TaxTMI 
TaxTMI 
2014 (4) TMI 430
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....e was determuined of Rs.8,38,500/- against the net profit of Rs.90,145/-. For this, the ld. A.O. initiated penalty proceeding u/s. 271(1)(c) for concealment of income and furnishing inaccurate particulars of income. Before imposing penalty u/s. 271(1)(c), the A.O. gave reasonable opportunity of being heard, which was availed by the assessee. After considering the assessee's reply, the A.O. observed that during the course of assessment proceeding u/s. 143(3) of the IT Act, the books of account from 08.09.1988 to 31.03.1989 were produced by the assessee. The books of account prior to 01.09.1989 were seized by the Department during the search operation u/s. 132 of the IT Act from the business premises as well as residence premises of the assessee. On examination of these books, it was noticed by the A.O. that the assessee had incurred heavy losses in every transaction of purchase and correspondences the parties with whom these transactions had been made were summoned and examined under oath by him. The ld. A.O. found that: "Shri Prashant P Vakil, proprietor of A.P. Traders, from whom majority of these goods had been purchased, revealed that A.P. Traders dealt in self adhesive sticker....
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.... the Patwa group showing a profit. No actual delivery was effected in any transaction." The A.O. concluded that assessee was indulged in bogus purchase and sale transaction to reduce its profit with a view to avoid payment of tax on the same. The ld. A.O. at the time of assessment gave reasonable opportunity of being heard after recording the statement, he also forwarded the copy of statement of Shri Prashant P. Vakil and offered cross examination of the witness. The assessee was asked to prove the genuineness of these purchases made from above parties. The assessee filed revised return on 07.11.1990 declaring the entire bogus loss of Rs.7,81,149/- as additional income for A.Y. 89-90. The assessee claimed before the A.O. that offer was made to avoid litigation and to buy peace of mind and on the condition that no penal action be initiated against it. The tax and interest was also paid on additional income. The CIT(A) also confirmed the finding of concealment of income/bogus transaction and held that. As a result of investigation and the act of the revised income was purely subsequent to the detection by the A.O. and was in admission on the part of the assessee to the nature of the....
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....entire loss of Rs.7,81,149 in the revised return of income. As mentioned above, it declined to cross-examine the two persons for the reason that they were close friends of the directors of the appellant-company and probably they disowned the purchases for the reason that the same may not have been accounted by them in their books of account. The appellant-company felt that crossexamination may result into embarrassment of the aforesaid two friends of the directors. Therefore, a revised return was filed surrendering the total loss. It is notable that ail the purchases are supported by vouchers and the same are duly recorded in the audited books of account and all the payments have been made by the appellant-company through regular banking channel. 5. Another important fact to be noted while considering levy of penalty u/s.271(1)(c) is that for the immediately preceding assessment year 1988-89, the appellant-company had incurred loss of Rs.5,38,771 in respect of purchases and sales around the same time as in the present assessment year. The Assessing Officer disallowed the loss treating the same as bogus loss and further penalty u/s.271(1)(c) of Rs.3,40,222 was levied. During that y....
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....Delhi), wherein identical issue was that revised return was filed by it only when it was detected and Income Tax Authority had collected material on the basis of which it could be said that the claim of deduction was false or bogus. Therefore, Hon'ble Delhi High Court confirmed the penalty u/s. 271(1)(C). He further relied in case of CIT vs. Lallubhai Jogibhai Patel [2004] 134 TAXMAN 381 (Guj.), wherein investment in car was suppressed by the assessee at Rs.31,000/-. The Hon'ble Gujarat High Court held that explanation to Section 271(1)(c) attracted. The assessee could not revert the presumption. Thus, the Tribunal was justified in confirming the penalty u/s. 271(1)(c). He further relied in case of A.M. Shah & Co. vs. CIT [2000] 108 TAXMAN 137 (Guj.), wherein serious discrepancies were found by the A.O. in books of account and excess sales were shown while purchases were not shown, bogus purchases were claimed and purchases were not shown in the sales or stock. Additions were made to gross profits on account of discrepancies. Penalty u/s. 271(1)(c) held justifiable. Ld. Sr. D.R. also relied upon in recent decision of Hon'ble Supreme Court in case of MAK Data (P.) Ltd. vs. CIT [2013....