COMMISSIONER OF INCOME TAX Vs. PARKASH INDUSTRIES LTD.

JUDGEMENT

(1.) THIS appeal has been preferred by the Revenue under s. 260A of the IT Act, 1961 (in short, "the Act") against the order 1993 -94, proposing to raise the following substantial question of law : "Whether on the facts and in the circumstances of the case, the learned Tribunal was right in law in cancelling the penalty of Rs. 76,97,423 levied under s. 271(1)(c) of the IT Act, 1961 in respect of addition of Rs. 1,48,74,249 representing peak amount of credit shown as receipts from one M/s Sahib Engineering Works which is a non -existent entity particularly when the Revenue is in appeal to the Hon'ble High Court against the deletion of addition of Rs. 1,48,74,249 on quantum -

(2.) DURING the assessment, the AO referred to the material found during search that the assessee received amount of Rs.

(3.) 5 crores from the bank account of M/s Sahib Engineering Works, Faridabad. It was observed that the said firm was a bogus firm and the claim of the assessee that the amount was received towards consideration for sale of material, was not accepted. Inference was drawn that the assessee siphoned off its unaccounted money by making M/s Sahib Engineering Works a conduit pipe through which unaccounted money travelled and reached back to the assessee. Thus, addition was made to the declared income. Further additions were made by holding that lease rent shown to have been paid by the assessee had not been in fact paid and the claim for depreciation could not be allowed as machinery was not in possession of the assessee during physical verification. The CIT(A) upheld the addition in respect of receipts shown to have been made from M/s Sahib Engineering Works but deleted the addition towards lease rent and depreciation allowance, taking into account additional evidence led by the assessee. 3. On further appeal, the Tribunal upheld the plea of the assessee in respect of amount received from M/s Sahib Engineering Works but dismissed the appeal of the Revenue in respect of deletions in respect of lease, rent and depreciation allowance.