When the reassessment proceedings were initiated the assessee admitted to have introduced bogus loan and shown the additional income in response to the notice under section 148 and the concealment of income, thus, there was no error and/or illegality has been committed by the ITAT in restoring the order passed by the AO levying the penalty under section 271(1)(c) of the IT Act.

GUJARAT HIGH COURT

No.- Tax Appeal No. 180 of 2013

BHARATKUMAR G RAJANI.............................................................. Appellant
Vs.
D.C.I.T.................................................................................................. Respondents

MR. M.R. SHAH AND MS SONIA GOKANI, JJ. .

Date :July 15, 2013

Appearances

Advocate For The Appellant, Mr RK Patel

Section 147 & 271(1)(c ) of the Income tax Act, 1961 — Reassessment — When the reassessment proceedings were initiated the assessee admitted to have introduced bogus loan and shown the additional income in response to the notice under section 148 and the concealment of income, thus, there was no error and/or illegality has been committed by the ITAT in restoring the order passed by the AO levying the penalty under section 271(1)(c) of the IT Act.
FACTS: Assessee, a trader in tea on wholesale and retail basis filed his return of income on 12.10.2001 declaring the total income at 7,14,050/-. That the said return was finalized and assessment order was passed under section 143(3) of the IT Act assessing the total income at 10,14,850/-. It appears that after the original assessment was completed, the department carried out searches and post-search inquiries in the case of one Saha Group. That during the inquiries it was revealed that the assessee had additionally taken a loan of 5 lakh from Shri Babulal D. Visrolia and a further loan of 5 lakh from Shri Vinod L. Patodia. During the course of inquiry held by the department the assessee surrendered the aforesaid loans aggregating to 10 lakh as bogus loans. Based upon the information received by the AO from the Investigation Wing of the Income Tax Department, notice under section 147/148 was issued pursuant to which the assessee filed a return of income in which he surrendered the said loan of 10 lakh apart from withdrawing the claim of interest on the said loan. Assessment was completed under section 143(3)/148 on 07.02.2006 accepting the income as returned by the assessee in response to notice issued by the AO under section 148 of the IT Act. While completing reassessment proceedings, the AO also initiated proceedings for levy of penalty. After hearing the assessee, the AO imposed the penalty of 5 lakh being minimum leviable. Feeling aggrieved and dissatisfied with the order passed by the AO levying the penalty of 5 lakh, the assessee preferred appeal before the CIT(A) and the CIT(A) allowed the said appeal and passed an order deleting the penalty of 5 lakh levied by the AO under section 271(1)(c) of the IT Act. Feeling aggrieved and dissatisfied with the order passed by the CIT(A) in deleting the penalty levied by the AO under section 271(1)(c) of the IT Act, the Revenue preferred appeal before the ITAT and by impugned judgment and order the ITAT has allowed the said appeal and has quashed and set aside the order passed by the CIT(A) and has restored the order passed by the AO levying penalty under section 271(1)(c) of the IT Act. Being aggrieved, assessee went on appeal before High Court.
HELD, that it was required to be noted that in the original return the assessee had shown the return income of 7,14,500/- only. After the Investigation Wing detected the money laundering racket at Mumbai, wherein the assessee was also found to have been involved, only thereafter the assessee filed revised return of income declaring bogus loan of 10 lakh and interest thereon as additional income Thus, it was established that the assessee has considered income of 10,88,972/-. It was also required to be noted at this stage that even after the original assessment was completed and during the course of investigation by communication dated 23.11.2004 the assessee wrote a letter to the Deputy Director of Investigation, Mumbai offering additional income of 5 lakh shown as loan from Babulal D. Visrolia and Vinod L. Patodia. However, even at that time also, he offered the additional income of 5 lakh and thereafter, when the reassessment proceedings were initiated the assessee admitted to have introduced bogus loan of 5 lakh from Babulal D. Visrolia and 5 lakh from Vinod L. Patodia [in all 10 lacs] and shown the additional income of 10 lakh and amount of 88,972/-thereon in response to the notice under section 148 of the IT Act. Considering the facts and circumstances, the concealment of income of 10,88,972/- came to be established and consequently when in a penalty proceedings under section 271(1)(c) of the IT Act, the minimum penalty of 5 lakh has been levied by the AO, which has been confirmed by the ITAT, we see no reason to interfere with the impugned judgment and order passed by the ITAT. No error and/or illegality has been committed by the ITAT in restoring the order passed by the AO levying the penalty under section 271(1)(c) of the IT Act. Hence, present appeal deserves to be dismissed. No question of law much less substantial question of law arises in the present appeal.

ORDER

M.R. Shah, J. -

1. Present appeal has been preferred by the appellant-assessee challenging the impugned judgment and order dated 01.06.2012 passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred to as "ITAT") in ITA No.123/Rjt/2011 with respect to the assessment year 2001-02 by which the ITAT has allowed the said appeal preferred by the Revenue by quashing and setting the order dated 28.01.2011 passed by the CIT(A) and consequently confirming/restoring the order passed by the Assessing Officer of penalty of Rs. 5 lakh levied under section 271(1) (c) of the Income Tax Act, 1961 (hereinafter referred to as "IT Act").

2. That the assessee a trader in tea on wholesale and retail basis filed his return of income on 12.10.2001 declaring the total income at Rs. 7,14,050/-. That the said return was finalized and assessment order was passed under section 143(3) of the IT Act assessing the total income at Rs. 10,14,850/-. It appears that after the original assessment was completed, the department carried out searches and post-search inquiries in the case of one Saha Group. That during the inquiries it was revealed that the assessee had additionally taken a loan of Rs. 5 lakh from Shri Babulal D. Visrolia and a further loan of Rs. 5 lakh from Shri Vinod L. Patodia. During the course of inquiry held by the department the assessee surrendered the aforesaid loans aggregating to Rs. 10 lakh as bogus loans. Based upon the information received by the AO from the Investigation Wing of the Income Tax Department, notice under section 147/148 was issued pursuant to which the assessee filed a return of income in which he surrendered the said loan of Rs. 10 lakh apart from withdrawing the claim of interest on the said loan. Assessment was completed under section 143(3)/148 on 07.02.2006 accepting the income as returned by the assessee in response to notice issued by the AO under section 148 of the IT Act. While completing reassessment proceedings, the AO also initiated proceedings for levy of penalty. After hearing the assessee, the AO imposed the penalty of ' 5 lakh being minimum leviable.

Feeling aggrieved and dissatisfied with the order passed by the AO levying the penalty of Rs. 5 lakh, the assessee preferred appeal before the CIT(A) and the CIT(A) by order dated 28.01.2011 allowed the said appeal and passed an order deleting the penalty of ' 5 lakh levied by the AO under section 271(1)(c) of the IT Act.

Feeling aggrieved and dissatisfied with the order passed by the CIT(A) dated 28.01.2011 in deleting the penalty levied by the AO under section 271(1)(c) of the IT Act, the Revenue preferred appeal before the ITAT and by impugned judgment and order the ITAT has allowed the said appeal and has quashed and set aside the order passed by the CIT(A) and has restored the order passed by the AO levying penalty under section 271(1)(c) of the IT Act.

Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the assessee has preferred the present Tax Appeal.

3. We have heard Shri R.K. Patel, learned counsel appearing on behalf of the assessee at length.

At the outset it is required to be noted that in the original return the assessee had shown the return income of Rs. 7,14,500/-only. After the Investigation Wing detected the money laundering racket at Mumbai, wherein the assessee was also found to have been involved, only thereafter the assessee filed revised return of income declaring bogus loan of ' 10 lakh and interest thereon as additional income Thus, it was established that the assessee has considered income of Rs. 10,88,972/-. It is also required to be noted at this stage that even after the original assessment was completed and during the course of investigation by communication dated 23.11.2004 the assessee wrote a letter to the Deputy Director of Investigation, Mumbai offering additional income of Rs. 5 lakh shown as loan from Babulal D. Visrolia and Vinod L. Patodia. However, even at that time also, he offered the additional income of Rs. 5 lakh and thereafter, when the reassessment proceedings were initiated the assessee admitted to have introduced bogus loan of ' 5 lakh from Babulal D. Visrolia and Rs. 5 lakh from Vinod L. Patodia [in all ' 10 lacs] and shown the additional income of Rs. 10 lakh and amount of Rs. 88,972/-thereon in response to the notice under section 148 of the IT Act. Considering the facts and circumstances, the concealment of income of Rs. 10,88,972/- came to be established and consequently when in a penalty proceedings under section 271(1)(c) of the IT Act, the minimum penalty of ' 5 lakh has been levied by the AO, which has been confirmed by the ITAT, we see no reason to interfere with the impugned judgment and order passed by the ITAT. No error and/or illegality has been committed by the ITAT in restoring the order passed by the AO levying the penalty under section 271(1)(c) of the IT Act. Hence, present appeal deserves to be dismissed. No question of law much less substantial question of law arises in the present appeal.

4. In view of the above, present tax appeal deserves to be dismissed and is, accordingly, dismissed.

In favour of revenue.