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TMI Blog2015 (1) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... dition having been made in the hands of the assessee thus, attract the levy of penalty under section 271(1)(c) of the Act. It is not a case of a bonafide explanation being given by the assessee which has not been accepted by the Department but finding of fact by the Assessing Officer/Commissioner of Income Tax (Appeals) and the order of the Tribunal establishes deliberate attempt to evade tax by way of introduction of cash credits and the assessee having furnished inaccurate particulars of income makes it liable to levy of penalty under section 271(1)(c) of the Act. Upholding the order of the Commissioner of Income Tax (Appeals), grounds of appeal raised by the assessee are dismissed. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... as introduced in the account books of the assessee during the year under consideration which in-turn was invested in the equity of M/s Shreyans Industries Ltd. The Assessing Officer was of the view that the amount totaling ₹ 42 lacs were accommodation entries. The assessee was show caused to explain the same. During the assessment proceedings, the Assessing Officer further found that in addition to the two entries of accommodation received from M/s Chinar Agencies Pvt. Ltd., there were six more entries which were received through companies/individuals/HUFs which were related to Shri Sanjay Rastogi and Shri Ashwani Uppal, an associate of Shri Sanjay Rastogi. Further enquiries were made by the assessee and information was also called under section 133(6) of the Act from various parties and thereafter, addition of ₹ 42 lacs was made in the hands of the assessee on account of the total share application money introduced in the financial year 2001-02. The said addition was confirmed by the Assessing Officer and thereafter by the Tribunal in ITA No. 1117/Chd/2008 relating to assessment year 2002-03 vide order dated 26.03.2012. Meanwhile, the Assessing Officer completed the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed to the assessee. 8. The ld. AR for the assessee placed reliance on M/s Rajdeep Builders V/s ACIT, Circle Shimla ITA 666/CHD/2010 dated 27.04.2012 & National Textiles Vs CIT 249 ITR 125 (Guj). The ld. AR for the assessee stressed that where the assessee has an explanation, the question is whether the explanation is bonafide or not. The addition in the hands of the assessee was made on the basis of circumstantial evidences but the same could not be the basis for levy of penalty under section 271(1)(c) of the Act . Further, the explanation of the assessee has not been found to be not bonafide and hence, no merit in the levy of penalty. 9. The ld. DR for the revenue pointed out that ld. AR for the assessee has elaborated upon the quantum addition whereas the Tribunal in the concluding para has held it to be a case of professional entry provider and if it is a case of professional entry provider, then it is the fittest case for levy of penalty. In the present case, there is a cumulative satisfaction by Assessing Officer and Commissioner of Income Tax (Appeals) that there is furnishing of inaccurate particulars of income and the explanation given by the assessee is false. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follow. What has been laid down is that qualitative difference between criminal liability under section 276C and penalty under s. 271(1)(c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. This being the position, the finding having been recorded on facts that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, the view taken by the Tribunal cannot be held to be perverse." 13. The Hon'ble Supreme Court of India in CIT, Ahemdabad Vs. Reliance Petroproducts Pvt. Ltd (supra) while referring to the word particulars in "inaccurate particulars of income", observed, "as per Law Lexicon, the meaning of word 'particular' is a detail or details, the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in Section 271 (1)(c) would embrace the meaning of the details of the claim made." It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return cannot amount to the inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under s. 271(l)(c). If the contention of the Revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under s. 271(l)(c). That is clearly not the intendment of the legislature. The Tribunal, as well as, the CIT(A) and the High Court have correctly reached this conclusion.--Sree Krishna Electricals vs. State of Tamil Nadu & Anr. (2009) 23 VST 249 (SC) applied; Reliance Petroproducts (P) Ltd. (judgment dt. 23rd Oct., 2007 of the Gujarat High Court in Tax Appeal No. 1149 of 2007) affirmed. 16. The Hon'ble Himachal Pradesh High Court in CIT Vs H.P. State Forest Corporation Ltd. (supra) held as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be imposed upon it. There does not appear to be falsehood in the accounts though the system of calculating the depreciation may have been improper. We also cannot lose sight of the fact that assessee is a Government Corporation. Its accounts are duly audited and even the CAG has gone through and approved the accounts of the Corporation. In such circumstances, we are of the view that merely because the assessee had claimed depreciation which claim was not accepted by the Revenue that by itself would not, in our opinion, attract penalty under s. 271(l)(c) of the Act. 17. The Hon 'ble Gujrat High Court in National Textiles Vs CIT 249 ITR 125 (Guj) held as under : The provisions of s. 68 permitting the AO to treat unexplained cash credit as income are enabling provisions for making certain additions, where there is failure by the assessee to give an explanation or where the explanation is not to the satisfaction of the AO. However, the addition made on this count would not automatically justify imposition of penalty under s. 271(l)(c) by recourse only to Expln. 1 below s. 271(l)(c). In order to justify the levy of penalty, two factors must co-exist, (i) there must be some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment also in penalty proceedings made no effort to summon him. Applying the test (ii) discussed above, therefore, it was a case where there was no circumstance to lead to a reasonable and positive inference that the assessee's case--that the cash credits were arranged as temporary loans, was false. The facts and circumstances are equally consistent with the Hypothesis that it could have been sundry loans in small amounts obtained from different parties. Therefore, even taking recourse to Expln. 1, same circumstances or state of evidence on which the cash credit were treated as income, could not by themselves justify imposition of penalty without anything more on record produced by the assessee or the Department. 18. Now coming to the facts of the present case. The assessee for the year under consideration had furnished return of income declaring 'nil ' income which was processed under section 143(1A) of the Act. Subsequently, information was received by the Assessing Officer from the Addl. CIT (Investigation), Unit VII, New Delhi regarding accommodation entries procured by the assessee. On the basis of the said information, the re-assessment proceedings under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company, as capital contribution. However, the AO made the addition u/s 68 of the Act, by observing that the share application money belong to the appellant assessee and the companies were used as a conduit to re-route the money back to its books of account, in the garb of money. The AO is of the opinion that the share application money belong to the assessee company, which was introduced in its books of account in the shape of share capital contribution by various companies and individuals. 20. Vide para 19, the Tribunal also noted that the Assessing Officer had mentioned that all the cheques having different bank accounts were signed by only one person i.e. Shri Ashwani Uppal and the contention of the assessee that Shri Sanjay Rastogi had no concern, was held to be wrong and not acceptable. The contention of the assessee that the concerns who had given the money have been assessed to tax, was also considered in para 21 of the order of the Tribunal and after considering the ratio of the decisions relied upon by the assessee, it was held that the case of the assessee was of the professional entry provider and the transactions in question were not genuine. Thus, the cumulative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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