2016 (3) TMI 81 - AT - Income Tax

Penalty u/s 271(1(c) - accommodation entry - Held that - There is no doubt that the AO has initiated the penalty proceeding by making the addition on the basis of information of receiving the accommodation entries by the of the assessee which was detected during the search and survey proceedings. Though there was confusion about the names of the parties from whom the assessee has received the amount however ultimately the assessee admitted to have received these amounts from three parties and decided to surrender this amount for taxation. Hence, the assessee has surrendered this amount to tax which is not voluntary act on the part of the assessee, but because of the proceeding initiated by the AO, after this fact of accommodation entries was detected in the search and survey proceedings. Therefore, the surrender of the amount by the assessee pre-empts the further investigation during the assessment proceedings. Even otherwise when the assessee has admitted this amount as income then no further investigation was required on the part of the AO to prove that this amount was received on account of accommodation entries received by the assessee. As relying on Hon ble Supreme Court in the case of Mak Data Vs. CIT 2013 (11) TMI 14 - SUPREME COURT the penalty levy u/s 271(1)(c) is confirmed. - Decided against assessee

Summary

Issues Involved:
Assessment of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2005-06 based on concealment of income.

Detailed Analysis:

1. Background and Facts:
The appellant filed its income tax return declaring a total income of Rs. 6,49,080/-, which was processed under section 143(1). During search and survey proceedings, it was discovered that the appellant received share application money of Rs. 6 lacs from various parties through bogus entries. The Assessing Officer (AO) proposed to add this amount to the appellant's income, and subsequently, a penalty was levied under section 271(1)(c) for Rs. 2,19,555/-.

2. Appellant's Arguments:
The appellant contended that it surrendered the amount of Rs. 6 lacs to avoid disputes with the department, even though the creditors were not under its control. The appellant provided confirmations from the parties along with PAN to establish the genuineness of the transactions. It argued that since it had produced relevant records, no penalty should be imposed. The appellant cited various legal precedents to support its case.

3. Revenue's Arguments:
The Revenue relied on judgments to emphasize that merely providing PAN numbers does not establish creditworthiness and genuineness of transactions. It also supported the lower authorities' orders in the case.

4. Tribunal's Decision:
The Tribunal observed that the appellant's surrender of income was not voluntary, as it was prompted by the AO's investigation. The Tribunal referenced the Supreme Court's decision in a similar case to highlight that voluntary disclosure does not absolve an assessee from penalty. It noted that the appellant failed to disclose the surrendered income in its initial return, indicating an intention to conceal income. The Tribunal upheld the penalty under section 271(1)(c) based on the evidence and legal principles discussed.

5. Conclusion:
Based on the analysis and legal precedents, the Tribunal confirmed the penalty levied under section 271(1)(c) against the appellant. The orders of the lower authorities were upheld, and the appeal was dismissed.

This detailed analysis highlights the key arguments presented by both parties, the legal principles applied by the Tribunal, and the final decision regarding the penalty under section 271(1)(c) in the given case.