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2019 (8) TMI 833 - AT - Income TaxPenalty u/s 271(1)(c) - bogus share capital addition - Suppression of the cash receipt - HELD THAT - As decided in own case 2019 (1) TMI 1344 - DELHI HIGH COURT has upheld the order of the coordinate bench confirming the addition of bogus share capital. In view of this, the assessee has concealed income to the extent of the above sum and penalty has been rightly levied and confirmed by the lower authorities. Suppression of the cash receipt of INR 3,300,000, the above sum was never disclosed by the assessee in the return of income, therefore it is a concealed income of the assessee and penalty has been rightly levied by the lower authorities on the sum. Therefore we confirm the penalty u/s 271 (1) (c) on the above addition of bogus and capital as well as the suppression of the sales receipt of INR 3,300,000. With respect to the 3rd addition the coordinate bench set aside the whole issue back to the file of the learned assessing officer as per para number 26 of the order. As the issue has been set aside to the file of the learned assessing officer for re-examination of the full facts, for the time being we delete the penalty with a direction to the learned assessing officer, to re-examine the issue of penalty after making compliance with the direction of the coordinate bench only. Accordingly, the issue of levy of penalty on the above sum is restored back to the file of the learned AO. Suppressed sales and receipt - HELD THAT - AO made the above addition which was confirmed by the learned CIT(A). As the above sum was disclosed by the assessee himself before the settlement commission as undisclosed income of the assessee, we do not find any merit in the argument of the learned authorised representative that assessee has not concealed the above income. In view of this the penalty u/s 271 (1) ( c) is confirmed on the above amount and the order of the learned CIT(A) is confirmed. Penalty for disallowance u/s 40 A (3) - HELD THAT - Out of the above cash sales assessee has incurred expenditure which are in violation of the provisions of section 40A (3). Therefore the addition was made. In the present case the AO made the addition on account of undisclosed sales whereas the learned CIT(A) found that the undisclosed sales has been properly accounted by the assessee in the books of accounts , however out of those undisclosed sales, certain expenditure in Cash were made and on those expenditure the provisions of section 40A (3) was invoked and disallowance was made. Merely because the expenditure are disallowed the assessee does not make himself exposed to the provisions of section 271 (1) (c) for concealment of income. The assessee has disclosed the complete details of that expenditure in its books of accounts. In view of this, the learned assessing officer has wrongly levied penalty for concealing the income. Penalty for advances received against the export of goods - HELD THAT - The assessee could not give any explanation even before us that why till date no export has been made or the advance received has been refunded back. It is also pertinent to note that the sum was received by the assessee in financial year 2006 and this matter was heard in financial year 2019. The assessee also could not show before us or before the lower authority, any efforts made by the assessee for refunding the above sum. In view of this we have no hesitation in confirming the penalty levied by the learned assessing officer and confirmed by the learned CIT(A) on the above sum. Penalty for deduction of deferred revenue expenditure - HELD THAT - The expenditure incurred by the assessee could not be established by the assessee before the learned lower authorities that those expenditure have been incurred by the assessee wholly and exclusively for the purposes of the business. However, the lower authorities have not reached to a conclusion that assessee has furnished any inaccurate particulars of the income or has concealed any income on that score. Mere disallowance of the expenditure claimed by the assessee cannot result into concealment of income. In view of this, we reverse the finding of the lower authorities and direct the learned AO to delete the penalty levied on this sum.
Issues Involved:
1. Confirmation of penalty imposed under Section 271(1)(c) of the Income Tax Act for Assessment Year 2002-03. 2. Confirmation of penalty imposed under Section 271(1)(c) of the Income Tax Act for Assessment Year 2005-06. Issue-wise Detailed Analysis: 1. Confirmation of Penalty for Assessment Year 2002-03: Background: The appeal was filed against the order of the CIT(A)-I, New Delhi, which confirmed the penalty of INR 6,285,118 levied by the Assessing Officer under Section 271(1)(c) of the Income Tax Act for the Assessment Year 2002-03. Facts: - A search was conducted, and the assessment was completed under Section 153A read with Section 143(3), resulting in various additions. - The assessee approached the Settlement Commission, admitting INR 3,300,000 on account of suppression of sales and receipts. However, the application was declared invalid due to non-payment of taxes. - The CIT(A) confirmed the addition of INR 17,605,370, leading to the imposition of a penalty by the Assessing Officer. Assessee’s Argument: - The assessee argued that no sufficient opportunity was provided before the levy of the penalty. - The matter was pending before the Tribunal, and hence, the penalty should not have been levied. Revenue’s Argument: - The Revenue argued that the assessee was non-cooperative and the penalty was justified based on the suppression of sales and bogus share capital. Tribunal’s Findings: - The Tribunal found that the assessee was given multiple opportunities but failed to represent its case. - The coordinate bench and the Delhi High Court confirmed the addition of INR 7,805,370 on account of bogus share capital. - The Tribunal upheld the penalty on the confirmed addition of INR 3,300,000 for suppressed sales and receipts and INR 7,805,370 for bogus share capital. - For the addition of INR 6,500,000, the Tribunal set aside the issue to the Assessing Officer for re-examination, directing the deletion of the penalty for the time being. Conclusion: The appeal for AY 2002-03 was partly allowed, confirming penalties on certain additions while setting aside others for re-examination. 2. Confirmation of Penalty for Assessment Year 2005-06: Background: The appeal was filed against the order of the CIT(A)-I, New Delhi, which confirmed the penalty of INR 4,698,190 levied by the Assessing Officer under Section 271(1)(c) for the Assessment Year 2005-06. Facts: - The assessment was completed under Section 153A read with Section 143(3), resulting in a total income of INR 3,789,840. - The CIT(A) granted substantial relief but confirmed disallowances and additions, leading to the imposition of the penalty. Assessee’s Argument: - The assessee argued that the disclosure before the Settlement Commission was voluntary, and financial constraints prevented tax payment. - The disallowance of expenditure and advances received against exports should not result in a penalty. Revenue’s Argument: - The Revenue argued that the assessee concealed income, justifying the penalty. - The assessee was given sufficient opportunities but failed to avail them. Tribunal’s Findings: - The Tribunal confirmed the penalty on INR 1,300,000 for suppressed sales and receipts, as disclosed before the Settlement Commission. - The Tribunal directed the deletion of the penalty on the disallowance under Section 40A(3), as it was merely a disallowance of expenditure. - The Tribunal confirmed the penalty on INR 6,883,782 for advances received against exports, as the assessee failed to provide an explanation or refund the amount. - The Tribunal directed the deletion of the penalty on the disallowed deferred revenue expenditure, as it was not established that the assessee furnished inaccurate particulars. Conclusion: The appeal for AY 2005-06 was partly allowed, confirming penalties on certain additions while directing the deletion of penalties on others. Order Pronounced: The order was pronounced in the open court on 12/07/2019.
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