TaxTMI 
TaxTMI 
2017 (5) TMI 573
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....ng particulars of income within mischief of Section 271(1)(c) of the Act. The levy of penalty being without jurisdiction and totally uncalled for deserves to be quashed. 2. The learned CIT(A) has erred in law and on the facts of the case in confirming the action of learned AO in levying penalty under section 271(1)(c) of the Act only on the basis of addition u/s 68 of the Act which creates a legal fiction only for quantum addition and the same cannot be extended to penalty. 3. The learned CIT(A) has erred in law and on facts in confirming the action of AO in initiating and levying penalty under section 271(1)(c) of the Act without recording mandatory satisfaction as contemplated under the Act at the time of framing the assessment order. 4. In any case, the impugned penalty order is barred by limitation and thus without jurisdiction and illegal. 5. In any case, quantification of the penalty is erroneous and excessive. 6. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from ti....
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....nuine, therefore, an addition of Rs. 35 lacs was made to the total income of the assessee as unexplained cash credits as per the provisions of section 68 of the IT act. The assessing officer also initiated penalty proceedings u/s. 271(1)(c) of the act for furnishing inaccurate particulars/concealment of income. During the course of penalty proceedings as mentioned below in the penalty order the assessing officer has not accepted the explanation of the assssee .He stated that assessee failed to discharge its onus to establish the genuineness and creditworthiness of the credit entry found in the books of accounts and held that it was a clear case of concealment of income, therefore, he levied a penalty of Rs. 11,89,650/- vide penalty order u/s. 271(1)(c) of the act passed on 10th February, 2015. Assessing officer in the penalty order while imposing the penalty has discussed as under:- "2. During the course of assessment proceedings, on verification of Balance Sheet of the assessee it was noticed that the Share Capital has been increased by an amount of Rs. 3 crore and the premium thereon was also credited to the Balance Sheet. The details of persons to whom shares claimed to....
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.... During the assessment proceedings, the above reproduced statement of Dugar ' Polymers Ltd was also brought to the notice of the AR of the assessee and the matter ' was discussed with him. However, neither any satisfactory explanation could be given by the assessee nor could it produce any contrary evidence, to otherwise prove the amount of Rs. 35 lakhs credited to the Balance Sheet as genuine and explained. No cross verification or- cross examination was demanded by the assessee against the contentions/statement made by the non- confirming party i.e. Dugar Polymers Ltd In view of .the above a show cause notice vide this office letter dated 11.02.2013 was issued to the assessee. In response to the same, the assessee vide reply dated 22.02,2013 had submitted as under: " as regards the investment in our company by Dugar Polymers Ltd. which he has unfortunately denied it is submitted that first that parties has been identifiable at the place of which address we submitted to yourself and we are also attaching the copy of the Bank Statement which was given by him when the allotment was made to him and the amount debited into his bank account is reflec....
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....blish that the genuineness, creditworthiness if the credit entry found in the books of accounts. In the present case, when the Dugar Polymers Ltd itself denies of making an investment in the shares of Appellant Company, it is clear that the share capital ofRs.35,00,000/- is not explained by the Appellant, even when it is clearly established that the money received by the appellant towards share capital has flown from the bank account of the said Dugar Polymers Ltd. Under the circumstances, it is held that the AO's action in making the addition of Rs. 35,00,000/- u/s.68 is justified. Therefore, the addition of Rs. 35,00,000/- made u/s.68 of the Act by the AO is confirmed and accordingly this ground of appeal is dismissed." 4. As the issue has been decided in favour of Revenue, another notice u/s.274 r.w.s. 271(1)(c)of I.T. Act was issued on 23.09.2014, a fresh asking the assessee to show cause why an order imposing penalty on it should not be passed. In response, the assessee has furnished its submission vide reply dated 06.12.2014, received in Dak on 10.12.2014. The submission of assessee is re-produced as under: "With reference to your show cause notice under....
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....nsidered the facts of the case, penalty order, submission made by the appellant and the case laws relied upon. The facts leading to the imposition of penalty by the AO is that Dugar Polymers Ltd. from whom the appellant claimed to have received an amount of Rs. 35 lakhs towards share value and premium thereof, had denied to have made any such transaction with the appellant which has been reproduced by the AO in the order. Appellant could not furnish any satisfactory explanation nor could produce any contrary evidence to prove that the amount of Rs. 35 lakhs credited to the Balance Sheet as genuine and explained. The addition made by the AO was contested by the appellant before the CIT(A) and the issue was decided against the appellant. In such facts and circumstances, AO concluded that appellant failed to discharge its onus to establish that the genuineness and creditworthiness of the credit entry found in the books of Accounts and according imposed penalty of Rs. 11,89,650/- being 100% of the tax sought to be evaded. Against the above action of the AO, appellant has contended that the evidences as placed on record by the Appellant has not been found to be incorre....
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..... Having gone through all the details, I am of the view that the onus was on the appellant to discharge complete liability to establish that the genuineness, credit-worthiness of the credit entry found in the books of accounts. In the present case, when the Dugar Polymers Ltd itself denies of making an investment in the shares of Appellant Company, it is clear that the share capital of Rs. 35,00,000/- is not explained by the Appellant, even when it is clearly established that the money received by the appellant towards share capital has flown from the bank account of the said Dugar Polymers Ltd. Under the circumstances, it is held that the AO's action in making the addition of 35,00,000/- u/s 68 is justified. Therefore, the addition of Rs. 35,00,000/- made u/s 68 of the Act by the AO is confirmed and accordingly this ground of appeal is dismissed." In the quantum proceedings, the addition was confirmed as the appellant could discharge the complete liability to establish that the genuineness, creditworthiness of the credit entry and also the fact that Dugar Polymers Ltd denied making an investment in the shares of the appellant company. All three ingredients of....