2023 (4) TMI 381 - AT - Income Tax

Penalty levied u/s 271(1)(c) - addition u/s 68 in respect of sundry creditors as the assessee could not prove the identity, genuineness and creditworthiness of the creditors - HELD THAT - CIT(Appeals) considered the submissions of the assessee and the averments of the AO in the penalty order and placing reliance on the decisions of various issues sustained the penalty imposed holding that the assessee has not discharged its burden to prove the identity, creditworthiness and genuineness of the creditors. No infirmity in the order passed by the Ld.CIT(A) in sustaining the penalty levied u/s 271(1)(c) of the Act. Grounds raised by the assessee are rejected.

Summary

Issues:
The appeal against the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 for AY 2015-16 due to failure to prove identity, genuineness, and creditworthiness of sundry creditors.

Details of the Judgment:

Issue 1: Failure to Prove Identity, Genuineness, and Creditworthiness of Creditors

The Assessing Officer made additions u/s 68 of the Act in respect of sundry creditors as the assessee could not establish the identity, genuineness, and creditworthiness of the creditors. Penalty proceedings were initiated u/s 271(1)(c) of the Act, and the penalty was imposed after the assessee failed to provide satisfactory explanations despite multiple opportunities. The Ld.CIT(Appeals) upheld the penalty, emphasizing the assessee's inability to discharge the burden of proof regarding the creditors' details. The AO noted the absence of necessary documents and evidence to support the appellant's claims, leading to the imposition of a substantial penalty. The Ld.CIT(A) considered the submissions of both parties and relied on various judicial precedents to sustain the penalty, highlighting the strict liability on the assessee for inaccurate particulars of income. The penalty provision aims to enforce fiscal discipline and deter non-compliance, and in this case, the penalty u/s 271(1)(c) of the IT Act, 1961 was deemed appropriate.

Issue 2: Reliance on Judicial Precedents

The appellant's reliance on various judicial precedents was deemed irrelevant as the facts and circumstances of those cases differed significantly from the present case. The Ld.CIT(A) rejected the grounds raised by the assessee, affirming the penalty imposed u/s 271(1)(c) of the Act. The judgment emphasized that the penalty provision does not require the establishment of mens rea and is a civil liability, not dependent on criminal intent. The decision in the case of CIT vs. Atul Mohan Bindal reiterated the civil nature of the penalty u/s 271(1)(c), emphasizing that mens rea is not essential for its imposition.

In conclusion, the appeal of the assessee was dismissed, and the penalty u/s 271(1)(c) of the IT Act, 1961 was upheld, considering the failure to prove the identity, genuineness, and creditworthiness of the creditors. The judgment highlighted the importance of fulfilling the burden of proof in tax matters and the civil nature of penalties under the Income Tax Act.

This summary provides a detailed overview of the judgment, covering the issues involved and the key points discussed in the decision.