DEEPAK KUMAR RAJORIA,AHMEDABAD vs. ITO, WARD-1(2), BIKANER

(Virtual hearing) Assessee By Shri Virendra r Jain-C.A. Revenue By Shri S.M. Joshi, JCIT-DR Date of hearing 05/07/2023 11/08/2023 Date of Pronouncement O R D E R PER: Dr. S. Seethalakshmi, JM The assessee has filed an appeal against the order of the National Faceless Appeal Centre, Delhi [herein after “NFAC/Ld.CIT(A)”] dated 28.11.2022 for the assessment year 2017-18.

2. The assessee has raised the following grounds of appeal:- “1.On the fact and circumstances of the case worthy CIT(A) has erred in confirming the penalty order imposed by the AO as it was not a fit case for levying penalty u/s 270A on account of misreporting of income hence the penalty imposed u/s 270A may please be quashed.

Deepak Kumar Rajoria vs. ITO 2. On the fact and circumstances of the case worthy CIT(A) has erred in confirming the un-fare action of the AO in imposing 200 percent penalty on account of misreporting income because there was nothing in this case which attract penalty u/s 270A. That the appellant had already surrendered that wrong deduction claimed earlier before assessing authority Tax was paid and adjust from TDS the appellant was aware of the fact that there is any form by filing which the penalty may be dropped so the penalty was never leviable in this case therefore the penalty u/s 270A may please be cancelled.

3. The appellant prays for justice and relief.

Deepak Kumar Rajoria vs. ITO 4. Aggrieved, from the said order of levying the penalty the assessee has filed an appeal before the ld. CIT(A). The ld. CIT(A) after hearing the contention of the assessee dismissed the appeal of the assessee by giving following findings on the issue:- “4. Decision:- I have considered the contentions made by appellant. I have also considered the observations of the Assessing Officer while deciding the issue under consideration. It is seen that no appeal was filed by the appellant against the assessment order from which the penalty proceedings originated. The appellant has not contested the assessment order and has accepted the assessment order. The act of not contesting the assessment order goes on to prove the ‘mens rea’ on the part of the appellant. Therefore, it is clear that there has been an intention of the appellant to defraud revenue and evade tax. Hence, there is no doubt in my kind that the appellant has willfully evaded tax for which penalty is impossible u/s 270A of the income tax act, 1961. Therefore, I find no infirmity in the order of the AO and uphold the same. 4.1 In view of the facts and circumstances of the case the penalty imposed by the AO is liable to be confirmed.

5. I hold accordingly, the appeal is dismissed.”

Deepak Kumar Rajoria vs. ITO acknowledgement No 230940210041017 declaring total income of Rs.429620/- The case was selected for complete scrutiny through CASS for the following reason-

Deepak Kumar Rajoria vs. ITO proceedings because that was the first year for this penalty so the AO should have waive it by his discretion power and should have waived it but he had to discharged his burden by imposing the huge penalty. The assessee surrendered and offered the income after paying tax. The penalty was not levied even when the assessee surrendered after issuance of questioner in assessment proceedings. The Court held the surrender before detection and considered to be bona fide gesture from the assessee. [CIT vs. Harnarain (ITA No.2072 of 2010) (dtd.31.10.2011)(Delhi HC)] [ACIT vs. Ashok Raj Nath (33 taxamann.com 588) (Delhi Trib)] When the himself Surrendered the amount during the asst proceedings and tax was deducted from TDS, No further appeal was filed. Therefore provision of section 270A is not applicable here. Penalty provisions have been substantially amended from A.Y.2017-18 onwards. The said penalty provision u/s 270A is in force to replace section 27111) (C) of the IT act. In this relevant case the assessee had voluntarily surrendered his claimed deduction so in this case no penalty should be imposed because there was no addition on record and the voluntarily surrender never attracts penalty provision as held in various judgements "Penalty is unjustified in those case wherein assessee has surrender the amounts voluntarily as reported:- CIT Vs. Suresh Chandra Mittal 251 ITR 9 (SC) CIT VS. Mohd. Mohtram 259 ITR 132 (Raj) ITO Vs. Subhash Kumar Jain 582/JP/1997 ITO Vs. Chetram Goyal ITA 1552/JP/97 Chandrakanta Vs. ACIT ITA 699 & 700/JP/1998 ACIT Vs. Rajasthan Machinery Store ITA 1510/JP/96 In these judgement it is held that where the assessee has surrendered income than penalty in these case is unjustified and deserve to be cancelled this is not a question whereas the surrender has been made in return or at the time of asst. proceedings thus in this case no penalty should be imposed because the appellant has voluntarily surrendered the amount to buy peace. It is held in the judgement Of Kishanchand shivchand Rai VS CIT (1973) 88 ITR 293 (Punjab) That the mere fact of surrender could not be a necessarily addmision of the assessee that the surrender amount were his undisclosed income so such surrender alone could not be the basis of imposing penalty.

Relying upon the above decision, Hon'ble Kamataka High Court in the case of CIT Vs SSA'S Emerald Meadows (2016) 73 taxguru.in 241 (Karnataka) dismissed appeal of the Department in which substantial question of law was as follows: "(1) Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved

Deepak Kumar Rajoria vs. ITO beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?" Hon'ble Supreme Court dismissed SLP of the department in the above case of CIT Vs SSA'S Emerald Meadows [2016] 73 faxguru.in 248 (SC)/[2016] 242 Taxman 180 (SC). Courts have consistently held that at the time of initiation of penalty, charge should be clearly specified. Understanding of this basic concept by the assessing officers will go a long way in correct initiating of penalty and passing of sustainable penalty orders. Each and every word in the sentence for Initiation of penalty is crucial. Hence, the assessing officers must stop. think and ponder before recording satisfaction for initiation of penalty. As reproduced above, Hon'ble Karnataka High Court in the case of CIT Vs Manjunatha Cotton & Ginning Factory held that notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Similarly, in the printed notice u/s 274 r.w.s 270A, it is essential to tick the applicable part in printed penalty notice and strike off inapplicable part in printed penalty notice. Thus, if penalty is initiated only for under reporting of income, the printed notice must not contain mention of misreporting of income. In such a case, misreporting of income is required to be essentially struck off. When the assessee had himself Surrenderd the amount during the asst proceedings and tax was deducted from TDS, No further appeal was filed. Therefore provision of section 270A is not applicable here. The assessee fulfilled all the requirements of the above section for droping penalty u/s 270A of the IT Act but he was not aware to submit any letter to drop the penalty proceedings because that was the first year for this penalty so the AO should have waive it by his discretion power and should have waived it so it was un fare to impose penalty u/s 270A in this case. so in view of above cancel the penalty order u/s 270A and allow the appeal.”

Deepak Kumar Rajoria vs. ITO has not unreported his income, the income has already been taxed. The Only deduction which was claimed in advertently and by the guidance of counsel who is praying the return of income remained the same even there is no lose to the income as TDS has already been deducted during the assessment proceedings. The assessee has already been surrendered the claim and not persuaded considering the facts that even after the assessment there is no liability of tax. He has not filed any appeal on account of the assessment shows that there is no unreported of his income by the assessee and merely the assessee has not filed and there cannot be any automatically levy penalty u/s 271A of the Act.

There is no additional amount remained to be payable by the assessee is the tax as income has already been paid by way of TDS and therefore since the assessee has fairly admitted in the assessment proceedings though he has without sufficient proof of claim deduction and therefore, looking to set of facts and circumstances placed before us regarding submission of deduction of claim where in the assessee has placed on record in the return of income the following details:-

B. donations entitled for 50% deduction without qualifying limit S. Name of Address City or State Pincode PAN of the Amount Eligible No. donee Town or Code Donee of amount District donation of donation 1. L J Knowl Vastrapur Ahmedabad Gujarat 380015 AACCL1607M 300000 150000

Deepak Kumar Rajoria vs. ITO Edge Ahmedabad foundation 2. Ahmedabad Childern Ahmedabad Gujarat 380001 AABTT1320 300000 150000 District Home, Probation- Khanpur After car Assocation 3. Sewa Bharti Knakariya Ahmedabad Gujarat 380028 AACTS9727 400000 200000 Gujarat Ahmedabad- 380028 Total B 1000000 500000 In the assessment proceeding the assessee did not produce the proof and the ld. AO based on the information placed on record nothing contrary placed on record that the claim of the assessee in real terms not given. The assessee has given the name of trust, pan number and amount of donation given was made in the return of income the assessee has withdrawn the said claim of donation and ld. AO did not investigate this matter further considered the revised computation and in that there is no further amount of tax or interest payable and the details of the donation was already available on record. But the assessee in the assessment proceeding submitted that “Regarding Donation-I don’t any document slip so request you to cancel the same and offer my apology and promise to not put any kind of nondocumentary submission in future.” This version does not establish that the claim of the assessee is bogus

Deepak Kumar Rajoria vs. ITO or non genuine nothing contrary brough on record. Considering the facts and circumstances of the case the penalty is not sustainable in light of this circumstances of the case, we are of the considered view that the penalty of levy of the lower authorities confirmed by the ld. CIT(A) u/s 270A of the Act does not have any legs to stand, therefore, the same is deleted based on stated facts.

In the result, the appeal of the assessee is allowed.

Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board.