Madhya Pradesh High Court
Steel Ingots Ltd. vs Commissioner Of Income-Tax And Ors. on 28 March, 2006
Equivalent citations: [2008]296ITR228(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
JUDGMENT A.M. Sapre, J.
1. This is an appeal filed by the assessee under Section 260A of the Income-tax Act, 1961, against an order dated May 24, 2002, passed by the Income-tax Appellate Tribunal, Indore Bench, Indore, in I.T.A. No. 42/Ind/96 and 192/Ind/96. The appeal was admitted for final hearing of the following substantial questions of law:
(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961, particularly when the legality of application of Section 68 for making addition in question itself was doubtful?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Explanation to Section 271(1)(c) were attracted even in absence of proper finding on the conditions of Explanation (B) to Section 271(1)(c) of the Income-tax Act?
2. Heard Shri P.M. Choudhary, learned Counsel for the appellant and Shri R.L. Jain, learned senior Counsel with Ku. V. Mandlik for the respondent.
3. The dispute in this appeal relates to the assessment year 1991-92. It is in relation to imposition of penalty imposed on the assessee by the Assessing Officer and later upheld by the Tribunal under Section 271(1)(c) of the Act but by granting partial relief of reducing the penalty amount from Rs. 12,49,850 to Rs. 10,41,543. It is this imposition of penalty which is sought to be impugned by the assessee in this appeal contending, inter alia, and in substance that it is bad in law and hence could not have been imposed. So the question that really arises for consideration in this appeal is whether any case for imposition of penalty under Section 271(1)(c) is made out?
4. At the outset we may consider it proper to quote as to how the Tribunal dealt with this issue while upholding the impugned penalty on the assessee under Section 271(1)(c) ibid.
We have carefully considered the arguments advanced by the parties in view of the materials available on record and have also gone through the orders impugned as well as judgments cited by learned authorised representative and relied on by the lower authorities. The orders impugned are comprehensive and reasoned ones. As it appears from the record that the assessee was not able to establish the identity of the kabaddies and therefore, the Assessing Officer had held that the appellant was not able to substantiate the explanation given by it for credits appearing in the name of kabaddies and consequently levy of penalty by virtue of Explanation to Section 271(1)(c) of the Act was levied and upheld by the learned Commissioner of Income-tax (Appeals). The assessing authority has rightly observed that under the present law the onus lies on the assessee and not on the Department to prove that certain amounts credited in its books were genuine and not bogus and also that the assessee was not only to give necessary explanation but to substantiate the same. The lower authorities have relied on the decisions in the cases of B-tex Corporation v. ITO [1993] 202 ITR (AT) 17 (Bom), Polycon Spun Pipes v. ACIT 53 ITD 546 (Chandigarh) and CIT v. Shama Magazine . We thus do not find any infirmity in the orders levying aforesaid disputed penalties against the assessee by the lower authorities.
5. The question therefore that arises for consideration is whether any case is made out for upsetting the aforementioned finding recorded by the Tribunal?
6. Having heard learned Counsel for the parties and having perused the record of the case, we are of the view that appeal has no merit and hence it is liable to be dismissed.
7. In our considered opinion it is a clear case where the assessee failed to prove certain heavy transactions which they claimed to have entered into with some kabaddies for purchase of scrap "raw material" for manufacturing of steel items in their factory. If the assessee despite affording them an opportunity to prove the transactions relied on by them for claiming benefits failed to substantiate, then a case for imposition of penalty is made out. In other words in such circumstances it becomes a case of concealment of true income chargeable to tax. When a bogus claim is made to evade tax and the same is proved to be bogus then in these circumstances, a case for imposition of penalty is made out. It is for the reason that it exhibits animus on the part of the assessee in concealing the true income and further exhibits an attempt on the part of the assessee to set up a bogus claim to avoid payment of legitimate tax which is otherwise due and payable on their true income for the year in question.
8. Accordingly, and in view of the aforesaid discussion reliance placed on CIT v. Kerala Spinners Ltd. , CIT v. Rajendran (G.R.) , CIT v. Suresh Chandra Mittal and CIT v. Issac John and Co. by learned Counsel for the assessee is of no consequence and hence distinguishable. We are also unable to accept the submission of learned Counsel for the assessee when he contended that in the absence of any finding on the latter part of Explanation (1) to Section 271(1)(c), the case has to be either remanded or the impugned penalty be set aside. In the light of what we have held in paragraph 7 this submission has no merit whatsoever. The argument advanced had no basis so as to upset the impugned finding.
9. As a result of the foregoing discussion we do to find any merit in this appeal which fails and is hereby dismissed. No costs.