PMT MACHINES LTD,MUMBAI vs. DCIT 2(2), MUMBAI

The present appeal u/s 253 of Income Tax Act (‘Act’) is directed by the assessee- company against the confirmation of penalty order by Commissioner of Income-tax (Appeals) [CIT(A)’’]-5 Mumbai dated 03.10.2012 for Assessment Year (AY) 2008- 09.

Brief facts of the case are that the assessee-company filed its return of income for relevant AY on 30.09.2008 declaring total income of Rs. 14,05,13,606/-. The assessment was completed on 08.12.2010 u/s 143(3) of the Act determining the total income of assessee at Rs. 14,56,26,450/-. During the course of assessment, the AO noticed that transaction of Rs. 1,50,16,736/- was not reflected in the books of accounts. The assessee was asked to explain the same. From the explanation of the assessee, AO noted that the profit of Rs. 5016736/- being profit of switched over of Units purchased by assessee on 31.03.2007 to the Units of Fusion Fund Series 3 Retail Growth was not offered for taxation. Thus, the Assessing Officer (AO) made

We have heard ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for Revenue and perused the material available on record. The ld. AR of the assessee argued that due to mistake the assessee has not concealed any income. The error committed by the assessee was without any intention to conceal any fact of the matter regarding income. It was further argued that as soon as the fact came to the knowledge of the assessee, the income was voluntary offered for taxation. The Ld. AR for assessee further argued that mere disallowance would not attract the penalty; moreover, the assessee has admitted that it was on account of mistake. The ld. AR of the assessee relied upon the decision of Krishna Sachdeva vs. DCIT in dated 31.03.2010 reported vide (2010) 29 CCH and the decision of Bombay High Court in CIT vs. Somany Evergree Knits Ltd. [2013] 352 ITR 592 (Bom). On the other hand, the Ld. DR for Revenue vehemently argued that the assessee has actively concealed the income and it was the work of AO, who had detected the income of assessee. Has the case been not selected for scrutiny, the Revenue would have been lost. The ld. DR for Revenue further argued that the ld. CIT(A) has categorically examined the contention of the assessee and that the assessee is not entitled for any relief.

We have considered the rival contention of the parties and further gone through the orders of authorities below. During the penalty proceeding, the assessee has not filed any reply to the show-cause notice issued to him. We have further noticed that there is no evidence on record which may suggest that assessee filed any appeal against the addition of quantum assessment. During the appellate proceeding, the assessee contended that due to non-availability of the documents of gain of switched over 3 M/s PMT Machines Limited which was to be accounted and should have debited to investment and the cost of investment should have been increased by the gain of Rs. 50,16,736/-. As the gain was not accounted for the cost of investment remained Rs. 1 crore instead of 1.5 crore (approx) and it was further contended that the assessee sold the investment in AY 2011-12 at Rs. 2,03,41,745/- and disclosed the profit in the return for AY 2011- 12. The ld. CIT(A) considered the contention of assessee and concluded that query regarding not disclosing the profit of Rs. 50,16,736/- on switched over on units was raised by AO on 10.11.2010. It was only thereafter, that assessee disclosed the profit in the return filed for AY 2011-12 after 10.11.2010 and as such that assessee’s contention that it had no mens rea or willful concealment is not correct. Ld. CIT(A) concluded that assessee is willfully and intentionally not disclosed the profit of Rs. 50,16,736/- being profit on switched over of the Unit. The assessee has not counter this fact before us, rather it was argued that there was no intentional concealment of fact or mere disallowance would not lead to levy of penalty, the ld. AR of assessee also failed to substantiate that mistake was bonafide mistake on the part of assessee. The facts of the decision cited by ld. AR of the assessee are at variance. In Krishna Sachdeva vs. DCIT (supra) the assessee claimed loss on sale of assets as capital loss and was not allowed as a set off of against the business income. Thus, there was a merely a wrong claim which was disallowed. In CIT vs. Somany Evergree Knits Ltd. (supra) assessee wrongly claimed loss a Revenue expenditure and the mistake was rectified during the assessment proceedings, the assessee realized its mistake and pointed it out. However, in the present case there was an active concealment on the part of assessee. The assessee has not intentionally explained it during the penalty proceeding by not responding to the notices issued by AO before levying the penalty. Hence, we do not find any reason to interfere with the order of ld. CIT(A), hence, the ground no. 1 to 4 raised in the present appeal are dismissed.

In the result, appeal filed by the assessee is dismissed. Order pronounced in the open court on this 9th November, 2016.