2017 (1) TMI 1327 - AT - Income Tax

Levy of penalty u/s.271(1)(c) - surrender of income on account of investigation to buy the peace - bogus purchase - revised return fled - Held that - During the assessment an information was received from DGIT (Inv.), Mumbai about the four firms engaged in Hawala entries. The name of the four firms were Ganesh Enterprises, Amar Enterprises, Saradge Enterprises and Anshu Mercantile Pvt. Ltd. Notice was given to the assessee but there was no proper reply, however, the assessee accepted the bogus purchase to buy peace and paid the tax accordingly. In the said circumstances the said law is not applicable to the facts of the case. Moreover the law relied by the departmental representative speaks that surrender of income on account of investigation to buy the peace is not voluntarily and statute does not recognize these type of defenses under the explanation 1 to section 271(1)(c) of the Act. Admission of bogus purchases leads to the concealment of income and furnishing the inaccurate particulars of income in the return. The surrender of income was not voluntarily and it is a fit case to levy the penalty. Therefore, in view of the law settled in Mak Data P. Ltd. Vs. Commissioner of Income Tax 2013 (11) TMI 14 - SUPREME COURT we are of the view that it is a fit case to levy the penalty, hence the order passed by the CIT(A) is correct and in accordance with law which is not liable to be interfere with at this appellate stage. - Decided against assessee.

Summary

Issues:
Confirmation of penalty under section 271(1)(c) by CIT(A) without proper opportunity to appellant.

Detailed Analysis:

Issue I & II:
The appellant challenged the penalty confirmation of ?8,10,638 under section 271(1)(c) by CIT(A). The appellant argued for non-leviability of penalty based on the intention to focus on business and pay taxes on discrepancies to buy peace. Cited case laws included CIT Vs. Suresh Chandra Mittal (2001) 251 ITR 0009 and Commissioner of Income Tax Vs. Shiv Kumar Jaiswal. The appellant admitted the bogus purchases and sought deletion of the penalty. However, the department relied on Mak Data P. Ltd. Vs. Commissioner of Income Tax [2013] 358 ITR 593 (SC). The Assessing Officer added ?27,02,126 as income due to bogus purchases based on information from DGIT (Inv.). The appellant's submission acknowledged the discrepancy and offered to disallow the purchases as expenses. The appellant's explanation included details on purchases from various parties and the subsequent VAT audit findings. Despite the appellant's plea to buy peace and pay taxes, the penalty was confirmed by CIT(A) and upheld by the Tribunal. The Tribunal found the surrender of income not voluntary as it was in response to detection by the Assessing Officer. The penalty was deemed applicable as per the law cited in Mak Data P. Ltd. Vs. Commissioner of Income Tax. The Tribunal dismissed the appeal, upholding the penalty.

This detailed analysis covers the issues raised by the appellant regarding the confirmation of the penalty under section 271(1)(c) and the Tribunal's decision based on the arguments presented and relevant case laws.