M/S SSV MARKETING PVT LTD.,MUMBAI vs. ITO 13(2)(4), MUMBAI

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ITA 1156/MUM/2020Status: DisposedITAT Mumbai25 April 2022AY 2014-154 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee was not eligible for the benefits of the Income Declaration Scheme as the declaration was made after the issuance of notice under Section 148 and during the pendency of proceedings under Section 147. Therefore, the penalty levied by the AO was sustained.

What were the facts?

The assessee claimed a deduction for donations made to a school, which was later found to be bogus. The assessee offered the donation amount to tax during assessment proceedings. However, the Income Tax Officer (ITO) levied a penalty, stating that the voluntary disclosure scheme was not applicable as a notice under Section 148 had already been issued.

What were the issues?

Whether the penalty levied is sustainable when the assessee offered the income to tax after receiving a notice under Section 148 and claimed benefits under a voluntary disclosure scheme which was not applicable in such circumstances.

Which sections of the Income-tax Act were involved?

Section 35(1)(ii),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI PAVAN KUMAR GADALE & SHRI AMARJIT SINGH

Hearing: 07.04.2022Pronounced: 25.04.2022

आदेश / O R D E R

PER AMARJIT SINGH, AM: All the grounds of appeal of the assessee are pertained to the issue of confirming the penalty of Rs.5,50,000/- therefore, all these grounds of appeal are adjudicated together in this common order. The assessee has raised the following grounds:

1.

“(1) Learned A.O/CIT(A) has erred in imposing penalty of Rs.5,50,000 against the principle of equity and natural Justice. (2) Learned A.O/CIT(A)) has failed to appreciate that Donation claimed were offered back to buy peace & avoid litigation and all taxes due were paid.

M/s SSV Marketing Pvt. Ltd. Vs. ITO-13(2)(4)

(3) Learned A.O/CIT(A) has failed to appreciate that penalty was not leviable or was to be levied. (4) Looking at above fact we request your honour to kindly delete the penalty imposed and oblige. (5) Your appellant craves the leave to add to, alter to, or amend the grounds of appeal from time to time.”

2. The fact in brief is that on the basis of information received from the Investigation Wing that assessee had given bogus donation of Rs.10,00,000/- to School of Human Genetics & Population Health (SHG & PH), the case of the assessee was reopened. During the course of assessment proceedings the assessee company had furnished detail of donation of Rs.10,00,000/- provided to School of Human Genetics & Population Health (SHG & PH) and also submitted that it had claimed deduction of Rs.17,15,000/- u/s 35(1)(ii) of the Act i.e 175% of Rs.10,00,000/- in A.Y. 2014-15. During the course of assessment vide letter dated 06.03.2017 the assessee had offered the said donation of Rs.10,00,000/- to tax with undertaking to pay all taxes. During the course of penalty proceedings the assessee has referred the income declaration scheme and CBDT Circular No. 34 of 2016 and submitted that if assessee co-operate with department by paying of taxes then the penalty would not be levied. The A.O has not accepted the submission of the assessee stating that the voluntary disclosure income scheme provides an opportunity to persons who have not paid full taxes in the past up to F.Y. 2015-16 to declare such undisclosed income. However, this scheme shall not be applicable to the following cases :

“(A) Where notices for assessment, re-assessment or search has been issued. (b) Where a search or survey has been conducted and time for issuance of notice has not expired. (c) Where information has been received by competent authority under agreement with foreign countries in respect of undisclosed assets.”

M/s SSV Marketing Pvt. Ltd. Vs. ITO-13(2)(4)

The voluntary disclosure income scheme was not applicable to the cases where notices for assessment/reassessment or search has been issued. In the case of the assessee notice u/s 148 was issued on 21.04.2016 on the basis of information received from the Additional DIT(Investigation), Unit -4, Kolkata that the assessee company was a beneficiary of bogus donor to claim deduction u/s 35(1)(ii) of the Act. Therefore, the A.O had concluded that assessee had furnished inaccurate particulars of income to the extent of Rs.17,50,000/- and levied minimum penalty of Rs.5,50,000/-.

3.

Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.

4.

Heard the ld. Departmental Representative and perused the material on record. The assessee’s case was reopened u/s 147 of the Act on the basis of information that bogus donation of Rs.10,00,000/- was made by it to School of Human Genetics & Population Health (SHG & PH) Kolkata, and claimed a deduction of Rs.17,50,000/- u/s 35(1)(ii) of the Act. On query the assessee had offered the said donation to tax and requested to consider the same under the Income Declaration Scheme of the Department by referring CBDT circular No. 34 of 2016. The A.O has rejected the submission of the assessee stating that benefit of circular dated 21.09.2016 were not available to the assessee since declaration was made after the issue of notice u/s 148 of the Act to the assessee and during the pendency of proceedings u/s 147 of the Act. Circular dated 21.09.2016 confers benefit on an assessee only if the declaration was made on or before the issue of notice u/s 148 of the Act. Notice u/s 147 was served on the assessee on 21.04.2016 and proceeding u/s 147 of the Act were pending, therefore, benefit of Circular dated 21.09.2016 were M/s SSV Marketing Pvt. Ltd. Vs. ITO-13(2)(4)

not available to the assessee. Looking to the above facts and circumstances we don’t find any infirmity in the decision of ld. CIT(A) in sustaining the penalty levied by the A.O. Therefore, the appeal of the assessee stand dismissed.

5.

In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 25.04.2022

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