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2018 (5) TMI 2125 - AT - Income TaxPenalty u/s 271(1)(c) - assessee was providing accommodation entries - HELD THAT - As assessee was providing accommodation entries, therefore, the addition was sustained.The conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed by the assessee because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. We have already seen the meaning of the word particulars in the earlier part of this order. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in these cases, there is finding that the details filed by the assessee are incorrect and the assessee knowingly furnished inaccurate particulars of income and was very much aware that he was involved in Hawala entries. In these appeals, the penalty was levied/confirmed on the basis of involvement of the assessee as discussed in the earlier paras of this order. Thus, there is clear cut case of concealment of income/furnishing of inaccurate particular of such income, that being the case, we find no infirmity in imposing/confirming the penalty. Considering the provision of the Act and the foregoing discussion, order of the Tribunal on quantum addition, material facts available on record, it can be concluded that it was a conscious act of the assessee to hide something from the Department. As in the case of the present assessee, the quantum addition has been confirmed. However, in principle, the penalty levied by the Assessing Officer in respect of additions confirmed by the Tribunal should be sustained. However, by a later development, the co-ordinate Bench of the Tribunal in the case of Varun Industries Ltd. 2017 (4) TMI 1593 - ITAT MUMBAI simply setaside the matter to the file of the Ld. Commissioner of Income Tax (Appeal), to decide the issue afresh after taking into account additions made in the hands of the brokers. The Ld. Assessing Officer is directed to ascertain the facts as to in whose hands the substantive/protective addition has to be made and then decide the issue of levy of penalty u/s 271(1)(c) of the Act on such additions. In the light of the aforesaid decision of the Tribunal, in the case of Varun Industries Ltd., we are forced to send these penalty appeals to the file of the ld. Assessing Officer to decide in accordance with law as the same will be dependent upon the outcome of the additions to be made in the hands of Varun industries Ltd. or the present assessee or any other related persons. Resultantly, these penalty appeals are also set-aside to the file of the ld. Assessing Officer. Appeal of assessee are allowed for statistical purposes only.
Issues Involved:
1. Legality of consolidated order for multiple assessment years. 2. Determination of the assessee's involvement in issuing bogus bills. 3. Estimation and addition of commission income. 4. Protective addition of sales bills. 5. Addition of unexplained bank credits. 6. Addition of cash deposits in bank accounts. 7. Addition of cash found during the search. 8. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961. Detailed Analysis: 1. Legality of Consolidated Order for Multiple Assessment Years: The assessee challenged the consolidated order passed by the Assessing Officer (AO) for seven assessment years. The Tribunal noted that although the AO passed a consolidated order, the additions and computation of total income were made separately for each year. The Tribunal upheld the findings of the CIT(A), which stated that the consolidated order was in conformity with the intent and purpose of the Income Tax Act, 1961, as per Section 292B. Therefore, the challenge to the consolidated order was dismissed. 2. Determination of the Assessee's Involvement in Issuing Bogus Bills: The Tribunal concluded that the assessee was involved in issuing bogus bills and operating more than 100 bank accounts in various names. This conclusion was based on incriminating materials found during the search, including signed blank cheques, sale bills, PAN cards, and ration cards. The Tribunal upheld the findings of the AO and CIT(A) that the assessee was a hawala operator engaged in providing accommodation entries. 3. Estimation and Addition of Commission Income: The AO estimated the commission income at 2% of the total sales bills issued in the name of M/s Varun Industries Ltd. The assessee argued that the prevailing commission rate in the steel market was between 0.02% to 0.05%. However, the Tribunal found that the assessee failed to justify this rate with corroborative evidence. The Tribunal upheld the AO's estimation of commission income at 2%, considering it fair and reasonable. 4. Protective Addition of Sales Bills: The AO made a protective addition of the total sales bills issued in the name of M/s Varun Industries Ltd. The assessee argued that once a substantive addition was made in the hands of M/s Varun Industries Ltd, the protective addition should not survive. The Tribunal noted that the outcome of the substantive addition in appellate forums was not ascertainable. Therefore, the protective addition was upheld to protect the interest of the revenue. 5. Addition of Unexplained Bank Credits: The AO added unexplained bank credits amounting to Rs. 1388.09 crores, as the assessee failed to provide satisfactory evidence to explain the sources of these credits. The Tribunal upheld the AO's addition, noting that the assessee did not discharge the onus of proving the identity, genuineness, and creditworthiness of the transactions. The Tribunal also relied on various judicial precedents to support its decision. 6. Addition of Cash Deposits in Bank Accounts: The AO made additions towards cash deposits in bank accounts amounting to Rs. 7,01,650, attributing 50% to the assessee. The Tribunal found merit in the assessee's argument for telescoping the source of income available from the estimated commission income to explain the cash deposits. The issue was set aside to the AO for verification and appropriate relief. 7. Addition of Cash Found During the Search: The AO made additions towards cash found during the search amounting to Rs. 47,30,000. The Tribunal directed the AO to verify if the source of income available from the estimated commission income could explain the cash found. The issue was set aside for verification and appropriate relief. 8. Levy of Penalty under Section 271(1)(c): The Tribunal analyzed the provisions of Section 271(1)(c) and concluded that the assessee had furnished inaccurate particulars of income, leading to concealment. The Tribunal upheld the penalty imposed by the AO and CIT(A), noting that the assessee was knowingly involved in hawala entries. However, in light of a co-ordinate Bench decision in the case of Varun Industries Ltd., the penalty appeals were set aside to the AO for re-examination, depending on the outcome of the substantive/protective additions. Conclusion: The Tribunal upheld the majority of the AO's and CIT(A)'s findings, including the assessee's involvement in issuing bogus bills, estimation of commission income, and protective additions. The issues of cash deposits and cash found during the search were set aside for verification. The penalty appeals were also set aside for re-examination in light of related judicial decisions. All appeals filed by the assessee were partly allowed for statistical purposes.
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