Aagam Shares & Commodities Pvt. Ltd. vs DCIT (ITAT Ahmedabad)
It is also well settled that penalty under s. 271(1)(c) of the Act will not be imposed in every case merely because it is lawful to do so. The penalty will not ordinarily to be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of contumacious conduct or dishonest act. The explanation offered towards bonafide issue of share capital thus cannot be outrightly rejected when tested on the touchstone of penalty proceedings of strict nature. The fact in the present case does not conclusively establish the malafide on the part of the assessee company. The assessee has filed detailed submissions in the course of assessment. The contentions raised do create some doubt in favour of the assessee. The impugned transactions of issue of share capital have been carried out through banking channel. The statement of third party has not been cross examined to fasten the onerous penalty. Hence, the assessee has shown existence of mitigating circumstances for exoneration from imposition of penalty. Thus, when tested on distinct parameters of penalty proceedings, the issue involved cannot said to be entirely free of any debate whatsoever. Hence, additions towards share capital in question would not ipso facto tantamount to alleged concealment of income. It is trite that finding in quantum proceedings for such additions/disallowance cannot be automatically adopted for the purposes of Section 271(1)(c) of the Act.
