Case Law Details

Case Name : Varshney Bhandu Foods Pvt. Ltd. Vs DCIT (ITAT Delhi)
Appeal Number : ITA No. 2973/Del/2014
Date of Judgement/Order : 30/01/2018
Related Assessment Year : 2008-09
Courts : All ITAT (5189) ITAT Delhi (1169)

Varshney Bhandu Foods Pvt. Ltd. Vs DCIT (ITAT Delhi)

In this case, the assessment was reopened on the basis of information obtained through investigation by the Investigation Wing. During the course of re-assessment proceedings, the assessee could not furnish documentary evidences in support of the genuineness of its claim of having received the impugned money. It is also undisputed that the assessee’s name appeared in the list of beneficiaries of the alleged bogus accommodation entries provided by Shri Aseem Kumar Gupta. It is apparent that when the assessee could not establish the genuineness of the impugned transaction before the Assessing Officer that it decided to surrender an amount of Rs. 55 lakh. Thus, the factual matrix indicates that the assessee made the surrender when it had no explanation to offer. Thus, the assessee could not prove the bona fide of its claim. The Hon’ble Apex Court in the case of MAK Data (P) Ltd. vs CIT 352 ITR 1 (SC) has held that the Assessing Officer should not be carried away by the plea of the assessee like voluntary disclosure, buy peace, avoid litigation, amicable settlement etc. to explain its conduct. The Hon’ble Apex Court further held that the burden is on the assessee to rebut the presumption of concealment as contained in Explanation 1 to section 271(1)(c) of the Act by cogent and reliable evidence. In the facts of the present case, we are afraid that the assessee has failed to discharge the initial onus cast upon it by cogent or reliable evidence and has simply mentioned that the amount was being surrendered as a voluntary disclosure to buy peace and avoid litigation. We are of the considered opinion that the assessee, in the present case, cannot escape the rigours of penalty as it has failed to offer any explanation and has also failed to lead any cogent or reliable evidence. Therefore, respectfully following the ratio of the Hon’ble Apex Court as laid down in the case of MAK Data (P) Ltd. vs CIT (supra), we find no reason to interfere with the adjudication of the Ld. Commissioner of Income Tax (A) and we dismiss the grounds raised by the assessee.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

This appeal has been preferred by the assessee against the order of the Ld. Commissioner of Income Tax (A)-19, New Delhi wherein, vide order dated 6.3.2014, the Ld. Commissioner of Income Tax (A) has confirmed the imposition of penalty amounting to Rs. 16,99,500/-imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) for assessment year 2008-­09.

2. Brief facts of the case are that the assessee company is dealing in trading and manufacturing of Skimmed Milk Powder and Desi Ghee. The return was filed declaring a loss of Rs. 45,79,569/- on 25.08.2008. Subsequently, on the basis of information received from the Directorate of Investigation, New Delhi in respect of alleged bogus accommodation entries provided by one Shri Aseem Kumar Gupta, the assessee’s case was reopened u/s 147 of the Act as the name of the assessee figured in the list of beneficiaries of the alleged bogus accommodation entries. As per the information received from the Directorate of Investigation, the assessee had received an entry of Rs. 65 lakh during the year under consideration. During the course of reassessment proceedings, the assessee surrendered Rs. 55 lakh on the ground that it wanted to avoid litigation and for peace of mind. No appeal against this quantum addition made on account of surrender was filed by the assessee. Subsequently, the Assessing Officer imposed penalty of Rs. 16,99,500/- u/s 271(1)(c) of the Act which was also confirmed by the Ld. Commissioner of Income Tax(A). The assessee has now approached the ITAT and has challenged the imposition of penalty.

3. When the case was called out for hearing, an application for adjournment was submitted on behalf of the Ld. AR. A perusal of the order sheet entries shows that the assessee’s appeal has been adjourned earlier on 29.06.2017, 3.7.2017 and 17.10.2017 on the request of the assessee and today again, the assessee has sought an adjournment. Thus, it is evident that the assessee is not interested in pursuing the appeal and is adopting dilatory tactics to avoid the hearing for the reasons best known to it. Therefore, looking into the facts, we reject the application for adjournment and proceed to hear the appeal ex parte qua the assessee.

4. The Ld. Sr. DR submitted that the assessee had failed to discharge the onus cast upon it to prove the genuineness of the money received by it. It was also submitted that the assessee had surrendered the amount during the course of reassessment proceedings and the same was not a voluntary surrender as the impugned transactions had come to the knowledge of the Income Tax Department on receipt of information from the Directorate of Investigation. It was submitted that no appeal had also been filed against the quantum addition and, therefore, the penalty had been rightly upheld by the Ld. Commissioner of Income Tax (A).

5. We have heard the Ld. Sr. DR and have also perused the material available on record. The facts of the case are undisputed. In this case, the assessment was reopened on the basis of information obtained through investigation by the Investigation Wing. During the course of re-assessment proceedings, the assessee could not furnish documentary evidences in support of the genuineness of its claim of having received the impugned money. It is also undisputed that the assessee’s name appeared in the list of beneficiaries of the alleged bogus accommodation entries provided by Shri Aseem Kumar Gupta. It is apparent that when the assessee could not establish the genuineness of the impugned transaction before the Assessing Officer that it decided to surrender an amount of Rs. 55 lakh. Thus, the factual matrix indicates that the assessee made the surrender when it had no explanation to offer. Thus, the assessee could not prove the bona fide of its claim. The Hon’ble Apex Court in the case of MAK Data (P) Ltd. vs CIT 352 ITR 1 (SC) has held that the Assessing Officer should not be carried away by the plea of the assessee like voluntary disclosure, buy peace, avoid litigation, amicable settlement etc. to explain its conduct. The Hon’ble Apex Court further held that the burden is on the assessee to rebut the presumption of concealment as contained in Explanation 1 to section 271(1)(c) of the Act by cogent and reliable evidence. In the facts of the present case, we are afraid that the assessee has failed to discharge the initial onus cast upon it by cogent or reliable evidence and has simply mentioned that the amount was being surrendered as a voluntary disclosure to buy peace and avoid litigation. We are of the considered opinion that the assessee, in the present case, cannot escape the rigours of penalty as it has failed to offer any explanation and has also failed to lead any cogent or reliable evidence. Therefore, respectfully following the ratio of the Hon’ble Apex Court as laid down in the case of MAK Data (P) Ltd. vs CIT (supra), we find no reason to interfere with the adjudication of the Ld. Commissioner of Income Tax (A) and we dismiss the grounds raised by the assessee.

6. In the final result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 30th January, 2018.

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Category : Income Tax (27621)
Type : Judiciary (11774)
Tags : ITAT Judgments (5372) section 271(1)(c) (374)

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