TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 695
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....the Ld. CIT(A) properly while dismissing the appeal. 3. The only issue raised in the present appeal is against levy of penalty under section 271(1)(c) of the Act at Rs. 14,99,400/-. 4. The brief facts of the case are that the assessee had received share capital from various entities and the Assessing Officer received information from the Addl. Director of Income Tax (Investigation) Unit-VII, New Delhi regarding bogus accommodation entries taken by the assessee company. The said information was received pursuant to survey conducted under section 133A of the Act on the office premises of Shri Sanjay Rastogi at Shakkar Pur, Delhi on 04.03.2003. During the course of survey, it was admitted by the said persons that he was engaged in giving accommodation entries. Shri Sanjay Rastogi also gave a list of companies which were involved in bogus entries, and further had given a list of companies who had taken or from whose accounts the entries were operated. One such company was the assessee before us i.e. M/s Noble Share Trading Pvt. Ltd. Shri Sanjay Rastogi also explained the modus-operandi that the companies seeking entries gave cheques in the names of the companies of Shri Sanjay Rastog....
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.... proceedings and merely because addition had been made in the hands of the assessee, would not justify levy of penalty under section 271(1)(c) of the Act. It was further pointed out by the ld.AR for the assessee that the Assessing Officer had levied penalty under section 271(1)(c) of the Act on the premise that Shri Sanjay Rastogi had admitted in his statement that the accommodation entries were provided to the various parties. It was stressed by the ld. AR for the assessee that from the statement of Shri Sanjay Rastogi, it was clear that the name of the assessee company had not been mentioned anywhere. It was further pointed out by the ld. AR for the assessee that even no name of M/s Chinar Agencies Pvt. Ltd. was mentioned in the statement of Shri Sanjay Rastogi. Further, M/s Chinar Agencies Pvt. Ltd. had in its balance sheet declared the investment as share application money in concerns as on 31.03.2002 and the assessment for the assessment year 2002-03 was framed on 24.03.2005. Even though there was survey on 17.04.2003 on Shri Sanjay Rastogi, no adverse view has been taken by the Assessing Officer while completing the assessment under section 143(3) of the Act in respect of the....
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....n itself provides an opportunity to be given to the assessee to explain its stand as to whether penalty for concealment is to be levied in the case or not. Both assessment and penalty proceedings are independent proceedings and are to be conducted separately. 11. The Hon'ble Supreme Court in Dharmendra Textiles & Processors case (supra), observed that the penalty u/s 271 (1)(c) of the Act is a civil liability. However, where the liability is penal in nature though being civil liability and there is no requirement of establishing the mens rea of the intention of the assessee in cases where the assessee is found to have concealed the particulars of his income or furnished inaccurate particulars of income. However, where the information furnished by the assessee in the return of income to the best of knowledge of the assessee is correct and complete, it cannot be said that the onus on the assessee has not been discharged to prove its bonafides. Where any addition to, or disallowance from, had been made to the returned income, it per se cannot be the foundation of penalty under section 271 (1)(c) of the Act as findings in the assessment order cannot be taken a conclusive proof of ....
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....on 271 (1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to inaccurate particulars. (underlined supplied by us) 14. The Hon'ble Supreme Court in CIT, Ahemdabad Vs. Reliance Petroproducts Pvt Ltd (supra) further noted that in the facts of the case before it, there were no findings that any details supplied by the assessee in its return of income were not incorrect or erroneous or false nor any statement made or any details supplied was found to be factually incorrect. The Court thus held that merely because the assessee had claimed the expenditure, which was not accepted or was not acceptable to the Revenue, that by itself would not, attract penalty under section 271 (1)(c) of the Act. It was also laid down by the Court that the intendment of the Legislature is not to levy penalty u/s 271 (1)(c) of the Act in case of every non acceptance of claim made by the assessee in the return of income. 15. The Hon 'ble Supreme Court in CIT Vs Reliance Petroproducts P.Ltd. (supra) further held as under : Reading....
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.... erroneous as to invite imposition of penalty. True it is that mens rea is not required to be proved. When mens rea is proved it shows that the person had an intention of evading payment of tax by illegal means. Merely because a wrong interpretation to the same set of facts is given would not, in our opinion, mean that the assessee is liable to pay penalty also. We must remember that penalty is by its very nature penal and somebody is being punished for an act which is unjustified. The assessee in the present case has already been burdened with tax and interest on the amount added to his income. The moot question is whether the assessee should be made liable to pay penalty. 22. The apex Court in Reliance Petro Products' case (supra) has clearly laid down that merely because the assessee makes a claim which is not sustainable in law, will not amount to furnishing inaccurate particulars regarding the income of the assessee. In the present case, as pointed out above, the assessee was deducting the amount of Rs. 2,12,18,295 on account of deterioration of old stock. This was being done on estimation on the basis of the reports made by various officers of the Corporation. This estim....
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....No penalty can be "Imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. If an assessee gives an explanation which is unproved but not disproved i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the Department because there will be no material to show that the amount in question was the income of the assessee. Alternatively, treating the Explanation as dealing with both the ingredients (i) and (ii) above, where the circumstances do not lead to the reasonable and positive inference that the assessee's explanation is false, the assessee must be held to have proved that there was no mens rea or guilty mind on his part. Even in this view of the matter, the Explanation alone cannot justify levy of penalty. Absence of proof acceptable to the Department cannot be equated with fraud or wilful default. As there is no material difference between the original Expln. 1 and Expln. 1 as substituted, it has to be so construed as to harmonise it with basic principles ....
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....rd to the similar address of entities and individual/HUF, who contributed to the share capital of the assessee company. The ld. 'DR' also referred to the modus-operendi as well as statement of Shri Sanjay Rastogi. In the assessment order, at page 4, the AO has furnished a chart of taxable entities, who contributed to the share capital of the assessee." 19. The Tribunal vide para 16 considered the findings of the Assessing Officer regarding the transaction i.e. the existence of the entities and the trail of money and observed as under : 16. On the basis of similar address, as is evident from the perusal of the above chart, as also provided in the assessment order as well as order of the ld. CIT(A), AO construed that these entities belong to Shri Sanjay Rastogi and Ashwani Uppal. A perusal of the chart reveals that Shri Ashwani Uppal has contributed towards share capital of the assessee company as in the capacity of individual and also as HUF. Ld. 'DR' issued certain letters to such entitles, which were received back with the postal remarks "left". Subsequently, Inspector was deputed to make certain enquiries regarding whereabouts of such entitles and individual, an....
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....ies in its books of account. 22. The Hon'ble Supreme Court in CIT Vs Reliance Petro Products Ltd. and the Hon'ble Himachal Pradesh High Court in CIT Vs HP State Forest Corporation Ltd. while referring to the ratio laid down in Reliance Petro Products Ltd. (supra) had observed that the Apex Court in the judgement had clearly held that the word 'inaccurate' as used in the Act would mean something which is not accurate, not exact or not correct. It was further held that, "Something which is untrue is inaccurate". While addressing the issue of levy of penalty, the Hon'ble Himachal Pradesh High Court further held that where interpretation given is plausible, though not accepted by the Assessing Officer, it could not be held that the statements of particulars were so inaccurate or erroneous as to invite imposition of penalty. 23. In the present set of facts addition has been made in the hands of the assessee, after making due and diligent enquiries where the transaction in question was held to be not genuine and it was held to be a case of professional entry provider. The evidences collected by the Assessing Officer and the statement of Shri Sanjay Rastogi recorded,....