TaxTMI 
TaxTMI 
2018 (5) TMI 1161
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....irming the imposition of penalty upon the appellant despite the fact that the element of menrea was absent? (B) Where in the facts and circumstances of the case, the Appellate Tribunal was ustified in confirming the penalty levied upon the appellant ust because certain additions were made during the course of assessment proceedings? (C) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in law in confirming the penalty order despite the fact that the total income of the appellant after addition comes to NIL?" 2. Issue pertains to penalty levied by the Assessing Officer which came to be confirmed upto the stage of Tribunal and arises in the following background. 3. For the assessment ....
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....ee's business loss. Eventually the assessee's assessed tax liability came to be nil as per the order of assessment dated 5.12.2011. Nevertheless, since the assessee had concealed the income and the particulars thereof, the Assessing Officer ordered initiation of penalty proceedings. Apparently because the order of assessment did not give rise to any fresh tax demand from the assessee, he did not carry this order in appeal. He however, opposed the penalty proceedings contending that against the surrendered income of 19,55,500/, the assessee had established derivative loss of Rs. 23.13 lacs which eventually resulted into nil tax liability. Merely because the assessee agreed to surrender the additions, penalty could not be levied. The ....
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....explained cash deposits of Rs. 19,55,500/. Thus the conduct of the appellant assumes the character of a mischief committed with a premeditated mind with the ob ect of taking a benefit which one was not otherwise legally entitled for. The reliance of the appellant upon the decision of honourable Supreme Court in the case of Reliance Petro products is unfounded and misplaced because in that case the Honourable Court has held that if the claim of expenditure is disallowed on account of legal fiction then possibly penalty would not be leviable. It is pertinent to note in this case there is no such controversy. The issue is candid and clear indications that the appellant is resting its claim on the basis of false parameters. The cash deposits in....
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....ect to state that the assessee had surrendered the income. Only when the return was taken in scrutiny and it was found that the assessee had undisclosed bank accounts in which cash deposits were made, that the assessee came out with the peak credit theory. The assessee has not offered any explanation or disclosed the source of such cash deposits either in the assessment proceedings or even in the penalty proceedings. The Supreme Court in case of Mak Data P. Ltd v. Commissioner of Income Tax reported in (2013) 358 ITR 593 (SC) has re ected the contention that merely because the assessee agrees to a certain addition "to buy peace", penalty proceedings cannot be initiated. Counsel submitted that that even if after making additions there is a l....
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....tified in imposing penalty which was levied at the minimum 100% of the tax sought to be evaded. 9. There is nothing on record to suggest that the assessee agreed to the addition of such income to cutshort the litigation in view of the fact that in any case, even after making the additions, there would be no tax liability in the hands of the assessee. Even if we were to accept the assessee's contention that such surrender was to avoid protraction of the litigation and which is often times referred to as "to buy peace" as held by the Supreme Court in case of Mak Data P. Ltd (supra), this would not necessarily avoid initiation of penalty proceedings. In the said case, it was held and observed that voluntary disclosure does not release t....
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....stence. Thus the decision in case of Gold Coin Health Food P. Ltd.(supra) was rendered by a three udge bench on a specific reference to consider the correctness of the udgment in case of Virtual Soft Systems Ltd.(supra). The Court overruled the decision in case of Virtual Soft Systems Ltd.(supra). Unfortunately, in case of Classic Industries Ltd.(supra), this aspect was not brought to the notice of the Supreme Court. In fact, counsel for the Revenue conceded before the Supreme Court that the issue is covered against the Revenue by virtue of udgment in case of Virtual Soft Systems Ltd.(supra), as can be seen from the said udgment of the Supreme Court which reads as under : "The present appeal has been filed against the udgment and o....