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TMI Blog2017 (12) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the penalty u/s. 271(1)(c). This, by no stretch of imagination, can be said to be covering the additional ground now being raised by the ld. Counsel of the assessee. Be that as it may, we find that the ld. Commissioner of Income Tax (Appeals) had never an opportunity to give a finding on this aspect now being raised by the assessee. Hence, on the facts and circumstances of the case, and in the interest of justice, we remit this issue to the file of the ld. Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) shall give a finding on this additional ground being now raised by the ld. Counsel of the assessee after giving the assessee an opportunity of being heard. - ITA Nos.2329, 2330, 2331 And 2332/Mum/2015 - - - Dated:- 11-12-2017 - Shri Shamim Yahya, Accountant Member And Shri Pawan Singh, Judicial Member For The Appellant : Shri Vijay Mehta Anuj Kisnadwala For The Respondent : Shri M C Omi Ningshen ORDER Per Shamim Yahya, Accountant Member: These are appeals has been filed by the assessee against respective orders of the learned CIT(A), in which following penalty, levied u/s 271(1)(c) have been confirmed: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urate particulars of its income within the meaning of section 271(1)(c) of the Income tax Act and, therefore, penalty proceedings u/s. 271(1)(c) of the Act was initiated. The assessee did not file any appeal against the assessment orders, wherein bogus purchases were disallowed and work-in-progress were reduced. The assessee s books of account for the year were closed at the time of search therefore it could not give effect of such bogus purchases in that particular year. To give effect to bogus purchases, the assessee reduced opening work-in-progress in A.Y. 2011-12 by admitting the amount of bogus purchases. 4. In the penalty order, the Assessing Officer noted that the assessee had furnished inaccurate particulars in its return of income filed u/s. 139(1) of the Income tax Act since it had debited bogus purchases in its books of account and, thereby inflated its work-in-progress. He further noted that the assessee had admitted bogus purchases and false entries in the books of account, therefore, penalty proceedings u/s. 271(1)(c) of the Act were initiated during the time of assessment proceedings. In response, the assessee contended that since there is no difference in the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part) his income for any previous year; or ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and, - ( a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or ( b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of penalty under clause (c) of sub-section (1) of this section be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. (emphasis supplied) 8. It would be seen that as per clause (ii) of Explanation 5A to Sec.271 (1) of the Act, where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) of the Act. In fact, in the submissions dated 13/2/2015, the learned AR has himself admitted that the appellant's case is covered by Explanation 5A to Sec.271 (1) of the Act. 11. It may be true that no addition was made by the AO, while completing the assessment and the returned income and the assessed income remains the same. However, it has to be noted here that the appellant company was found to be debiting bogus expenditure in its books of accounts. The fact that the company was debiting bogus expenditure was very clearly and categorically admitted by the Managing Director of the company, Shri Rasesh Kanakia, in his statement on oath, recorded u/s.132(4) of the Act. Thereafter, i.e. subsequent to the search, the appellant has reversed the relevant entries in the books of accounts for the year and has also reduced the closing work in progress by such amount of bogus purchases. Such reduction, in normal course, would have resulted into increase in profits. However, as the appellant was following project completion method and the project was not completed, the entire expenditure was being shown towards workin- progress, but the reduction in the work-in-progress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied, if there is concealment or furnishing of inaccurate particulars of income on the part of the assessee, as per clause (a) of Explanation 4 to Sec.271(1). It shows that the intention of the Legislature is to levy penalty in all cases where the assessee is found to have concealed or furnished inaccurate particulars of income. In the present case, the appellant has itself admitted to have concealed and furnished inaccurate particulars of its income, by debiting bogus purchase expenses to its books of accounts for the year under consideration. 13. The learned AR has also relied upon various case laws, which are discussed as under. In the case of Ruchi Strips Alloys, the Hon'ble ITAT directed to delete the penalty by holding that as there was no tax sought to be evaded, as finally the assessment was completed u/s. 115JB and not under the normal provisions. Similarly, in the case of Nalwa Sons Investment Ltd. also, the assessment had been completed under MAT provisions. As against the same, the assessment in the present case is done under normal provisions and not under MAT provisions u/s.115JB. Therefore, the facts are distinguishable to those cases. Further, the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o income has been assessed in the relevant previous year, either by way of enhancing the income declared or reducing the losses as shown in the return of income, penalty u/s. 271(1)(c) cannot be levied. It has further been submitted that tax sought to be evaded also cannot be computed as per the provisions of Explanation 4(a) or (c) to section 271(1) of the Act and that if the machinery section fails to determine the tax sought to be evaded, no penalty u/s. 271(1)(c) can be levied. He further submitted that the issue of tax sought to be evaded arises only in the year in which income is assessable. He further referred to the provisions of Explanation 5A to section 271(1) and submitted that any previous year used in clause (ii) of Explanation 5A refers to the relevant assessment year in which such income is assessable and not merely in the previous year in which entry is passed in the books of account. That although bogus purchases have been accounted for in the books of account, income arising there from is assessable in the year in which the project is substantially executed as per the percentage completion method followed by the assessee. That since as per the method of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-12, in which year there was increase in corresponding income. Hence, we find that the assessee has been found to be in possession of undisclosed income during the year and on which penalty u/s. 271(1)(c) is exigible. In this regard, we may refer to the provisions of section 5A of section 271(1)(c), which even at the expense of repetition, is reproduced below for the sake of emphasis. Explanation 5A. - Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of ( i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year; or ( ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and, - ( a) where the return of income for such previous year has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no ambiguity in the amount of income which the assessee sought to evade by furnishing of inaccurate particulars of income by way of booking bogus purchases. 14. The case law from the Nalwa Sons Investments Ltd. from Hon ble Delhi High Court (supra), referred by the learned counsel of the assessee is not at all applicable on the facts of the present case. The decision of Nalwa Sons Investments Ltd was rendered in the context of computation of income under MAT provisions under section 115 JB. And it was not in the context of normal computation of income which is the present case here. Moreover, in the said case before the Hon ble Delhi High Court there was no question of invoking explanation 5A to section 271(1)(c) and it was not a case of search after 1st day of June 2007. Hence, this case law doesn't help the case of the assessee. Accordingly, the orders of the learned CIT(A) confirming the levy of penalty on merits is sustained and affirmed. 15. Now we deal with the admission of the additional ground raised by the assessee which has been reproduced hereinabove. In the additional ground, it has been argued that the penalty order was bad-in-law since the relevant limb u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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