Robbs Traders & Finance Pvt. Ltd. Vs Assessing Officer (ITAT Kolkata)
ITAT Kolkata held that as assessee has provided the explanation with documentary evidence and such documents have not been held as false either by AO during assessment proceedings or during penalty proceedings. Hence, penalty u/s. 271(1)(c) not leviable.
Facts- The assessee-company has filed its return of income electronically on declaring total income of Rs.1,06,120/-. AO thereafter received information from DDIT (Investigation) exhibiting the fact that certain entry providers and hawala operators involved in providing entries of bogus LTCG, STCL and bogus business loss. AO thereafter issued notice u/s. 148 of the Income Tax Act. In response to this show-cause notice, the assessee filed its return of income and a notice u/s. 143(2) was issued and served upon the assessee. Accordingly, AO disallowed the claim of loss amounting to Rs.5,24,170/-. AO initiated penalty proceeding for furnishing inaccurate particulars.
AO imposed a penalty of Rs.1,94,760/- for furnishing inaccurate particulars of income. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- A perusal of the assessment order would reveal that ld. Assessing Officer has nowhere demonstrated as to how the loss claimed by the assessee is bogus. He only issued a show-cause notice and the Assessee withdrew its claim just in order to avoid litigation with Department. But when the Department intended to impose a penalty upon the assessee under section 271(1)(c), the assessee has contested the issue in the penalty proceeding. The ld. Assessing Officer instead of entertaining the arguments on merit summarily rejected it on the ground that all these issues must have been raised during the assessment proceedings and must have been rejected. He observed that this penalty proceeding cannot take the character of assessment and cannot sit in judgment. It is pertinent to observe that the addition is only on the admission of the assessee that it withdrew its claim. Nowhere, it has been demonstrated that the claim of the assessee was false or bogus.
Explanation 1 to section 271(1)(c) provides that, if the assessee fails to offer an explanation or offers an explanation which is found by the ld. Assessing Officer to be false, but now in the present case, the assessee has an explanation and it has buttressed this explanation with the documentary evidence. These documents have not been held as false either by the ld. Assessing Officer during the assessment proceeding or during penalty proceeding. Therefore, the assessee does not deserve to be visited with penalty.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 12th December, 2022 passed for A.Y. 2012-13.
2. The assessee has taken four grounds of appeal, but its solitary grievance is that ld. CIT(Appeals) has erred in upholding the levy of penalty amounting to 1,94,760/- by the ld. Assessing Officer under section 271(1)(c) of the Income Tax Act.
3. Brief facts of the case are that the assessee-company has filed its return of income electronically on 08.2012 declaring total income of Rs. 1,06,120/-. The ld. Assessing Officer thereafter received information from DDIT (Investigation), Unit-7(3), Mumbai exhibiting the fact that certain entry providers and hawala operators involved in providing entries of bogus LTCG, STCL and bogus business loss. The ld. Assessing Officer thereafter issued notice under section 148 of the Income Tax Act. In response to this show-cause notice, the assessee filed its return of income and a notice under section 143(2) was issued and served upon the assessee. It is a very brief assessment order running into only one & half page and the whole finding is based on the admission of the assessee, which reads as under:-
“Further to our submission in respect of loss on sale of shares of Scan Steel Ltd this is to inform you that to buy peace and avoid litigation we are admitting the loss and we want to increase the total income disclosed in the original return at Rs. 1,06,120/- resulting in total income at Rs.6,30,290/- by withdrawing the claim of loss in trading of shares of Scan Steel Ltd. of Rs.5,24, 170/-.
The contentions of the assessee-company as well as the return of income were examined with respect to the details and records available in this case and accordingly the claim of loss in trading of shares of Scan Steel Ltd. amounting to Rs.5,24,170 is disallowed.
Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 is initiated separately on this issue, for furnishing inaccurate particulars of income in its return of income.
Disallowance of loss : Rs.5,24,170/-
In the light of above discussions, and also considering the materials available on records in this case, the total income of the assessee is as under:-
Computation of total income
