DISHA N. LALWANI,MUMBAI vs. ITO 23(2)(2), MUMBAI
In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal upheld the penalty imposed under Section 271(1)(c) as the assessee failed to establish the genuineness of the transactions and provide a plausible explanation. The CIT(A)'s confirmation of the penalty was found to be justified.
What were the facts?
The assessee claimed exemption for long-term capital gains from share sales, but the AO found the transactions to be bogus accommodation entries arranged by a known entry provider. The addition to income was confirmed by the CIT(A).
What were the issues?
Whether penalty under Section 271(1)(c) is leviable when the assessee claims exemption based on bogus share transactions and fails to provide a genuine explanation.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: SHRI R.C. SHARMA (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
This appeal has been filed by the assessee Mrs. Disha N. Lalwani against order dated 02/02/2016 passed by the Ld. Commissioner of Income Tax (Appeals)-40, Mumbai, for the assessment years 2003-04, whereby the Ld. CIT (A) has confirmed the penalty of Rs. 1,73,219/- imposed by the AO u/s 271 (1) (c) of the Income Tax Act, 1961 (for short ‘the Act’).
Brief facts of the case are that assessee had claimed exemption u/s 10 on account of long term capital gain from sale of shares for Rs. 7,66,653/-. During the course of assessment it was noticed that Mr. Mukesh Chauksi, MD of M/s Mahasagar Securities Ltd. had arranged bogus bills/accommodation entries pertaining to the said shares. Accordingly, AO holding the sale transaction of Rs. 7,66,653/- and brokerage of Rs. 130/- bogus treated the Assessment Year: 2003-04 same as unexplained cash credit u/s 68 of the Act and added the said amount to the income of the assessee. In appeal, the Ld. CIT (A) confirmed the addition. Accordingly, penalty order u/s 271 (1) (c) was passed by the AO. In first appeal, the Ld. CIT (A) confirmed the penalty levied by AO u/s 271 (1)(c). Against the said order, the assessee is in appeal before the Tribunal. 3. The assessee has raised the following effective grounds of appeal
against the impugned order passed by the Ld. CIT (A):- 1. “On the facts and in the circumstances of the case and in law, the penalty order passed u/s 271 (1)(c) of the I.T. Act is invalid and bad in law.
2. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in confirming the penalty levied of Rs. 1,73,219/- u/s 271 (1)(c) of the I.T. Act and that too without giving full and proper opportunity of being heard in the matter.
3. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in confirming the penalty levied of Rs. 1,73,219/- u/s 271 (1)(c) of the I.T. Act and that too without appreciating fully and properly the facts of the case.
4. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in confirming the penalty levied of Rs. 1,73,219/- u/s 271 (1)(c) of the I.T. Act although there has been neither any concealment of income nor furnishing of inaccurate particulars of income.”
4. This case was fixed for hearing on 07/11/2017. On the said date, when the case was called for hearing, none appeared on behalf of the assessee nor any application for adjournment was received. We noticed that this case was fixed for hearing for the first time on 02/04/2017. Thereafter, the case was posted for 03/03/2017, 13/04/2017, 21/04/2017 and 02/11/2017 for hearing, however, the assessee the assessee did not appear on any of the said dates. We further observed that notice sent through registered post has received back with the remark of the Postal Department that the party has left Assessment Year: 2003-04 the place. From the conduct of the appellant/assessee, we are satisfied that the assessee is not interested in pursuing the present appeal. We accordingly decide to dispose of the appeal on the basis of material on record after hearing the Departmental Representative (DR).
5. Before us, the Ld. DR relying on the order passed by the Ld. CIT (A) submitted that in quantum appeal the Mumbai Tribunal has confirmed the addition in question. Therefore, there is no merit in the assessee’s appeal and the same is liable to be dismissed.
6. We have carefully gone through the material on record. The only grievance of the assessee is that the Ld. CIT(A) has wrongly confirmed the penalty levied by the AO u/s 271(1)(c) of the Act. We notice that the assessment was reopened in this case after receiving information from DIT (Inv), Mumbai that search and seizure operation was conducted on M/s Mahasagar Securities Pvt. Ltd. and its related group of 34 companies including M/s Goldstar Finvest Pvt. Ltd. run by Mr. Mukesh Chauksi and it was found that the appellant had obtained accommodation entries in the scrip of M/s Buniyad Chemicals and M/s N.E. Electronics through M/s Gold Star Finvest Pvt. Ltd. and Mr. Mukesh Chauksi in his statement admitted that these companies provide purchase bills for long term capital gain and further confirmed that both the sales and purchase bills issued are bogus. We further notice that the SEBI has confirmed that no trades for client code through the member’s names appearing in the contract note were found executed. The concluding para of Ld. CIT (A)’s order reads as under:-
In the above facts and circumstances, where it has been established that the appellant has obtained accommodation entries from a professional entry provider additions having been made in the hands of the appellant, attract the levy of penalty under section 271 )1)(c) of the Act. It is not a case of a bonafide Assessment Year: 2003-04 explanation being given by the assessee which has not been accepted by the Department but finding of fact by the Assessing Officer/Commissioner of Income Tax s(Appeals) as referred to by the AO, establishes deliberate attempt to evade tax by way of introduction of cash credits and the assessee having furnished inaccurate particulars of income makes it liable to levy of penalty under section 271(1)(c) of the Act.
In our considered opinion, since, the assessee has failed to establish the genuineness of the transaction, the assessee has also failed to offer any plausible explanation as to why penalty u/s 271(1)(c) of the Act should not be imposed. In our considered opinion, the Ld. CIT(A) has rightly confirmed the penalty in question. Hence, we do not find any infirmity in the order of the Ld. CIT(A) to interfere with the same. Accordingly, we uphold the findings of the Ld. CIT(A) and dismiss all the grounds of appeal of the assessee.
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