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TMI Blog2019 (10) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... lief to the assessee on the claim of salary expenses found to be bogus and false. Accordingly, when the assessee has claimed a bogus salary expenditure and the addition was made specifically and independently by the AO on account of disallowance of salary then the penalty levied by the AO u/s 271(1)(c) in respect of the said addition is justified and valid. The decisions relied upon by the assessee will not help the case of the assessee when the addition was based on false claim made by the assessee. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT(A) confirming the levy of penalty u/s 271(1)(c) of the Act. Appeal filed by the assessee is dismissed. - ITA No. 509/JP/2019 - - - Dated:- 23-9-2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hearing. 2. At the time hearing, the ld. AR of the assessee has stated at bar that the assessee does not press ground no. 2 of the grounds of appeal and the same may be dismissed as not pressed. The ld. DR has raised no objection if ground no. 2 of the assessee s appeal is dismissed as not pressed. Accordingly the ground no. 2 of the assessee s appeal is dismissed being not pressed. 3. Ground no. 1 is regarding the penalty levied U/s 271(1)(c) of the Act which was confirmed by the ld. CIT(A). The assessee is proprietor of M/s Om Sales Corporation and M/s S.S. Enterprises. The assessee filed his return of income for the year under consideration on 30.09.2012 declaring total income of ₹ 6,79,080/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty U/s 271(1)(c) of the Act. Thus, the ld. AR has pleaded that the penalty levied by the AO may be deleted. 5. On the other hand, the ld. DR has submitted that it is not a case of addition made by the AO on the basis of estimation but the AO made two additions one on account of estimation of income being trading addition of ₹ 23,03,773 and another on account of disallowance of salary of ₹ 36,83,887/-. The addition made by the AO on account of trading estimation was not considered by the AO while imposing the penalty U/s 271(1)(c) of the Act but the penalty has been levied only in respect of the disallowance of bogus claim of salary of ₹ 36,83,887/-. He has referred to the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s levied by the AO only in respect of the disallowance of salary therefore, the issue before us is only whether the disallowance made by the AO on account of salary claim attracts the penalty U/s 271(1)(c) or this addition is only on the basis of estimation of income. It is pertinent to note that during the course of assessment proceedings the AO recorded the statement of the assessee whereas the assessee has clearly admitted that during the year under consideration only two persons were employed where he has claimed salary expenditure in respect of 24 persons. The said statement has not been disputed by the assessee however, the ld. AR of the assessee has submitted that due to some confusion the assessee has made this statement. The releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees as appearing in the list hence unable to produce them for verification. He completely failed to explain as to how number of employees are declared at 24 as against 2 admitted in his statement recorded u/s 131 as mentioned above. It is after thought of the assessee and he has just submitted a long list of employees without their addresses and PAN, unable to explain whether payments were made in cash or by cheque. He also failed to produce their PAN, return of income or bank statement so as to verify that they were employed by the assessee during the relevant period. Facts given by the assessee in his statement, recorded on oath u/s 131 on 18.02.2015, are considered to be true and hence it is held that assessee was having only two em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of ₹ 127,776 which has to be brought to tax separately. Thus, the Tribunal has confirmed the additions made by the AO and also observed that even after the addition made by the AO the net profit rate comes to 0.12% which is comparable to the another case which has been considered by the Coordinate Benches of this Tribunal. Hence, the said finding of the Tribunal cannot be said to be an addition based on estimation but while upholding and confirming the additions made by the AO, the Tribunal has just verified the reasonableness of the income assessed and not granted any relief to the assessee on the claim of salary expenses found to be bogus and false. Accordingly, when the assessee has claimed a bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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