VINAY BHASIN (HUF),MUMBAI vs. ITO WD 19(3)(4), MUMBAI

Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. This appeal by the assessee filed u/s 253 of the Income-tax Act (‘Act’) is directed against the order of Ld. Commissioner of Income-tax (Appeals) [for short ‘the CIT(A)] – 34, Mumbai dated 24th of March 2015 for Assessment Year (AY) 2006- 07. Though the assessee has raised as many as six ground of appeal

, however as per our considered opinion the only substantial ground of appeal is “Whether ld Commissioner (Appeals) erred in not deleting the penalty of Rs. 2,90,800/- levied by Assessing Officer under section 271(1)(c ) of the Act.

2. The brief facts of the case are that assessment for the relevant assessment year was completed u/s 143(3) on 19 December 2008. In the assessment the Assessing Officer treated the Long Term Capital Gain on sale of shares of Rs. 10,27,753/- of M/s Rohinton Worldwide Trade Ltd as unexplained cash credit under section 68 of the Act and added to the income of the assessee. On appeal the addition was Vinay Bhasin(HUF) confirmed by ld Commissioner (Appeals). After dismissal of the appeal in quantum assessment by ld Commissioner (Appeals), the AO issued show cause notice for levying penalty u/s271(1) ( c ) . The assessee contested the initiation of penalty and filed its reply dated 05.03.2013. In reply the assessee contended that there was no concealment of fact and all particulars of transaction of sale of share were disclosed. The AO concluded that the explanation given by the assessee is neither substantiated nor bonafide, and thus Explanation 1 to section 271(1) (c ) would come in to play. It was further concluded that assessee deliberately showed the income through modus operandi adopted by him. The AO considered it as Penny stock. And the AO concluded that the assessee furnished inaccurate particular of income to avoid the payment of tax. The AO levied the penalty @ 100% of tax sought to be evaded. Aggrieved by the order of penalty the assessee filed appeal before the Commissioner (Appeals) but no success. Thus, further aggrieved by the order of Commissioner (Appeals) the present appeal is filed before us.

3. Neither the assessee nor his representative whose authority letter (power of attorney) is on record appeared before us when case was called for hearing. We have noted that the assessee was served with the notice of hearing of appeal for today through RPAD on 23rd Nov 2016 at the address given by assessee in the Form No. 36 of Appeal. As none appeared before us despite waiting for sufficient time we left no option except to proceed further and to hear the submission of ld representative of Revenue. We have heard ld DR for Revenue and perused the material available on record. The ld DR for the revenue argued that the assessee filed appeal against the addition in quantum assessment before Commissioner (Appeals) and the same was dismissed. The assessee has not filed any further appeal before Tribunal. It was further argued that the assessee has not substantiated his claim nor gave any satisfactory explanation in the reply to the notice under section 271(1) (c). The assessee has deliberately shown the income through a modus operandi adopted by him through Penny stock and thereby furnished inaccurate particulars of income and avoided payment of tax on true and correct income. 2 Vinay Bhasin(HUF) 4. We have considered the submission of ld DR for the revenue and further gone through the orders of authorities below. The AO levied the penalty holding that the assessee tried to give the transaction of LTCG as a color of genuine with the help of series of transaction which was not found to be genuine and the same was treated as unexplained cash credit under section 68 in the assessment order. The AO further observed the shares were purchased by the assessee off the market. The said off market transaction done in M/s Rohibson Worldwide Trade Ltd was only a devise adopted by the assessee. The payments were made in cash. The purchase was not explained by assessee. The said share were purchased @ Rs. 7.36/- per share and sold @ Rs.102.97/- per share, which was only a devise to convert his black money into white money. In appeal before Commissioner (Appeals) the assessee filed copies of sale certificates, certificate of Standard Chartered Bank confirming the facilities to De-mat account transferring the sales using this account and other certificate of Standard Chartered Bank regarding sale of 1000 shares on 31 January 2006 Rs. 10,11,500/-. The assessee further contended that that it is not a fit case for levy of penalty. The learned Commissioner (Appeals) while considering the contention of assessee upheld the action of AO by referring various decision of Hon’ble Apex Court as referred in paragraph 4 of his order. Before us, the assessee has neither filed any documentary evidence nor come forward to substantiate his defense. The assessee has not discharged the onus cast upon him. Hence, we do not find any merit in the grounds of appeal raised before us. In the result the appeal of the assessee is dismissed.