Case Law Details
PCIT Vs J.M.J. Essential Oil Company (Himachal Pradesh High Court)
The question that requires consideration in the present case is as to whether penalty could have been imposed on the respondent under Section 271(1)(c) on the ground that the respondent had furnished inaccurate particulars of his income in the garb of fictitious cash sales with a view to claim exemption under Section 80-IC of the Act. The Assessing Officer while examining the return filed by the respondent with respect to Financial Year 2006-2007 (Assessment Year 2007-2008) under Section 143(3) of the Act, vide order dated 24.12.2009, held that respondent had failed to explain the cash sales amounting to Rs.3,12,00,000/- effected in the month of September, 2006. The said order has been admittedly upheld upto the Hon’ble Supreme Court vide order dated 23.08.2019. Appeal filed by the appellant was dismissed by this Court vide order dated 5th November, 2018. Penalty proceedings with regard to inaccurate cash sales set up by the respondent were separately initiated. It was observed by the Assessing Officer as well as the Appellate Authority (Commissioner of Income Tax (Appeals) that the respondent had claimed cash sales amounting to Rs.3,12,00,000/- only for the month of September, 2006. No such cash sale was ever set up prior to or after the month of September, 2006. The cash sales were duly scrutinized and it was found that in some bills the complete particulars of the purchasers had not been given. The addresses mentioned on the cash bills were found to be incorrect on an enquiry. Merely because the respondent had got order from the VAT Authority, did not in itself make the cash sales genuine. By paying a sum of twelve lacs by way of VAT on cash sales within the State, the respondent had credited cash to its Books to the tune of Rs.3,12,00,000/-. The cash bills were of specific amount of rupees six lacs and rupees three lacs only and the amount had been transferred to the accounts of partners as cash withdrawals in the month of September, 2006 itself.
Thus, the Assessing Officer as well as the Appellate Authority, after examining the facts of the case, came to a finding that it was a clear case of fabrication of accounts by the respondent and the respondent was liable to pay penalty under Section 271(1)(c) of Income Tax Act, 1961. The finding of fact arrived by the Assessing Officer as well as the Appellate Authority, has been set aside by the Tribunal mainly on the ground that the respondent had substantiated its explanation by sale bills, sale tax Challan and sale tax order passed by the VAT Authorities. Thus, the Tribunal was mainly influenced by the fact that as the VAT authority had accepted the cash transactions in question, the cash sales put up by the respondents were genuine. However, we are of the opinion that merely because the VAT Authorities had accepted the cash sales set up by the respondent in itself, is not a sufficient ground to hold that the cash sales set up by the respondent were genuine. The Assessing Officer was liable to independently look into the cash sales to come to a conclusion as to whether the said sales were genuine or not.
In view of the peculiar facts and circumstances of the case, the Assessing Officer as well as the Appellate Authority, rightly gave finding of fact that the cash sales put-forth by the respondent were not genuine and the respondent had introduced its unaccounted income in the garb of cash sales. The Tribunal erred in deleting the penalty levied under Section 271(1)(c) of the Act despite there being sufficient material on record to show that the cash sales set up by the respondent were fabricated and not genuine.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
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