TaxTMI 
TaxTMI 
2018 (1) TMI 192
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....bai, passed u/s 271(1)(c) of the Income Tax Act, 1961 on the following amongst the other grounds: 1. The Learned Assessing Officer has erred in levying penalty of Rs. 65,130/- u/s 271(1)(c) of the Income Tax Act 1961 without appreciating the facts of the case in the right perspective. 2. The Learned Assessing Officer has erred in not giving the appellant an opportunity to cross examine the third party for verifying the correctness of their admission. 3. The ground of appeal is without prejudice to the other. 4. The appellant reserve the right to amend, alter or add to the grounds of appeal." 3. The brief facts of the case are that the assessee is part of Balaji group and is engaged in the business of production of TV serials and films. The search and seizure action u/s. 132(1) of the 1961 Act was carried out by Revenue against the Balaji Group on 30.04.2013 by DDIT (Inv.), Mumbai. The assessee was covered under the said search operations conducted by Revenue u/s 132(1) of the 1961 Act. The major allegation against the Balaji Group was that they had inflated their purchases by getting accommodation entries from bogus parties. A statement on oath u/s 132(4) of the 1961 ....
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....y the AO u/s. 143(3) r.w.s. 153A of the 1961 Act, wherein the income assessed was loss of Rs. 9,16,18,762/- as against returned loss of Rs. 9,18,35,203/-. The penalty proceedings u/s 271(1)(c) were initiated by the AO for furnishing of inaccurate particulars of income leading to concealment of income. The assessee submitted that additions have been made merely based on the statement of third party whose name appeared in the list of suspected dealers of Maharashtra VAT authorities and who was mainly defaulter with the VAT department having defaulted on the payment of VAT to the Government. It was submitted that the assessee actually purchased the material as is referred to in the bills issued by said dealer namely Somu Textiles Private Limited in the ordinary course of business. It was submitted that the statement of third party is not backed with any incriminating material or any document which could substantiate that the purchases made by the assessee were bogus. The assessee submitted that it has submitted all bills from suppliers, delivery challans, lorry receipts, entries in inward/outward register lying at godown. It was submitted by the assessee that the statement u/s 132(4)....
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....e A.O, which appears to be a typographical error. The learned CIT-A held that the assessee had made bogus purchases without actual delivery of goods and amount was surrendered by the assessee as well that Sh. Jagdish Mundra, Director Somu Textile Private Limited has also affirmed in statement on oath recorded u/s 132(4) that the said concern was only issuing bogus bills without supplying any material. 5. The assessee has come in an appeal before the tribunal and Ld. Counsel for the assessee has vehemently argued the case before the Bench wherein it was submitted that there was a search and seizure operations conducted by Revenue u/s. 132(1) of the Act in the case of Balaji Group of Companies on 30.04.2013 and the assessee was also searched by Revenue u/s 132(1) on 30-04-2013. It was submitted that there were allegations of bogus purchases to the tune of Rs. 2,16,441/- by the assessee from M/s. Somu Textile Pvt. Ltd. wherein it is alleged that the said concern has only issued bills without supplying any material to the assessee. It was submitted that the penalty of Rs. 65,130/- was levied by the AO u/s 271(1)(c) with respect to the said alleged bogus purchases from Somu Textile Pri....
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....es claimed by the assessee and ultimately losses were reduced by this small addition in quantum and no liability to pay taxes arose due to this small addition of Rs. 2,16,441/-. Our attention was drawn to page no. 11 of paper book wherein statement of Smt. Shobha Ravi Kapoor Director of the assessee recorded on oath u/s. 132(4) on 2.05.2013 is placed, wherein she made voluntarily disclosure of Rs. 10,64,34,202/- towards bogus purchases made from AY 2007-08 to AY 2013-14 in the hands of M/s BTL. It is explained that BTL stands for Balaji Telefilms Limited. Our attention was also drawn to page 21 of the paper book wherein the assessee submitted written letter before the A.O dated 05.05.2015 requesting for the copy of the statement u/s. 132(4) of Shri. Jagdish Mundra and request was also made for allowing for cross examination of said Sh Jagdish Mundra. Ld. DR on the other hand relied upon the appellate order of the CIT-A. 6. We have considered rival contentions and perused the material on record. We have observed that the assessee is engaged in the production of TV Serials and Films. The assessee is part of the Balaji Group of Companies. The search & seizure operations u/s. 132(1) ....
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....any of the 17 concerns mentioned in response to question no. 9." The assessee has specifically and consistently asked for the statement of Shri. Jagdish C. Mundra, Director of Somu Textiles Private Limited for rebuttal which was not furnished to the assessee by Revenue. The assessee has also consistently requested for cross examination of said Shri. Jagdish C. Mundra who has given incriminating statement on oath against the assessee u/s 132(4) but the Revenue chose not to produce said Sh. Jagdish Mundra before the assessee for cross examination. The assessee has given an explanation that keeping in view smallness of the amount being addition of Rs. 2,16,441/- and also keeping in view that the assessee had claimed a loss of more than of Rs. 9 crores in the return of income filed with the Revenue and in any case no taxes were payable even after the additions of Rs. 2,16,441/- as were made by Revenue due to huge assessed loss, the assessee submitted that it chose not to file any appeal before appellate forums to avoid further litigation. This is an plausible and bonafide explanation offered by the assessee as no person under normal circumstances would like to enter into dispute/liti....
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....rchases to the tune of Rs. 2,16,441/- and the assessee did not chose to further litigate the said matter but that does not mean that penalty u/s 271(1)(c) is to be levied automatically. The penalty proceedings are altogether different proceedings and the ingredient for levying penalty are different than making quantum additions. The Revenue has to show by positive material that the assessee has furnished inaccurate particulars of income or concealed the particulars of income. In the instant case, the sole reliance of the Revenue is based on an incriminating statement recorded of a third person namely Sh. Jagdish Mundra recorded on oath u/s 132(4) at the back of the assessee albeit he was also searched simultaneously along with assessee on 30-04-2013, which statement dated 13-05-2013 was never confronted to the assessee nor the said statement had stood the test of cross examination by the assessee. If we eschew the aforesaid statement of said Jagdish Mundra, nothing remains with the Revenue to incriminate the assessee. The assessee has been consistently asking for the statement of said Sh. Jagdish C Mundra as well asking for cross examination of said Sh. Jagdish C Mundra which is co....