Conduct Of The Assessee Not At All Bonafide: ITAT Upholds Penalty Levied On ‘Young Indian’ [Read Order]

‘There was a deliberate defiance on the part of the assessee for non-submission of the same under the pretext that some of the details are available in the records of the Income Tax Department or some of the details are available in the Website of the Ministry of Corporate Affairs.’

The Income Tax Appellate Tribunal on Thursday upheld penalty imposed on Young Indian Pvt. Ltd., observing that its conduct is not at all bonafide.

The Delhi Bench of ITAT comprising RK Panda and Suchitra Kamble dismissed the appeals filed by the company, Young Indian Pvt. Ltd., in which Congress president Rahul Gandhi and his mother Sonia Gandhi are major stakeholders.

A penalty of Rs 10,000 for each default was levied from the company under the provisions of Section 272A (1) (c) of the Income Tax Act on the ground that it deliberately and without any valid reasons failed to furnish the details sought.

Details Sought By IT Dept

Following were the details sought by the Income Tax Department:

• The details of persons who at any time during the financial year 2010-11 was a founder member, ordinary member, patron member, member of the managing committee, director or manager or M/s Young Indian;


• Complete details of the subsequent transfer of shares of M/s Young Indian made by the two founder members who were holding 550 shares each (certificates bearing numbers 1 and 2) allotted to them at the time of incorporation, which as per the statutory filings made by the company to the MCA was effected on 22.01.2011. Please explain with documentary evidences, the entire procedure involved in the transfer of such shares, the method of arriving at the fair price of such shares by M/s Young Indian in accordance with the terms of clause 4.11 of the Articles of Association of M/s Young Indian and the fair price so determined or determinable. Also provide the details of payments received by M/s Young Indian from the incoming members and details of disbursal of a fair price, received from the incoming members, if any, and made to the outgoing share holders/founder Also, provide the details of payment received from the founder members for the share allotted to them by M/s Young Indians;


• Complete details of fresh allotment of 3,900 equity shares made on 22.1.2011 as per the statutory filings made before MCA, the relationship of each new shareholder with M/s Young Indian clearly specifying the nature of such relationship, the share issue price, the method of determining the issue price, copies of share applications the details of payments made along with the share applications and 19 ITA No.5303/Del/2016 payments, if any, made thereafter. Also, provide the complete details of credit to the bank account of M/s Young Indians of such share capital received from the new share applicants and shareholders; and


• Fair value of the new shares as on the date of issue. In this regard, also provide the complete details of the assets of M/s Young Indian as on 22.01.2011. These details may also be provided in respect of the subsidiary of M/s Young Indian.

Justification By Young Indian

Before the tribunal, it was contended on behalf of the company that the details called for by the ADIT were already filed/available with the Tax Department and accordingly, there was no basis to suspect that any income has been concealed or is likely to be concealed. It was also contended that there is correlation between the date on which the ADIT called for the details from time to time from the assessee and the dates on which the hearings were fixed in trial courts/high courts in the on-going litigation where the political rivals of the assessee’s shareholders have filed criminal proceedings against them.

Deliberate Defiance By Young Indian

The tribunal observed that there was a deliberate defiance on the part of the assessee for non-submission of the same under the pretext that some of the details are available in the records of the Income Tax Department or some of the details are available in the Website of the Ministry of Corporate Affairs.

“In our opinion, no prejudice would have been caused to the assessee by submitting the details as called for by the ADIT (Investigation), as per the summons u/s 131(1A) if those details are already available in the records of the I.T. Department or in the website of the Ministry of Corporate Affairs. The conduct of the assessee in the instant case, in our opinion, is not at all bona-fide. We, therefore, do not find any merit in the argument of the ld. counsel for the assessee on this issue,” the tribunal said.

Earlier this year, the Delhi High Court had directed the company to deposit Rs 10 crore out of the total of Rs 249.15 crore income tax demand from it.