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2022 (5) TMI 1278 - AT - Income TaxPenalty proceedings u/s 271(1)(c) - unverifiable selling expenses Disallowance of EPF ESIC after due date added u/s 2(24)(x) read with section 36(1)(va) Deemed dividend u/s 2(22)(e) Bogus creditors Surrender on account of unverifiable creditors - HELD THAT - As perused the orders passed by the authorities below specifically the impugned order wherein the Commissioner has observed that the Assessee has not offered any explanation for rebutting the presumption of concealment and even also failed to mention any worthwhile new facts and evidence in order to show the transactions even if not confirmed by the parties with whom the Assessee has dealt with were genuine/real. Therefore virtually in this case no explanation has been offered in the penalty proceedings. Hence the penalty has been rightly levied u/s 271(1)(c) of the Act. Before us as well the Assessee has failed to place on record any material to contradict the findings of the ld. Commissioner. Even otherwise we do not find any reason or material to controvert the findings given by the Commissioner in upholding the levy of penalty imposed by the Assessing officer and therefore in the absence of any cogent reason and/or material we are constrained to dismiss the appeal of the Assessee and to uphold the impugned order - Decided against assessee.
Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961. 2. Validity of additions made during assessment. 3. Consideration of surrender of income to avoid litigation. 4. Treatment of specific disallowances and additions as concealment of income. Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c): The core issue revolves around the imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2009-10. The penalty was levied for concealment of income and furnishing inaccurate particulars of income. 2. Validity of Additions Made During Assessment: The assessment was completed under section 143(3) of the Act, with significant additions made to the declared income. The additions included unverifiable selling expenses, disallowance of EPF & ESIC payments, deemed dividend under section 2(22)(e), and bogus creditors. The total assessed income was Rs. 1,22,89,340 against the returned income of Rs. 3,97,998. 3. Consideration of Surrender of Income to Avoid Litigation: The assessee surrendered Rs. 1 crore to avoid further litigation, with an understanding that no further penalty would be levied. However, the Assessing Officer (A.O.) imposed a penalty of Rs. 54,72,620, which was later reduced to Rs. 42,08,060 under section 154. 4. Treatment of Specific Disallowances and Additions as Concealment of Income: The Commissioner upheld the penalty, categorizing the following disallowances and additions as concealment: - Unverifiable Selling Expenses (Rs. 50,000): This was considered a purely estimated disallowance and did not attract a penalty. - Late Payment of ESI & PF (Rs. 4,30,065): This disallowance was based on full facts disclosed by the assessee and did not attract a penalty. - Advance from M/s Broadway Machines (P) Ltd. (Rs. 5,12,200): The Commissioner found that the assessee consciously concealed this deemed income under section 2(22)(e). - Surrendered Bogus Creditors (Rs. 12,97,074 and Rs. 1,00,00,000): The surrender was seen as an admission of the bogus nature of the credits, indicating conscious concealment of income. Legal Precedents and Case Laws: The Commissioner referenced several case laws to justify the penalty, emphasizing that the mere surrender of income does not absolve the assessee from penalty if there is evidence of conscious concealment. Notable cases cited include: - Hindustan Steels Ltd vs. State of Orissa (1972) 83 ITR 26: Penalty cannot be imposed unless there is a conscious breach of law. - CIT vs. D.K.B. & Co. (2002): Penalty can be levied even if the assessee agrees to additions. - Beena Metals vs. CIT (1998): Penalty justified when the assessee fails to produce relevant records. - Western Automobiles (India) vs. CIT (1976): Admission of income by the assessee justifies penalty. Conclusion: The Tribunal upheld the penalty, agreeing with the Commissioner that the assessee failed to provide any substantial explanation or evidence to rebut the presumption of concealment. The assessee's appeal was dismissed due to the lack of any material to contradict the findings of the Commissioner. The penalty under section 271(1)(c) was deemed rightly levied. Result: The appeal of the assessee was dismissed, and the penalty order was upheld. Order Pronounced: The order was pronounced in open court on 25.05.2022.
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