Sabara Impex Ltd Vs ITO (ITAT Mumbai)
ITAT Mumbai held that penalty under section 271(1)(c) of the Income Tax Act is leviable as incomes were not offered to taxation with a dishonest intention to conceal the income and evade tax.
Facts- A survey was conducted by DDIT in the case of M/s Geekay Exim India Ltd. During the course of the survey, it was found that various concerns of the group were engaged in fictitious trading of pharmaceutical goods without actual delivery. A statement u/s 131 was recorded of Shri Rais Ahmed, director of M/s Geekay Exim India Ltd. Shri Rais Ahmed is also a director in the assessee company.
Notably, all the goods purchased by the assessee were sold to one single party M/s Ebers Pharmaceuticals Ltd. These purchases and sales were not supported by any delivery challans or proof of transportation. No payments had been made for these purchases and no confirmation was submitted for sundry creditors in respect of the above-mentioned parties.
Based on above mentioned facts the assessment was reopened u/s 148 of the IT ACT and a notice u/s 148 was issued on 21-03-2001. In response to this notice assessee replied vide letter dated 26-03-2001 that the original return filed on 01-12-1997 be treated as return of income filed in compliance to notice u/s 148. The assessment order was passed u/s 143(3) r.w.s. 147 on 26-03-2002 assessing the total income at Rs 2,43,22,330/-.
Conclusion- Held that the provisions of section 271(1)(c) is clearly attracted in the assessee’s case While filing the return of income, the assessee failed to offer the said incomes for taxation with a dishonest intention to conceal its income and thus evaded tax. Also during the course of penalty proceedings the assessee has failed to offer any plausible explanation in this regard thus the assessee has failed to make full and true disclosure of the facts while computing its income and filed return of income with inaccurate particulars and thereby concealing its taxable income.
In the light of the facts and the circumstances of the case and the position of law emerging from various courts of law, it is held that the assessee has failed to make out a case for avoiding levy of penalty in its case as the primary onus in the case in terms of Explanations to section 271(1) (c) of the IT Act has not been discharged by assessee. Accordingly, we are satisfied that this is a fit case for imposition of penalty.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These two appeals by the assessee are directed against the orders of Commissioner of Income Tax(Appeals)-6, Mumbai dated 31.01.2013 & 30.10.2015 under section 143(3) r.w.s. 254 &271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 1996-97. In ITA No. 3267/Mum/2013, the assessee has raised the following grounds of appeal:
“01. The orders passed by the learned lower authorities are bad in law and bad in facts
02. The assessment order passed by recourse to section 147 of the IT Act, 1961, is ab initio void, inasmuch as said notice was not served on the appellant in accordance with the provisions of law and also the provision of section 147 of the IT Act, 1961 were not applicable in appellant’s case.
03. The assessment order passed is ab initio void, inasmuch as, no speaking order was passed before completion of the impugned assessment on the objections raised against issue of notice u/s 148 of the IT Act, 1961. The action of the learned Assessing Officer is contrary to the dictates of the Hon’ble Supreme Court.
04. The learned Assessing Officer has grossly erred in making an addition of Rs 2,40,75,750/- by recourse to section 68 of the IT Act 1961, and holding it to be the income from other sources. Reasons assigned for the impugned addition are wrong and contrary to the provisions of law
05. The learned lower authorities have grossly erred in restricting deduction u/s 80HHC of the IT Act 1961, at Rs 33,41,195/-only, as against the correct amount of deduction allowable at Rs 1,06,98,507/- The shortallowable of deduction is wrong and contrary to the provisions of law read with judicial proposition:
06. The appellant may please be permitted to raise any additional or alternative ground on or before thehearing of appeal.”
2. Brief facts of the case are that the assessee filed its return of income on 0112-1997 declaring total income at Rs 22,40,430/-. A survey was conducted by DDIT (Inv), Mumbai on 22-04-1999 in the case of M/s Geekay Exim India Ltd. During the course of survey, it was found that various concerns of group were engaged in fictitious trading of pharmaceutical goods without actual delivery. A statement u/s 131 was recorded of Shri Rais Ahmed, director pf M/s Geekay Exim India Ltd. Shri Rais Ahmed is also director in assessee company.
3. During the year under consideration assessee made purchases from following parties:
