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2017 (2) TMI 739 - AT - Income TaxPenalty u/s 271(1)(c) - concealment of income on account of bogus purchases shown to have been made by assessee from Agra suppliers - 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 - Held that - 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. Thus it is clear that the explanation offered by the assessee with respect to payments alleged to have been made from suppliers of Agra against purchases, was found false and unacceptable. Authorities below appear to have 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.
Issues Involved:
1. Applicability of Section 271(1)(c) read with Section 275 of the IT Act. 2. Confirmation of penalty levied by the Assessing Officer (A.O.). 3. Allegation of concealment or filing inaccurate particulars of income by the assessee. 4. Variation between returned income and assessed income. 5. Mechanical levy of penalty. 6. Allegation of concealment of income by making wrong claims of purchases from Agra parties. 7. Failure to offer a correct explanation regarding facts material to the computation of total taxable income. 8. Leviability of penalty on the amount of bogus purchases added under Section 69 of the Act. Detailed Analysis: 1. Applicability of Section 271(1)(c) read with Section 275 of the IT Act: The assessee argued that the provisions of Section 271(1)(c) read with Section 275 are not applicable. However, the Tribunal found that the details of purchases furnished by the assessee were inaccurate, leading to concealment of income. The Tribunal emphasized that the provisions of Section 80HHC and 80IA, which provide tax holidays, do not exonerate the assessee from penal consequences under Section 271(1)(c). 2. Confirmation of Penalty Levied by the A.O.: The CIT(A) confirmed the penalty imposed by the A.O., which was challenged by the assessee. The Tribunal upheld the CIT(A)'s decision, stating that the penalty was justified as the purchases shown were found to be bogus and the sellers were non-existent. 3. Allegation of Concealment or Filing Inaccurate Particulars of Income: The assessee contended that it neither concealed nor filed inaccurate particulars of its income. However, the Tribunal concluded that the assessee failed to provide purchase vouchers and confirmations from the suppliers, which indicated concealment of income and furnishing of inaccurate particulars. 4. Variation Between Returned Income and Assessed Income: The assessee claimed that there was no variation between the returned income and the assessed income, thus penalty should not be levied. The Tribunal dismissed this argument, stating that even if the taxable income remained at NIL due to deductions under Sections 80HHC and 80IA, the concealment of income through bogus purchases warranted the penalty. 5. Mechanical Levy of Penalty: The assessee argued that the penalty was levied mechanically. The Tribunal found this argument unsubstantiated, noting that the penalty was based on detailed investigations and findings that the purchases were bogus. 6. Allegation of Concealment of Income by Making Wrong Claims of Purchases from Agra Parties: The CIT(A) and the Tribunal found that the assessee tried to conceal its income by making wrong claims of purchases from Agra parties. The Tribunal noted that detailed investigations revealed that the suppliers were non-existent, and the assessee failed to provide necessary confirmations and purchase vouchers. 7. Failure to Offer a Correct Explanation Regarding Facts Material to the Computation of Total Taxable Income: The Tribunal agreed with the CIT(A) that the assessee failed to offer a correct explanation regarding the purchases from Agra suppliers, which were found to be bogus. The Tribunal emphasized that the explanation offered by the assessee was false and unacceptable. 8. Leviability of Penalty on the Amount of Bogus Purchases Added Under Section 69 of the Act: The Tribunal upheld the penalty on the amount of bogus purchases added under Section 69, stating that the assessee's failure to provide purchase vouchers and confirmations from the suppliers justified the penalty. Conclusion: The Tribunal concluded that the penalty imposed by the A.O. and sustained by the CIT(A) was based on sound footings and deserved to be sustained. The appeal of the assessee was dismissed. Order: The appeal of the assessee is dismissed. The order was pronounced in the open court on 25.11.2016.
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