S.K. Traders V. Commissioner of Income-Tax, Patiala

ITA/982/2008

AI Insights

The case involves M/s S.K. Traders, the appellant, who appealed against the penalty levied by the Commissioner of Income-Tax, Patiala, the respondent. The core issue was the justification of the penalty under section 271(1)(C) of the Income Tax Act, which pertains to the concealment of income or furnishing of inaccurate particulars of income. The Tribunal had earlier upheld the penalty, noting that the assessee had admitted to underbilling and surrendered a sum of Rs.7,50,000, but later recorded a loss on sales which was seen as an attempt to nullify the surrendered income. The High Court, after reviewing the Tribunal's findings, dismissed the appeal, agreeing that the particulars of the loss claimed were false and thus a penalty was rightly imposed.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 796478 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 13-12-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: TEJINDER JOSHI
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Estimation of income; Penalty; Surrender of income; Non-bonafides; False particulars
• Section: 271(1)(c)

Judgement Text

"Income-tax Appeal No.982 of 2008 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.982 of 2008 Date of decision: 13.12.2010 M/s S.K.Traders ...Appellant Versus Commissioner of Income-Tax, Patiala ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Pankaj Jain, Advocate for the appellant. Mr. Tejinder K. Joshi, Advocate for the respondent. **** ADARSH KUMAR GOEL, J ( Oral) . This appeal has been filed by the assessee against levy of penalty claiming following substantial question of law:- “Whether on the true and correct interpretation of the provisions of section 271(1)(C) the levy of penalty is justified on estimation of income that too in absence of any third party conclusive material being the basis of levy?” Facts have been noticed in connected appeal of the assessee in the matter of quantum disposed of a separate order of date. The finding recorded by the Tribunal while upholding the Income-tax Appeal No.982 of 2008 -2- **** penalty is as under:- “We are conscious that the assessee himself admitted of under billing and surrendered a sum of Rs.7,50,000/- on this account. So, however, in relation to such surrender, no penalty has been levied. The inference of the assessing officer is that the assessee recorded a loss on sales made in order to nullify the income surrendered. Indeed there is a loss incurred by the assessee if we are to remove the credit on account of the income surrendered of Rs.7,50,000/-. The assessing officer has elaborately brought out the manner in which the loss has been incurred for which the assessee has not offered any explanation. So, however, in our view the addition having become final, presently we are only to evaluate the bonafides of such claim of the assessee. In our view the surrender or Rs.7,50,000/- was made by the assessee before the ADIT on 24.3.95 as noted by the assessing officer in the assessment order itself. Therefore, it can be reasonable to deduce that it is only post 24.3.95 that the asessee would have incurred the loss with a view to nullify the income surrendered. The loss prior to such surrender has also been disallowed. So, however, the same cannot be said to be Income-tax Appeal No.982 of 2008 -3- **** lacking in bonafides. It is only the non-furnishing of explanation in relation to the loss incurred post surrender on 24.3.95 which is non-bonafide. The loss, as worked out by the assessing officer post 24.3.95 amounts to Rs.4,04,983/- in our considered opinion, to the above extent the assessee can be said to have not discharged the onus cast on it in terms of section 271(1)(C) of the Act.” We have heard learned counsel for the parties. In view of the clear finding recorded by the Tribunal that particulars of loss for the period after the date of surrender furnished by the assessee were not genuine and were false, case of penalty was clearly made out. The assessee having given deliberately false particulars, there is no error in the view taken by the Tribunal. The question has thus to be answered against the assessee. Accordingly, the appeal is dismissed. (Adarsh Kumar Goel) Judge December 13,2010 (Ajay Kumar Mittal) Pka Judge "