M/S JUPITER TRADELINKS PRIVATE LIMITED,LUCKNOW vs. DY,. COMMISSIONER OF INCOME TAX, CC-1, LUCKNOW
Income Tax Appellate Tribunal, LUCKNOW ‘A’ BENCH, LUCKNOW
Before: SH. SUDHANSHU SRIVASTAVA & SH. NIKHIL CHOUDHARYA.Y. 2013-14
PER NIKHIL CHOUDHARY, A.M.:
This is an appeal filed by the assessee against the orders of the ld. CIT(A)-3,
Lucknow under section 250 of the Income Tax Act, 1961 on 26.11.2024 dismissing the appeals of the assessee against the orders of the ld. AO dated 4.06.2019, passed under section 271(1)(c). The grounds of appeal are as under: -
“1. The learned CIT(A) has erred in both law and facts of the case by confirming the penalty of 2,20,41,900/- levied by the assessing officer.
2. The learned CIT(A) has failed to appreciate that:
a. the appellant has neither concealed the particulars of its income nor furnished any inaccurate particulars of income; b. there was no failure on the part of the appellant in truly and fully disclosing all material facts c. mere disallowance or rejection of the claim or stand taken by the appellant based on reasonable interpretation of the law is not sufficient to attract penalty u/s 271(1)(c)
3. The amount of penalty confirmed by the learned CIT(A) is invalid, excessive and unreasonable.”
A.Y. 2013-14
M/s Jupiter Tradelinks Pvt. Ltd.
The facts of the case are that the assessee company filed its return of income for the assessment year 2013-14, declaring a net income of Rs. 15,952/-. Subsequently, the case was selected for scrutiny through CASS and an assessment order was passed under section 144 of the Act on 28.03.2016, in which the income was assessed at Rs.6,79,82,260/-. In the financial year 2012-13, a sum of Rs. 4 Crores was credited to the bank account maintained by the assessee company at IndusInd Bank, Lucknow Branch. However, during the assessment proceedings, the assessee did not offer any explanation regarding the credit in this bank account. Therefore, in the absence of any documentary evidence and explanation, the source and nature of the credit remained unexplained. Therefore, the ld. AO made an addition of Rs. 4 Crores to the income of the assessee company under section 68 of the Income Tax Act. Furthermore, the ld. AO had noticed that a sum of Rs. 27,92,00,000/- was disclosed as investment by the company during the financial year 2012-13 but the company had not shown any income out of that investment. As no explanation was offered by the assessee company with regard to the same, the ld. AO made a presumptive addition to the income of the assessee company at 10% of the total investment i.e. Rs.2,79,20,000/-. Penalty proceedings under section 271(1)(c) were initiated separately. 3. Aggrieved with the said assessment order, the assessee company preferred an appeal before the ld. CIT(A)-2, Kolkata under whose juri iction the then AO lay. The ld. CIT(A)-2, Kolkata, vide his order under section 250 of the Income Tax Act passed on 7.12.2018, dismissed the appeal of the assessee company on account of its failure to prosecute the appeal. Upon receipt of this penalty order, the ld. AO at Lucknow issued a penalty notice under section 271(1)(c) and states that the notice was personally served on the assessee, but no reply was received in this regard. Therefore, he held that the assessee company had failed to explain the credit entry of Rs.4 Crores in the bank account and also failed to disclose the income earned on the investment of Rs.27,92,00,000/- in the return filed by it, compelling the ld. AO to compute the income A.Y. 2013-14
M/s Jupiter Tradelinks Pvt. Ltd.
on the said investment. Since, the assessee had failed to submit any explanation either during the assessment or the penalty proceedings, the ld. AO held that he had no option but to conclude that the assessee company had nothing to say in this regard and therefore, he levied the penalty under section 271(1)(c) of Rs.2,20,41,900/- @ 100%
tax sought to be evaded.
4. Aggrieved by such order of the ld. AO, the assessee went in appeal before the ld. CIT(A)-3, Lucknow. The ld. CIT(A) records that the assessee failed to submit any written submission during the course of appeal proceedings and also failed to appear in the said proceedings. In the circumstances, the ld. CIT(A) decided to proceed with the matter on the basis of the facts already on record. She observed that in the appellate proceedings the burden of proof lay on the assessee, to prove that the facts and findings of the ld. AO were incorrect. If the assessee fails to disprove or rebut with any cogent evidence, the facts and findings of the ld. AO, no interference was required.
In the present case, the ld. CIT(A) observed that the assessee has not availed any such opportunity and therefore, relying upon the decision of the Hon’ble Supreme Court in the case of Titaghur Paper Mills Co. Ltd vs State of Orissa and Pinaki Sen Gupta vs. State of Orissa (1983) 142 663 (SC), wherein the Hon’ble Supreme Court had held that the principles of natural justice had been met when notices for compliance were issued on several occasions, and the cases of Vipul Logistic and Warehousing Pvt. Ltd., vs. ITO
(ITA No.5454/Del/2010) for A.Y. 2006-07 and the Hon’ble Delhi High Court in the case of CIT vs. Gold Leaf Capital Corporation (ITA No.798/2009), as also many other decisions of the Hon’ble Mumbai and Hon’ble Madhya Pradesh High Court, the ld.
CIT(A) held, that since the assessee had failed to submit any reply that would disprove the findings of the ld. AO, the penalty under section 271(1)(c) was fit to be upheld.
Therefore, she confirmed the levy of penalty of Rs.2,20,41,900/- and dismissed the appeal against the said assessment.
A.Y. 2013-14
M/s Jupiter Tradelinks Pvt. Ltd.
The assessee is aggrieved against such order passed by the ld. CIT(A) and has accordingly come before us in appeal. Sh. Akshay Agarwal, Advocate (hereinafter referred to as the ld. AR) appearing on behalf of the assessee submitted that no compliance could be made before the ld. AO at Kolkata or after the transfer of the case to Lucknow, during the penalty proceedings for the concerned assessment year. However, it was submitted that there was no failure on the part of the assessee in disclosing all material facts truly and fully. It was submitted that the assessee had maintained regular accounts and all the findings against the assessee had been recorded without pointing out that there was any mistake in the books of accounts. It was submitted that, in fact, the notices that had been sent to the assessee had not been received by it and therefore, compliance could not be made. The ld. AR assured that if the matter was to be restored back to the file of the ld. AO, he would ensure proper compliance before the ld. AO. He pleaded for the matter to be restored back on the grounds that there had not been any real finding of fact in the matter that could visit the assessee with a penalty of concealment of income, because the additions had been made only on the basis of surmises and conjectures. Accordingly, it was pleaded that one more opportunity may be given to the assessee to make its case, so that the ld. AO would see that no case of penalty under section 271(1)(c) was made out. 6. On the other hand, Sh. R.K. Agarwal, CIT DR (hereinafter referred to as the ld. CIT DR) firmly opposed sending back the case to the ld. AO, pointing out that the assessee had habitually defaulted on notices before the lower authorities both during the assessment and the appeal proceedings. Therefore, the ld. CIT DR prayed that the appeal of the assessee should be dismissed. 7. We have duly considered the facts and circumstances of the case. It appears from a reading of the assessment order, the penalty order and the respective appeal orders, that no compliance has been made by the assessee at any stage prior to this. Thus, due to this, there has been no real examination into whether the income of the A.Y. 2013-14
M/s Jupiter Tradelinks Pvt. Ltd.
assessee has been concealed or whether inaccurate particulars of income have been found. While the fact of non-compliance can result in levy of various penalties and even prosecution against any assessee, to our mind, unless it can be found that there were good reasons to hold that the assessee had concealed or furnished inaccurate particulars of its income, it could not be visited with the penalty under section 271(1)(c). Keeping the said aspect in mind, we deem it in the interest of justice to both parties, to restore the appeal to the file of the ld. AO, with a direction to the assessee to make full compliance before the ld. AO to establish that the credits and investments made by the assessee, do not merit any addition and levy of penalty. We would further caution the assessee that failure to make compliance before the ld. AO at this stage would lead to a presumption that it had no explanation to offer in this regard and the AO would thereafter be free to take action as per the provisions of law. In view of the fact that the matter has been restored to the file of the ld. AO, the appeal of the assessee is held to be allowed for statistical purposes.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 29.08.2025 in the open Court. [SUDHANSHU SRIVASTAVA]
[NIKHIL CHOUDHARY]
JUDICIAL MEMBER
ACCOUNTANT MEMBER
DATED: 29/08/2025
Sh