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TMI Blog2022 (7) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority, rightly gave finding of fact that the cash sales putforth by the respondent were not genuine and the respondent had introduced its unaccounted income in the garb of cash sales. The Tribunal erred in deleting the penalty levied under Section 271(1)(c) of the Act despite there being sufficient material on record to show that the cash sales set up by the respondent were fabricated and not genuine. As we are of the considered opinion that the order passed by the Tribunal is liable to be set aside as the penalty levied under Section 271(1)(c) of the Act against the respondent was liable to be upheld in view of inaccurate particulars of income furnished by the respondent in the garb of fictitious cash sales with a view to claim exemption under Section 80-IC - Decided in favour of revenue. - INCOME TAX APPEAL No. 13 of 2016 - - - Dated:- 20-7-2022 - HON BLE MRS. JUSTICE SABINA And HON BLE MR. JUSTICE SATYEN VAIDYA FOR THE APPELLANT : MR. VINAY KUTHIALA , SENIOR ADVOCATE WITH MS. VANDANA KUTHIALA , ADVOCATE FOR THE RESPONDENT : MR. B. C. NEGI , SENIOR ADVOCATE WITH MR. SHAURYA KAUSHIK , ADVOCATE JUDGMENT Appellant-Revenue has filed the appeal challengi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us to procure PAN SHAMAMA for further use and recorded their names, addresses as given by the buyers without any access to verification whether the addressees given by them is correct and complete. (iv) Further, since there is no restrictions or any statute from selling over the counter to buyers against cash, we believed and relied upon the address as given by the buyers and have prepared the sale invoice, as per the information given to us during September 2006, the details of which are enclosed herewith. We confirm that our finished gods namely PAN SHAMAMA have been sold to various buyers who have approached us at our manufacturing facilities at Una using their own transportation. The goods have been supplied in M.S. Drum of 25 kgs. We have also collected VAT @ 4% from the buyers and remitted the same to the Sales Tax Authorities, Una. (v) We also wish to state that the buyers address and other information mentioned in the respective bill as per details given by them and we do not have any further information regarding their telephone number and proof of address to establish the identity of the buyers. Since these sales were effected in the normal course of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e VAT had been paid on the cash sales, did not establish the fact that the sales were genuine. By payment of meager amount of 4% VAT, the respondent had brought tax exempt funds of rupees three crores into its books. The stocks maintained by the respondent did not tally with the raw material, vis-a-vis, the production. Since the respondent had furnished inaccurate particulars of income eligible for exemption under Section 80 IC by claiming fictitious cash sales, it was a clear case of fabrication of accounts and the penalty had been rightly imposed on the respondent by the Assessing Officer. 8. Mr. B.C. Negi, learned Senior Counsel assisted by Mr. Shaurya, learned Counsel for the respondent-assessee, has opposed the appeal and has submitted that the respondent had duly disclosed the cash sales in the accounts. The sale bills were supported by Sales Tax Paid Challans and Sales Tax Return filed by the respondent. The Books of Account had been accepted by the Sales Tax Authorities (VAT Authorities). Since the cash sales had been accepted by the Sales Tax Authorities, the respondent was not liable to pay any penalty. There was no element of fraud or suppression of facts with intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actment of Section 271 (1)(e) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276C of the I.T. Act. 11. Learned Senior Counsel, has further placed reliance on a decision rendered by the Hon ble Supreme Court in case titled Commissioner of Income Tax, Delhi versus Atul Mohan Bindal , reported in (2009) 9 SCC 589, wherein, it was held as under:- 9. Section 271(1)(c) as was operative during the relevant year reads thus: 271. Failure to furnish returns, comply with notice, concealment of income, etc.-(1) If the Assessing Officer or the (***) (Commissioner (Appeals) in the course of any proceedings under this Act , is satisfied that any personxxx xxx xxx (c) has concealed the particulars of his income or or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,- xxx xxx xxx (iii) in the cases referred to in clause (c), in addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence between Section 271(1)(c) and Section 276(c) of the Act was lost sight of. The Court held that the explanation appended to Section 271(1)(c) indicates element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The Court held thus: (Dharamendra Textile case, SCC 394, para 18): 18. The Explanations appended to Section 271(1)(c) of the Income Tax Act, 1961, indicate the elements of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroff case (supra) has not considered the effect and relevance of Section 276-C of the I.T. Act. The object behind the enactment of Section 271(1)(c) read with Explanations indicates that the Section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276-C. xxx xxx xxx 14. Having thoughtfully considered the matter, in our judgment, the matter needs to be reconsidered by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11-A, shall also be liable to pay a penalty equal to the duty so determined: [Provided that where such duty as determined under sub-section (2) of Section 11-A, and the interest payable thereon under Section 11-A, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. 20. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The reference is answered. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11-AC would apply to every case of nonpayment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11-AC in the manner as suggested because in that case that was not even the stand of the Revenue. xxx xxx xxx 34. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11-AC would depend upon the existence or otherwise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs.3,12,00,000/-. The cash bills were of specific amount of rupees six lacs and rupees three lacs only and the amount had been transferred to the accounts of partners as cash withdrawals in the month of September, 2006 itself. 14. Thus, the Assessing Officer as well as the Appellate Authority, after examining the facts of the case, came to a finding that it was a clear case of fabrication of accounts by the respondent and the respondent was liable to pay penalty under Section 271(1)(c) of Income Tax Act, 1961. The finding of fact arrived by the Assessing Officer as well as the Appellate Authority, has been set aside by the Tribunal mainly on the ground that the respondent had substantiated its explanation by sale bills, sale tax Challan and sale tax order passed by the VAT Authorities. Thus, the Tribunal was mainly influenced by the fact that as the VAT authority had accepted the cash transactions in question, the cash sales put up by the respondents were genuine. However, we are of the opinion that merely because the VAT Authorities had accepted the cash sales set up by the respondent in itself, is not a sufficient ground to hold that the cash sales set up by the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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