SAIMANGAL INVESTRADE LTD,MUMBAI vs. ASST CIT CEN CIR 40, MUMBAI

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ITA 3797/MUM/2013Status: DisposedITAT Mumbai04 March 2016AY 2006-074 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal deleted the penalty because the addition of ₹10.17 crore, which formed the basis for the penalty, had already been deleted by the Tribunal in a separate appeal.

What were the facts?

The Assessing Officer added ₹10.17 crore to the assessee's income as bogus cash credit under Section 68. Subsequently, a penalty under Section 271(1)(c) was imposed and confirmed by the CIT(A).

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the primary addition forming its basis has been deleted. Whether the penalty order was specific about concealment or inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 68,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR

For Appellant: Ms. Nidhi Patel
For Respondent: Dr. P. Danial, Special Counsel

Aforesaid appeal of the assessee is directed against the order dated 18th March 2013, passed by the learned Commissioner (Appeals)–36, Mumbai, sustaining penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") for the assessment year 2006–07.

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2.

Briefly stated the facts are, assessee company filed its return of income on 25th November 2008 for the impugned assessment year declaring nil income. During the assessment proceedings, the Assessing Officer from the information available on record found that during the relevant previous year, assessee had repaid loan to the tune of ` 10.17 crore after receiving share allotment money of ` 10.17 crore. The Assessing Officer, on the basis of investigation conducted by the Department, came to the conclusion that the amount received on account of share allotment of ` 10.17 crore is nothing but bogus cash credit in terms of section 68 of the Act and added back to the total income of the assessee. Though, the assessee preferred appeal before the learned Commissioner (Appeals) challenging the addition made but the first appellate authority also confirmed the addition. Against the said order of the learned Commissioner (Appeals), assessee preferred appeal before the Tribunal.

3.

In the meanwhile, on the basis of addition made under section 68 of the Act, for an amount of ` 10.17 crore, Assessing Officer initiated proceedings for imposition of penalty under section 271(1)(c) of the Act and ultimately passed an order on 28th March 2011, imposing penalty of ` 3,42,32,220 under section 271(1)(c). Learned

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Commissioner (Appeals) also confirmed the penalty imposed by dismissing the appeal preferred by the assessee.

4.

At the outset, learned Authorised Representative submitted, in the mean while, the Tribunal while deciding assessee’s appeal against the addition made under section 68 of the Act, has passed an order on 20th December 2013, deleting the entire addition. She, therefore, submitted that under the circumstances, penalty has to be deleted. Further, learned Authorised Representative submitted while imposing penalty under section 271(1)(c), Assessing Officer has not stated whether it is for concealment of income of furnishing of inaccurate particulars of income. For this reason also, penalty imposed cannot be sustained.

5.

Learned Departmental Representative has also agreed that the addition on the basis of which penalty under section 271(1)(c) was imposed has been deleted by the Tribunal.

6.

We have considered the submissions of the parties and perused the material available on record. As could be seen, the basis for imposition of penalty under section 271(1)(c) is the addition of ` 10.17 crore made under section 68 of the Act. It is observed, the Tribunal, while deciding the assessee’s appeal in ITA no.3924/Mum./2009 dated

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20th December 2013, has accepted assessee’s claim and deleted the entire addition of ` 10.17 crore. Therefore, as the very addition on the basis of which penalty under section 271(1)(c) was imposed has been deleted by the Tribunal, the penalty imposed under section 271(1)(c) cannot survive. Accordingly, we delete the penalty. As we have deleted penalty on the aforesaid reasoning, we consider it necessary to deal with the contentions of learned Authorised Representative against imposition of penalty.

7.

In the result, appeal is allowed. Order pronounced in the open Court on 04.03.2016

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