2013 (7) TMI 1230 - HC - Income Tax

Summary

Issues:
Tax appeal against the order of the Income Tax Appellate Tribunal for the assessment year 2006-07 regarding the addition of share capital under section 68 of the Income Tax Act and the deletion of penalty levied by the Assessing Officer under section 271(1)(c).

Analysis:
1. Facts of the Case: The case involved M/s Agrawal Round Rolling Mills Limited, a company manufacturing iron and steel re-rolled products, which filed its return for the assessment year 2006-07 showing a loss of Rs. 2,78,11,510. The Assessee received share application money of Rs. 1,49,05,000 in the relevant year, out of which Rs. 61,00,000 was surrendered due to lack of necessary documents for 12 applicants.

2. Assessment and Penalty Proceedings: The Assessing Officer (AO) added the surrendered amount of Rs. 61,00,000 under section 68 of the Income Tax Act and initiated penalty proceedings. The AO imposed a penalty of Rs. 30,79,900, being 150% of the tax sought to be evaded. The Assessee's appeal was allowed by the Commissioner of Income Tax (Appeal), but the Income Tax Department filed an appeal before the Tribunal, which was dismissed, leading to the present tax appeal.

3. Substantial Question of Law: The appeal was admitted based on the substantial question of law whether the Tribunal erred in deleting the penalty levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act related to the addition of share capital under section 68, for which no details were furnished by the Assessee.

4. Decision of the High Court: The High Court noted that both the Tribunal and the CIT-A found that the amount added under section 68 was voluntarily surrendered by the Assessee, and there was no concealment as there was no detection or information in possession of the Department except for the surrendered amount. The High Court upheld the findings of the lower authorities, stating that it was a finding of fact with no illegality. Consequently, the tax appeal was dismissed as having no merit.

In conclusion, the High Court upheld the decision of the lower authorities regarding the deletion of the penalty levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, emphasizing that the surrendered amount by the Assessee did not involve any concealment as there was no detection or information other than the voluntarily surrendered sum.