The Commissioner of Income Tax-III vs. M/s.Vibha Agrotech Limited

Heard learned counsel for the appellant and Mr. R.S. Chimanka along with A. Kedia, learned counsels for the Income Tax Department.

“xxx We have heard both the parties and perused the record. It is noticed that the addition of Rs.5,13,516 made by the Assessing Officer being excess advances received by the assessee than shown by it in the Balance Sheet was not sustained by the learned CIT (A). As such, the new addition of Rs.10,63,484 was made by the first appellate authority. As per the record of the Tribunal with reference to this amount of Rs.10,63,484 neither the Assessing Officer nor the first appellate authority initiated penalty proceedings u/s 271 (1)(c) of the Act. Thus, we hold that no penalty u/s 271(1)(c) of the Act can be levied on the amount of Rs.10,63,484. As regards the balance addition of Rs.10,28,265 the penalty proceedings were initiated by the Assessing Officer. There has also been an amendment in the Act wherein it has been clarified that if certain additions are made and the Assessing Officer stated in the assessment order that penalty proceeding is initiated u/s 271(1)(c) of the Act, the same should be sufficient for valid initiation of the proceedings. Thus, we hold that penalty proceedings u/s 271(1)(c) of the Act was validly initiated with reference to the amount of Rs.10,28,265. It could be seen from the order of the Assessing Officer and the learned CIT (A) that though the assessee was given sufficient opportunities, the discrepancy on account of which the above addition was made by the Assessing Officer and sustained by the learned CIT (A) could not be explained by the appellant. Even during the penalty proceedings no further evidence has been brought on record to reconcile the above discrepancy. Thus it has to be held that with reference to this addition the assessee has not been able to substantiate its claim that the amount in fact was received as advances for construction. Thus Explanation 1 to Section 271 would be attracted in the facts of the present case. Even otherwise the finding of the Assessing Officer in the impugned penalty order to the effect that in I.T.A No.19 of 2009

-2- the present case the assessee has consciously disregarded its obligation to file accurate particulars” has not been dislodged by the assessee. It has also not been shown that the jurisdictional High Court’s decision in the case of CIT v. IMFA (supra) is not applicable in the facts of the assessee’s case. In the above circumstances, we are of the considered opinion that the Apex Court’s decision in the case of Dilip N Shroff (supra) would not come to the rescue of the appellant especially when the above judgment of Hon’ble Supreme Court has been referred to a larger Bench. In the above view of the matter, we uphold levy of penalty on the amount of Rs.10,28,265. The Assessing Officer will work out the minimum penalty on the same as per law. We direct accordingly.”

Misc. Cases/I.As. connected to this appeal, if any, are dismissed accordingly.

SKG/SKJ

.……..........………… ( K.S. Jhaveri ) Chief Justice

……………….…….. ( K.R. Mohapatra ) Judge