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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: SHRI B.R. BASKARAN (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
This appeal has been filed by the assessee against order dated 22/02/2016 passed by Ld. Commissioner of Income Tax (Appeals)- 45, Mumbai pertaining to the assessment year 2004-2005, whereby the Ld. CIT(A) has dismissed the appeal filed by the assessee against penalty order passed u/s 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’).
Brief facts of the case are that the assessee filed its return of income for the assessment year 2004-05 declaring the total income of Rs.93,838/-. Subsequently, the case was reopened u/s 147 of the Act, on the basis of information received from DDIT(Inv) Mumbai, to the effect that the assessee 2 Assessment Year: 2004-2005 had taken bogus bills from M/s Mihir Agencies Pvt. Ltd., one of the group concerns which was indulged in issuing bogus bills and providing bogus speculation/profit/loss, short term/long term capital loss/gain etc. for Rs. 6,59,400/-in the name of a scrip Buniyad Chemical and claimed the same as long term capital gain. It was established during the assessment proceedings that the transaction was never entered in to the stock exchange and the said amount was the income from undisclosed source. Further an amount of Rs.32,790/-being 5% of the amount for procuring the bogus entries, was added u/s 69C of the Act. AO also treated the loan amounting to Rs. 5,34,452/-as unproved loan. Hence, the income of the assessee was determined at Rs. 13,57,401/-. Appeal filed by the assessee against the assessment order was dismissed by the Ld. CIT(A).
Accordingly, the AO initiated proceedings u/s 271(1)(c) of the Act. The assessee failed to furnish any explanation in response to the show cause notice, the AO levied penalty of Rs. 4,11,257/- u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income. In appeal the Ld. CIT(A) confirmed the penalty levied by the AO.
Aggrieved by the impugned order passed by the Ld. CIT (Appeals), the assessee has preferred the present appeal before the Tribunal on the following effective grounds:-
1. “The present appeal filed by the Appellant is against the CIT (A) 45/ITO 25(3)(1)/ITA 338/10-11 dated 22-02-2016 for the period 01.04.2003 to 31-03-2004 passed by the CIT (A)-45/ITO 33 (1)(2)/ITA 277/2013-14.
2. The CIT (A) has erred in not giving reasonable proper and sufficient opportunities to the Appellant for explaining and adding the income under the various heads.
3 Assessment Year: 2004-2005
3. The CIT (A) has not given proper opportunity of hearing to the appellant before making huge addition under various heads.
4. The CIT (A) has not justified in estimation of house property income of Rs. 50,400/- as notional rent since the appellant’s self occupied property flat at Kandivali whose notional rent was considered by the A.O. and the CIT (A) without considering the fact of case where the notional income of SOP of the appellant shall be nil. There is no question of concealment of any income since it is reflected in the appellant’s balance sheet and his books of accounts related to previous year. 5. The CIT (A) has not justified in treating the entire sale proceeds of shares of Rs. 659400/- as income for undisclosed sources for which the written submission and explanation were submitted before the A.O and CIT (A) at the time of hearing, which shows and reflects in the books of account that the appellant had received the actual contract noes from the broker and all the transactions were dealt with cheques only. There is no question of concealment of any income since it is reflected in the appellant’s balance sheet and his books of accounts related to previous year. 6. The CIT (A) not justified in estimation of expenses @ 5% on Rs. 6,59,000/- (Amounting to Rs. 32,970/-) U/s 69C of I. Tax Act’ 1961. Since the said addition was not accepted by the appellant as it was wrongfully added in the hands of the income of the appellant. Without prejudice the estimation of expenses @ 5% is very high and not accepted by the appellant. There is no question of concealment of any income since it is reflected in the appellant’s balance sheet and his books of accounts related to previous year. 7. The CIT (A) not justified in making addition on account of unproved loans of Rs. 5,34,452/- as the same loans were accepted and allowed in the previous assessment year by the than A.O and all the loans confirmations with relevant documents to show the genuineness of the transactions i.e. all the loans 4 Assessment Year: 2004-2005 were opening balance of current financial year relevant to assessment year only. There is no question of concealment of any income since it is reflected in the appellant’s balance sheet and his books of accounts related to previous year. 8. The CIT (A) not justified in levying interest/penalty U/s 234A, 234B & 234C of the I. Tax Act’ 1961. 9. The CIT (A) not justified in initiating penalty proceedings U/s 271 (1)(c) of the I. Tax Act’ 1961.”
This appeal was fixed for hearing on 22.11.17. On the said date, when the case was called for hearing, neither the appellant/assessee nor his authorized representative appeared nor any application was received for adjournment. We noticed that the assessee has not appeared successively for more dates when the case was fixed for hearing. Prior to that, the assessee has taken adjournments for three occasions. The Ld. authorized representative has withdrawn the letter of authority, From the conduct of the assessee and the circumstances, we are convinced that the assessee is not interested in pursuing its appeal. Accordingly, we decided to dispose of the appeal on the basis of material on record after hearing the Departmental Representative (DR).
Before us, the Ld. DR relying on the concurrent findings of the authorities below, submitted that since the explanation offered by the assessee was found to be false by the AO, the Ld. CIT(A) has rightly confirmed the penalty imposed by the AO u/s 271(1)(c) of the Act.
We have carefully gone through the material on record including the orders passed by the authorities below and the cases relied upon by the assessee before the authorities below. Though the assessee has raised 9 grounds of appeal but the only grievance of the assessee is that the Ld. CIT(A)
5 Assessment Year: 2004-2005 wrongly confirmed the penalty order passed by the AO. We notice that the Ld. CIT(A) has confirmed the penalty levied by the AO after taking into consideration the submissions made by the assessee during the appellate proceedings. The operative part of the order reads as under:
6. I have considered the penalty order and the submissions of the appellant. It is seen that during the assessment addition of Rs. 32,790/- has been made by denying capital gain after enquiries were made by the income tax department. The commission paid for entries passed in order to earn capital gain was also added. Loan confirmations which were not provided during the assessment proceedings were also added back to the income of the appellant. Considering the facts and circumstances which led to levy of penalty, I am inclined to agree with the Assessing Officer that income was concealed. The judicial pronouncements relied upon by the appellant differ in facts and circumstances. In none of the cases cited, capital gains were earned through fraudulent share transactions and loan confirmation not produced. Hence, Penalty levied is confirmed. Ground Nos 1-4 are thus dismissed.
In our considered opinion, the findings of the Ld. CIT(A) are based on the evidence on record. Since the assessee has failed to prove the genuineness of the transaction to claim capital gain and further failed to prove the genuineness of the loan transaction, the addition was made to the income of the assessee. During the penalty proceedings the explanation offered by the assessee was found to be false by the authorities below. Under these circumstances, the findings of the Ld. CIT(A) cannot be held to be erroneous to interfere with the same. Moreover, no new facts came to our notice. Hence, we uphold the findings of the Ld, CIT(A) and dismiss all the grounds of the appeal of the assessee.
6 Assessment Year: 2004-2005 In the result, appeal filed by the assessee for the assessment year 2004- 2005 is dismissed.