2025 (4) TMI 658 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - concealment of income/ furnishing of inaccurate particulars of such income - addition made of share capital in the hands of the assessee as bogus - HELD THAT - CIT(A) has rightly appreciated that the addition made of share capital in the hands of the assessee as bogus was the culmination of the detailed inquiry conducted revealing the said fact we are in complete agreement with the CIT(A) that this is a clear-cut case of concealment of income attracting levy of penalty u/s 271(1)(c). The order of the CIT(A) confirming the levy of penalty is therefore upheld. The appeal of the assessee is dismissed.

ISSUES PRESENTED and CONSIDERED

The central issue in this appeal was the validity of the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, for alleged concealment of income or furnishing inaccurate particulars of income by the assessee. The questions considered included whether the penalty was validly initiated and whether the assessee had indeed concealed income or provided inaccurate details regarding the share capital and premium received.

ISSUE-WISE DETAILED ANALYSIS

Levy of Penalty under Section 271(1)(c) of the Income Tax Act, 1961

Relevant Legal Framework and Precedents: Section 271(1)(c) of the Income Tax Act, 1961, allows for the imposition of a penalty on an assessee who has concealed income or furnished inaccurate particulars of income. The burden of proof lies on the assessee to demonstrate the genuineness of the transactions in question.

Court's Interpretation and Reasoning: The Tribunal, in its analysis, focused on the failure of the assessee to discharge the onus of proving the genuineness of the share capital and premium received. The Tribunal noted that the assessee did not produce necessary documents, such as bank statements and books of accounts, and failed to present its directors for examination. The Tribunal also noted that the money for the share capital was routed through a single bank account, indicating a lack of genuine transactions.

Key Evidence and Findings: The Tribunal relied on the findings from the quantum proceedings, which were confirmed by the Commissioner of Income Tax (Appeals). The evidence showed that the share capital was received from seven companies, all of which had transactions routed through a single bank account with cash deposits, suggesting the existence of accommodation entries rather than genuine investments.

Application of Law to Facts: The Tribunal applied Section 271(1)(c) to the facts, emphasizing the failure of the assessee to substantiate the claims of genuine share capital. The Tribunal highlighted the deliberate non-compliance by the assessee, including not producing directors or relevant documents, which supported the conclusion of concealment of income.

Treatment of Competing Arguments: The assessee argued that the penalty was not validly initiated and that all possible evidence had been submitted. However, the Tribunal found these claims to be baseless, noting the lack of cooperation and failure to provide substantial evidence to counter the findings of concealment.

Conclusions: The Tribunal concluded that the assessee had indeed concealed income by introducing unaccounted cash as share capital and premium, justifying the imposition of the penalty under Section 271(1)(c). The Tribunal upheld the findings of the Commissioner of Income Tax (Appeals) and dismissed the appeal.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal noted, "The Appellant has claimed that the Penalty Proceedings have not been validly initiated... However, perusal of the facts show that such claims are baseless and the Assessee could not substantiate its claim for receipt of Share Capital and Share Premium and that the instant case is a case where deliberate concealment of income was made."

Core Principles Established: The Tribunal reaffirmed the principle that the burden of proof lies on the assessee to demonstrate the genuineness of transactions when questioned. Failure to provide adequate evidence or deliberate evasion of compliance can lead to a conclusion of concealment of income, warranting penalties under the relevant sections of the Income Tax Act.

Final Determinations on Each Issue: The Tribunal upheld the penalty imposed under Section 271(1)(c), concluding that the assessee had failed to provide credible evidence to refute the findings of concealment of income. The appeal was dismissed, and the penalty confirmed.

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