it was held as under: Judgment of Apex Court: 1. Whenever there is a difference between the returned and assessed income, onus is on the assessee to substantiate the claim by cogent and reliable evidence. When initial onus placed by the Explanation-i to Section 271(1X0) is discharged by the assessee, burden of proving the ground to levy the penalty is on Revenue. (ii). Assessee s plea like voluntary disclosure , buy peace , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 529 / 20 Taxman 215(Mad.), CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 /30 Taxman 546H; CIT v. K.R. Sadayappan [1990] 185 ITR 49/51 Taxman 304 , Addl. CIT v. Jeevan Lai Sah[1994] 205 ITR 244 / 73 Taxman 182 (SC) and K.P. Madhusudanan v. CIT [2001] 251 ITR 99/ 118 Taxman 324 (SC), it is well established that whenever there is difference between the returned and assessed income, there is inference of concealment. The Explanation 1 to sec. 271 ( 1 )(c) of the Act raises a presumption that can be rebutted by the assessee with reference to facts of the case. Thus, the onus is on the assessee to rebut the inference of concealment. The onus laid down upon the assessee to rebut the presumption raised under Explanation 1 would not be discharged by any fantastic or fanciful explanation. It is not the law that any and every explanation has to be accepted. In CIT v. K.P. Madhusudanan [2000]246 ITR 218/[2002] 125 Taxman 265, Hon'ble Kerala High Court came to the conclusion that penalty was liable to be imposed in a case where the assessee could offer no acceptable explanation for the income not disclosed or the inaccurate particulars he had furnished in his return. - Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them, would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have . [Para 20] In a recent decision dt. 29/07/2013 in the case of CIT vs. HCIL Kalindee ARSSPL in ITA Nos.480/2012 and in the case of CIT vs. HCIL ARSSPL Triveni (3V) in IT A Nos. 481/2012 Hon bie Delhi High Court has upheld the penalty u/s 271 (l)(c) imposed by the AO where inadmissible deduction claimed u/s 80IA was disallowed and added to the income of the assessee. In these cases also the appellant claimed that the deduction u/s 80IA of the Act were claimed on the basis of certificate of Charted Accountant. While upholding the penalty imposed by the AO, the Hon'ble Jurisdictional High Court have held as under: Penalty provisions are not criminal and do not require culpable mens rea. Whether or not the assessee had acted malafidely is not the relevant question to be asked and answered. The relevant question to be asked and answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed form and certificate of the Chartered Accountant, can not absolve the assessee of its liability if the act or attempt in claiming the deduction was not bonafide. 11. Two reasons were given by the Assessing Officer why the claim for deduction under Section 80IA of the Act was rejected and should be denied. The first reason was that the respondent assessees were involved in works contracts and Explanation to Section SOLA (13) stipulates that benefit under the said Section was/is not available to a contractor carrying on works contract. The said clarificatory explanation was inserted by the Finance Act, 2007 with retrospective effect from 01.04.2000. The CIT (Appeals) in the first appellate order has specifically mentioned that the Finance Act, 2007 received the Presidential assent on 11.05.2007 [(2007) 291 ITR (St.) 1]. The returns of income were filed by M/s. HCIL Kalindee ARSSPL (JV) and M/s. HCIL ARSSPL Triveni (JV) on 01.11.2007. An amendment of this nature invariably attracts attention and is seldom missed. Such amendments become topic of discussion and conversation in the professional circles. To show and establish bonafides, the assessees had to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the AO in the penalty order, it is held that appellant failed to discharge his onus while filing the return of income by disclosing the true and full particulars of income for the assessment year under consideration. Thus, it is held that Assessing officer has rightly imposed the penalty u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income by the assessee to the extent of ₹ 50,48,792/- on which penalty of ₹ 16,99,422/- has been imposed being 100% of tax sought to be evaded. Thus, action of the AO is upheld in imposing penalty u/s 271 (1 )(c) of the Act of ₹ 16,99,422/-. 4. We have gone through the material on record and we find that this is a clear case of concealment wherein, the entire affairs of the business have been kept concealed from the department. It was only after receipt of information in connection with BCTT and conducting of survey u/s133A the affairs of the business have come to fore and the revenue has fairly determined the gross profit @ 6.33% on the turnover taking into consideration entire business activities of the assessee. We have also given thought as to whether penalty is levied w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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