2019 (11) TMI 1079 - AT - Income Tax

Penalty under section 271(1)(c) upheld for unexplained share application money from 272 parties with invalid addresses

ITAT Ahmedabad upheld penalty under section 271(1)(c) where assessee received share application money from 272 parties but failed to provide valid ... Penalty u/s 271(1)(c) - addition u/s 68 - HELD THAT:- The assessee has not given any explanation. It has just submitted that it has received share application money from 272 parties. It has given their names. But the addresses given by the assessee were found to be incorrect because notices were returned. Apart from that the assessee has not given any details. Monies have been taken in cash and not through banking channel. Therefore, neither it has proved the genuineness of the transaction nor credit-worthiness of the alleged applicants; rather to say their identities also doubtful. In such circumstances, it has to be construed that the explanation offered by the assessee has been proved as false by the AO Assessee has relied upon above six judgments. Out of that in the first two, in the case of National Textiles [2010 (3) TMI 80 - SUPREME COURT] and Jalaram Oil Mills [2001 (6) TMI 15 - GUJARAT HIGH COURT] assessment year involved is 1971-72 and 1974-75. Explanation- 1 to section 271(1)(c) of the Act has been appended in the present form w.e.f. 1-4-1976. Therefore, these judgments are of no help to the assessee. As far as the last judgment of Hon’ble Supreme Court in the case of Reliance Petroproducts P. Ltd. [2010 (3) TMI 80 - SUPREME COURT] the assessee has made some claim which was found to be not admissible as per the position of law. The assessee has not withheld information. Hon’ble Supreme Court was of the view that unless some claim is made, how the assessee would explain his case before tax authorities. In the present case no such facts are there. The assessee has not made any claim admissible in law, which has been disallowed on account of difference of opinion between him and the tax authorities. Similarly, as far as the facts of other three decisions are concerned, they are quite distinguishable with the facts in the present case. Therefore, we do not find any error in the order of the ld.CIT(A) and the appeal of the assessee is dismissed. Issues: Appeal against confirmation of penalty under section 271(1)(c) of the Act.Analysis:1. The assessee appealed against the penalty of Rs. 52,48,000 imposed by the AO under section 271(1)(c) of the Act for the assessment year 2002-03.2. The case involved scrutiny of the assessee's accounts, revealing discrepancies in share application money received from various parties.3. The AO made additions to the income of the assessee due to discrepancies in share application money and issued a penalty notice under section 271(1)(c).4. The assessee contended that it provided details of share applicants and the AO failed to verify them, asserting that the explanation for share application was genuine.5. The counsel for the assessee cited various judgments to support the contention that the penalty was unjustified.6. The Revenue authorities argued that the assessee failed to provide a plausible explanation, justifying the penalty under Explanation-1 of section 271(1)(c).7. The Tribunal analyzed section 271(1)(c) and emphasized the conditions for imposing a penalty, including concealment of income or furnishing inaccurate particulars.8. The Tribunal referred to its findings in the quantum proceeding, concluding that the share application money was unaccounted income and the assessee failed to substantiate the genuineness of transactions.9. The Tribunal noted that the assessee did not provide a satisfactory explanation, and the share application process lacked credibility, leading to the dismissal of the appeal.10. The Tribunal upheld the penalty, emphasizing the failure of the assessee to prove the genuineness of transactions, leading to the dismissal of the appeal.This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, legal provisions applied, and the Tribunal's decision regarding the penalty imposed under section 271(1)(c) of the Act.