ITAT upheld addition and penalty when creditors could not be found
ITAT upheld addition and penalty when creditors could not be found
Assessee declared total income of Rs.6,49,080 which was processed u/s 143(1) (of Income Tax Act, 1961). During search it was detected that assessee had received share application money of Rs.6 lacs from three parties, who could not be found. AO made an addition of Rs.6 lacs, and imposed penalty of Rs.2,19,555 being 100% of tax sought to be evaded. CIT(A) and ITAT upheld AO's order.
1 The assessee filed its return of income declaring total income of Rs.6,49,080/- which was processed u/s 143(1) (of Income Tax Act, 1961). Subsequently, during the course of search and survey proceeding carried out by the department it was noticed that various parties were involved in bogus entries transaction by taking cash and giving entries through cheques in the various forms like loan, share application money and sale or purchase of shares. It was found that share application money of Rs.6 lacs was received by the assessee from M/s. Shashi Jewellers, Shri Deepak Gupta and M/s. Milansar Impex & Traders Private Limited. In the assessment proceedings the AO issued summons to three parties from whom the assessee received the money and the summons were received back undelivered with postal remarks that "no such person at given address". The AO proposed to add Rs.6 lac to the income of the assessee comprising Rs.2 lac each from these three parties. The assessee has surrendered this amount of Rs.6 lac to taxing. Accordingly, the AO made an addition of the said amount of Rs.6 lac in the hands of the assessee being assessee's own money. Subsequently, the AO initiated penalty proceeding u/s 271(1)(c) (of Income Tax Act, 1961) and levy a penalty of Rs.2,19,555/- being 100% of tax sought to be evaded.
2 CIT(A) upheld the AO's order.
3 On appeal, the ITAT held as under:
“There is no doubt that the AO has initiated the penalty proceeding by making the addition on the basis of information of receiving the accommodation entries by the of the assessee which was detected during the search and survey proceedings. Though there was confusion about the names of the parties from whom the assessee has received the amount however ultimately the assessee admitted to have received these amounts from three parties and decided to surrender this amount for taxation. Hence, the assessee has surrendered this amount to tax which is not voluntary act on the part of the assessee, but because of the proceeding initiated by the AO, after this fact of accommodation entries was detected in the search and survey proceedings. Therefore, the surrender of the amount by the assessee pre-empts the further investigation during the assessment proceedings. Even otherwise when the assessee has admitted this amount as income then no further investigation was required on the part of the AO to prove that this amount was received on account of accommodation entries received by the assessee. The Hon'ble Supreme Court in the case of Mak Data Vs. CIT (supra)....
4. Respectfully following the judgment of the Hon'ble Supreme Court the penalty levy u/s 271(1)(c) (of Income Tax Act, 1961) is confirmed. The orders of the authorities below are upheld.
5. In the result the appeal is dismissed.”
Case Reference-Alpna Packaging Pvt. Ltd v ITO
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC-I": NEW DELHI
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER
ITA No. 1415/Del/2015
(Assessment Year: 2005-06)
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