×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
18-06-2019, Sharma East India Hospitals, Section 271(1)(c), Tribunal Jaipur
These three appeals by the assessee are directed against three separate orders of the ld. CIT(A), Jaipur dated 14.08.2018 & 16.08.2018 arising from the penalty orders passed U/s 271(i)(c) and 271AAA of the IT Act for the assessment years 2010-11 to 2012-13 respectively. For the assessment year 2010-11 the assessee has raised following grounds:-
“1. On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in confirming penalty levied by ld.AO u/s 271(1)(c) read with explanation 5A at Rs. 1,30,000/-arbitrarily, thus the order so passed deserves to be quashed.
2. On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the penalty levied by ld.AO u/s 271(1)(c) the Income Tax Act, 1961 when the notice initiating the penalty was defective where the limb was specified on which penalty proceedings were initiated i.e. whether the assessee has concealed the income or furnished inaccurate particulars of his income, thus the penalty order so passed deserves to be hold bad in law and the consequence penalty levied u/s 271(1)(c) at Rs. 1,30,000/- deserves to be deleted.
3. On the facts and in the circumstances of the case the Ld. CIT(A) has further in imposing the penalty without appreciating the fact that the additions sustained by Hon'ble ITAT are on estimate basis by directing disallowance at rate of 15% out of the alleged unverifiable purchases which have been duly established by the assessee as verifiable and genuine by submitting complete evidences and there s nothing which has not been disclosed by the assessee or has not been reported and mere making of claim, which is not sustainable in the eyes of law, by itself will not amount to furnishing of inaccurate particular so as to hold the appellant guilty in terms of section 271(1)(c) of the Act. Hence the penalty so levied deserves to be deleted in toto.
4. That, the Ld. CIT(A) has further erred in confirming application of Explanation 5A to Section 271(1)(c) by completely ignoring that the conditions contemplated under explanation 5A are not fulfilled in as much as the addition sustained by the Hon'ble ITAT does not represent the income based on any entry in books of account/documents or transactions. Therefore, the penalty of Rs. 1,30,000/- deserves to be deleted.
5. On the facts and in the circumstances of the case and in law, ld.CIT(A) has erred in ignoring the observations made by Hon'ble High Court while hearing the appeal on quantum additions filed by department where it was observed that the additions were on estimate basis, thus the consequent penalty deserves to be deleted.
6. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal.”
2. The assessee is a public limited company and providing medical facilities by running a Hospital under the name and style as “Jaipur Hospital”. The assessee filed his return of income U/s 139(1) of the Act on 19.08.2010 declaring total income of Rs. 24,92,280/- subsequently, there was a search and seizure action U/s 132 of the Act on 08.06.2011 at the business premises of the assessee as well as at residence of its director. During the course of search and seizure action some loose papers and documents were found and seized from the possesstion of the directors and the statement of directors of the assessee company and their family members were recorded. During the statement recorded U/s 132(4) of the bogus purchase of cotton and gauge patties (bandage) from one M/s Shri Krishna Surgicals were admitted to the tune of Rs. 27,28,014/- for the assessment year 2010-11, Rs. 30,13,175/- for the assessment year 2011-12 and Rs. 5,56,210/ for the assessment year 2012-13. However, in response to notice U/s 153A of the Act the assessee has not declared income on account of the bogus
purchase and declared the same income as declared in the return of income filed U/s 139(1) of the Act. The AO in the assessment frame U/s 143(3) r.w.s. 153A for the assessment year 2010-11 made the addition of Rs. 27,28,014/- on account of bogus purchase. The matter was carried to this Tribunal and this Tribunal vide order dated 05.06.2015 has restricted the addition to 15% of the alleged bogus purchases. On further appeal before the Hon’ble Jurisdictional High Court the order of the Tribunal was confirmed. The AO has initiated the proceeding U/s 271(1)(c) of the act and levied of the penalty against the addition sustained by the Tribunal. The assessee challenged the order of the penalty before the ld. CIT(A) but could not succeed.
3. Before us, the ld. AR of the assessee has submitted that the AO has invoked the explanation 5A by holding that the assessee deemed to have concealed the income to the extent of the bogus purchases shown in the books of accounts. However, the Assessing Officer has completely ignoring the fact that the conditions contemplated under explanation 5A are not fulfilled as much as addition sustained by the