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Income Tax Appellate Tribunal, DELHI BENCH “H” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI PRADIP KUMAR KEDIA
आदेश /O R D E R PER C.N. PRASAD, J.M.
This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax(Appeals)-9, New Delhi dated 27.09.2019 for AY 2015-16 in sustaining the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961.
Several notices have been issued to the assessee and all the notices returned un-served with the endorsement of postal authorities that I.T.A.No.9233/Del/2019 assessee has ‘left’ the address. In spite of issue of several notices as none appeared nor any adjournment was sought by the assessee, this appeal is disposed off and hearing the Ld. DR. The Ld. DR submits that while completing the assessment the Assessing Officer made addition u/s 68 of the Act in respect of sundry creditors as the assessee could not prove the identity, genuineness and creditworthiness of the creditors.
Penalty proceedings were initiated u/s 271(1)(c) of the Act dated 23.12.2017 by the Assessing Officer calling for explanation on 27.01.2018 and 12.06.2018.
Considering the reply filed by the assessee on 12.06.2018 as the assessee could not prove the identity, genuineness and creditworthiness of the creditors the Assessing Officer imposed penalty 100% of tax.
The Ld. DR submits that on appeal the Ld.CIT(Appeals) sustained the order of the Assessing Officer in imposing penalty u/s 271(1)(c) of the Act. He strongly placed reliance on the orders of the Ld.CIT(Appeals).
On hearing the Ld. DR and perusing the orders of the Assessing Officer as well as the Ld.CIT(Appeals), we observed that the Ld.CIT(Appeals) considered the submissions of the assessee and the averments of the Assessing Officer in the penalty order and placing reliance on the decisions of various issues sustained the penalty imposed holding that the assessee has not discharged its burden to prove the I.T.A.No.9233/Del/2019 identity, creditworthiness and genuineness of the creditors observing as under: - “4.1 Further, in response to the penalty notice, the assessee submitted its reply dated 12.06.2018. The reply of the assessee was considered by the AO and found to be not acceptable. Further the AO also noted that the case laws quoted by the assessee in its favour were found to be different from the assessee's. The AO held as under:- “3.3 It is clear that despite multiple opportunities having been provided to the assessee during the course of assessment, the assessee failed to produce the said parties or provide confirmation of their outstanding balances. This clearly establishes that the liability of the assessee towards these parties had seized and the assessee was no longer in touch with the same and could not provide relevant addresses.
4. In view of above discussion and after considering the facts and circumstances of the case, it is clear that assessee is liable to penalty u/s 271(1)(c) of the IT Act, 1961 for furnishing inaccurate particulars of income.” In view of above, the AO levied a penalty of Rs.1,29,39,641/-. 5.1 I have considered the facts of the ground, contention of the AR of the appellant and impugned order. During the course of assessment proceedings, an addition of Rs.3,80,91,495/- was made by the AO on account of non confirmation from several parties. The main contention of the appellant is that it had submitted copies of accounts of all the said parties to substantiate that there was no cash transaction and as such the non receipt of confirmation from some of the creditors does not mean that there is a cessation of liability. The appellant has also cited different case laws in order to justify its claim. 5.2 On going through the facts and documents available on record, I am of the opinion that the appellant has not brought anything substantial or concrete to support its viewpoint. The appellant’s main contention has been solely that non confirmation from the creditors does not mean that there is cessation of liability within the meaning of I.T.A.No.9233/Del/2019
section 41(1). The AO had issued summons u/s 133(6) which remained uncomplied with by many parties. As has been held in many judicial precedents by the Hon’ble Courts/Tribunals, the burden of onus lies on the appellant and not on the A O. It was the duty of the appellant to produce necessary documents and evidences which could have proved its contention bona fide. In this case as noted above, the AO has carried out detailed enquiry and the appellant was controverted with those findings of facts regarding sundry creditors remaining non- confirmed. Further, despite of opportunity the appellant failed to prove its claim with respect to non-confirmed parties. Having regard to those facts, the impugned amount is definitely a case of furnishing of inaccurate particulars of income and concealment of income. 5.3 Further, even if it is an accepted position that not contesting the quantum addition, cannot be a basis of penalty and that assessment proceedings is different from penalty proceedings, the onus was on the appellant to furnish explanation supported with cogent evidence so as to prove the bona fide of the claim. However, there is no such explanation much less a bona fide explanation has been adduced by the appellant. 5.4 The Hon'ble Supreme Court in the case of Union of India and other Vs Dharmendra Textiles Processors and others 306 ITR 217 has held that the 'mens rea' need not be established before imposition of penalty u/s 271 (1)(c) of the IT Act, 1961. "The explanation appended to section 271(1)(c) of the Income-tax Act, 1961, indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The object behind the enactment of section 271(1)(c) read with the Explanation indicates that the section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276C.” While imposition penalty u/s 271(1)(c) of the I.J Act, 1961, it is of utmost importance to take into cognizance the objective of penalty provision. The price objective of 4
I.T.A.No.9233/Del/2019 penalty provision is to have deterrent effect, to make assessee law abiding and to enforce fiscal discipline amongst the asses see. An assessee who is acting against the settled principle of law, who is trying to defraud the revenue by circumventing the provisions of law deserves to be made to pay an additional amount through penalty. In the assessee's case all these ingredients are there and therefore, the penalty u/s 271(1)(c) of the IT Act, 1961 is very much attracted. 5.5 In a recent case of CIT vs. Atul Mohan Bindal 317 ITR 1 (SC), the Apex Court affirmed its decision in the case of Union of India Vs. Dharmendra Textile Processors (supra) and held that the penalty leviable u/s 271 (1 )(c) was neither criminal nor quasi criminal in nature. It was a civil liability and therefore, presence of mens rea was not essential. 5.6 Reference can be made to the case of CIT vs. Escorts Finance Ltd. 226 CTR 105 (Del), Where the jurisdictional High Court held that "Even if there is no concealment of income or furnishing of inaccurate particular s, but on basis thereof the claim which is made is ex facie bogus, it may still attract penalty provisions. Cases of bogus hundi loans or bogus sales or purchases have been treated as that of concealment or inaccuracy in particulars of income for the judicial pronouncements (See Krishna vs. CIT 217 ITR 645, Rajram vs. CIT 193 ITR 614 and Beena Metals 240 ITR 222)." 5.7 The Hon"ble Supreme Court in the case of Chairman SEBI Vs. Shri Ram Mutual Fund reported in (2006) 68 SCL 216 (SC), in para 35 have held as under:- "Para 35…… In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act sand the regulation is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the violations would immediately attract the levy of penalty irrespective of the fact whether contravention must make by the defaulter with guilty intention or not. We also further held that unless the 5
I.T.A.No.9233/Del/2019 language of the statute indicates the need to establish the presence mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or hot. ON a careful perusal of section 15(D)(6) and section 15E of the Act, there is nothing which required that mens rea must be proved before penalty can be imposed under these provisions. Hence once the contravention is established then the penalty is to follow" 5.8 Further reliance is placed on the judgment in the case of CIT vs Frostair (P) Ltd. 26 taxmann.com 11, wherein the Hon’ble Delhi High Court held thus: “Section 68, read with section 271(1)(c), of the Income- tax Act, 1961 - Cash credit – Whether assessee is under a burden to explain nature and source of share application money received in a given case and he has to establish shareholder's identity; genuineness of transaction; and creditworthiness of shareholders - Held, yes - On being informed that assessee had accepted share capital from some companies which were engaged in providing bogus entries, in form of loan and share application money, Assessing Officer asked for details under section 142 - Assessee submitted a list of 18 shareholders - Assessing Officer discerned that PAN/GIR No of shareholders was not correct, .they were not found at addresses given and they were not filing their ITRs with concerned officers - Whether since Assessing Officer had examined all facts in exhaustive manner, addition under section 68 and, consequently initiation of penalty proceedings were justified - Held, yes [In favour of revenue]" 5.9 Now as far as the second issue of the appellant with regard to reliance placed by it on various judicial precedents is concerned, it is noted that the facts and circumstances in those judicial precedents are totally different from the one in this case.”
On careful consideration of the observations of the Ld.CIT(A), we do not see any infirmity in the order passed by the Ld.CIT(A) in sustaining the penalty levied u/s 271(1)(c) of the Act. Grounds raised by the assessee are rejected.
I.T.A.No.9233/Del/2019
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 28/03/2023