Heranba Industries Ltd, Mumbai vs Assessee

सर्वश्री आय.सी.शभमव, रेखम सदस्म एवुं श्री संजम गगव, न्ममयमक सदस्म BEFORE SHRI R.C.SHARMA, AM & SHRI SANJAY GARG, JM आमकय अऩीर सं./ITA No.2292/Mum/2013 ( नििाारण वषा / Assessment Year :2009-10) Heranba Industries Ltd., Vs. DCIT-9(2), Mumbai 101/102, Kanchanganga, Factory Lane, Near M K High School, Borivali (West), Mumbai-400 092 स्थममी रेखम सं ./ जीआइआय सं ./ PAN/GIR No. : AAACH 3787 Q (अऩीरमथी /Appellant) .. (प्रत्मथी / Respondent)

यनधमवरयती की ओर से /Assessee by : Shri Rashmikant C. Modi यमजस्र् की ओर से /Revenue by : Shri Jeetendra Kumar

सुनर्मई की तमयीख / Date of Hearing : 11/02/2015 घोषणम की तमयीख/Date of Pronouncement 08/04/2015

आदे श / O R D E R

PER R.C.SHARMA (A.M):

This is an appeal filed by the assessee against the order of CIT(A),

dated 18-1-2013, for the assessment year 2009-10 in the matter of

imposition of penalty u/s.271(1)(c) of the I.T.Act.

2. Rival contentions have been heard and record perused. Facts in

brief are that assessee is engaged in manufacturing of pesticides,

herbicides and formulations. During the year under consideration,

assessee filed its return at total income of Rs.1.49 crores. During the

course of scrutiny assessment proceedings, the AO found that the

assessee received share application money of Rs.89.50 lakhs during the 2 ITA No.2292/13

year under consideration. The assessee was asked to furnish the details

with supporting evidences. In response to the same, assessee vide letter

dated 01.11.2011 submitted the following :-

"During the course of hearing you had asked us to provide necessary evidence in respect of share application money of Rs.89,50,000/- received during the year. In this connection, we wish to submit that we are not in a position to provide necessary supporting. We therefore, in order to buy peace, offer the share application money received during the year of Rs.89,50,000/- as income of the assessee for assessment year 2009-10."

The AO being not satisfied by the above explanation, added Rs.89.50

lakhs in assessee's income u/s.69A and also levied penalty u/s.271(1)(c).

3. By the impugned order, the CIT(A) confirmed the action of the AO

imposing penalty against which assessee is in further appeal before us.

4. We have considered rival contentions, carefully gone through the

orders of the authorities below and also deliberated on the judicial

pronouncements referred by the lower authorities in their respective

orders as well as cited by ld. DR & AR during the course of hearing before

us. From the record we found that at the very first instance share

application money was surrendered by assessee with a request not to

initiate any penalty proceedings. The AO passed order u/s.143(3) adding

surrendered amount u/s.69A on the plea that assessee has surrendered

amount only after issue of notice. It is not disputed by the department that

sum which was added u/s.69A was one which was surrendered by the

assessee itself. Neither there was any detection nor there was any

information in the possession of the department except for the amount

surrendered by the assessee and in these circumstances it cannot be 3 ITA No.2292/13

said that there was any concealment. In case of CIT vs. Suresh Chandra

Mittal 251 ITR 9 (SC), Hon'ble Supreme Court observed that if the

assessee has offered the additional income to buy peace of mind and to

avoid litigation penalty u/s.271(1)(c) of the Act cannot be levied. In the

instant case, there was no malafide intention on the part of the assessee

and the AO had not brought any evidence on record to prove that there

was concealment of income. At the time of surrender itself contention of

not initiating any penalty proceedings was there. No additional matter was

discovered to prove that there was concealment of income. The AO has

included the amount of share capital in the total income of assessee

merely on the basis of assessee's declaration/surrender. The AO did not

point out or refer any evidence or material to show that the amount of

share capital received by the assessee was bogus. It is also not the case

of the revenue that material was found at the assessee's premises to

indicate that share application money received was an arranged affair to

accommodate assessee's unaccounted money. Thus there was no

detection by the AO that share capital was not genuine. The surrender of

share capital after issue of the notice u/s.143(2) could not lead to any

inference that it was not voluntary. Admittedly the assessee has offered

the amount of share capital for taxation voluntarily and it was not the case

of revenue that the same was done after its detection by the department.

It is quite clear from the record that this entire transaction was not

detection of the AO that the share capital was not genuine and that the

assessee had offered the amount without any specific query. Even 4 ITA No.2292/13

surrender of amount by the assessee after receipt of questionnaire could

not be lead to any inference that it was not voluntary, in the absence of

any material on record to suggest that it was bogus or untrue. The

contention that in every case where surrender is made inference of

concealment of income must be drawn under S.58 of Evidence Act,

cannot be accepted in view of the decision of Punjan & Haryana High

Court in the case of Careers Education & Infotech (P) Ltd., (2011) 336

ITR 257 (P&H). Not an iota of evidence was narrated to support the

addition made except the surrender made by the assessee itself. When

no concealment was ever detected by the AO, no penalty was impossible.

Recently, Hon'ble Punjab & Haryana High Court in the case of Siddharth

Enterprises vide order dt. 14th July, 2009 held after considering the

decision of Hon'ble Supreme Court in the case of Union of India & Ors.

vs. Dharamendra Textile Processors & Ors. (2008) 306 ITR (SC) 277 that

the judgment of Hon'ble Supreme Court in the case of Dharmendra

Textiles (supra) cannot be read as laying down that in every case where

particulars of income are inaccurate, penalty must follow. What has been

laid down is that qualitative difference between criminal liability under s.

276C and penalty under s. 271(1)(c) had to be kept in mind and approach

adopted to the trial of a criminal case need not be adopted while

considering the levy of penalty. Even so, concept of penalty has not

undergone change by virtue of the said judgment. It was categorically

observed that penalty should be imposed only when there is some

element of deliberate default and not a mere mistake. This being the 5 ITA No.2292/13

position, the furnishing of inaccurate particulars was simply a mistake and

not a deliberate attempt to evade tax. Hon'ble Supreme Court in the case

of CIT vs. Suresh Chandra Mittal 251 ITR 9 (SC) observed that where

assessee has surrendered the income after persistence queries by the

AO and where revised return has been regularized by the Revenue,

explanation of the assessee that he has declared additional income to buy

peach of mind and to come out of waxed litigation could be treated as

bona fide, accordingly levy of penalty under s. 271(1)(c) was held to be

not justified.

5. In view of the above, we do not find any merit for levy of penalty

u/s.271(1)(c) of the Act.

6. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on this 08/04/2015.

Sd/- Sd/- (संजम गगव) (आय.सी.शभमव) (SANJAY GARG) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai; ददनमंक Dated 08/04/2015 प्र.कु.मभ/pkm, यन.स/ PS

आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :

1. अऩीरमथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमुक्त(अऩीर) / The CIT(A), Mumbai.

4. आमकय आमक् ु त / CIT

5. वर्बमगीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai

6. गमर्व पमईर / Guard file.

आदे शािसार/ BY ORDER, सत्ममवऩत प्रयत //True Copy//

उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai