RAVINDRA WALIA,MUMBAI vs. ASSTT COMMISSIONER OF INCOME TAX -16(1) , MUMBAI, MUMBAI

The assessee has challenged the order of the ld. CIT(A) in confirming the levy of penalty u/s. 271(1)(c) of the Act by the learned Assessing Officer ('ld.A.O.' for short) on account of unexplained expenditure, unaccounted cash, expenses and bank deposits. As both the appeals are on identical facts, we hereby pass a consolidated order by taking as the lead case. production company by the name M/s.Rising Star Entertainment. The assessee has filed his return of income dated 29.10.2007, declaring a loss at Rs.1,55,00,270/- and the same was processed u/s. 143(1) of the Act. The assessee’s case was selected for scrutiny and the assessment order dated 29.12.2009 was passed u/s. 143(3) of the Act where the ld. A.O. had determined the total income at Rs.2,23,71,500/- by making various additions/disallowances. The ld. A.O. also initiated the penalty proceedings and thereby passed the penalty order u/s. 271(1)(c) of the Act dated 28.03.2012, where the ld. A.O. had levied a penalty of Rs.1,27,50,502/-.

The assessee was in appeal before the ld. CIT(A), challenging the penalty order by the ld. A.O.

The first appellate authority upheld the order of the ld. A.O.

The assessee is in appeal before us, challenging the impugned order.

The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the ld. A.O. had levied penalty on the addition made towards unexplained expenditure amounting to Rs.2,88,14,556/- and unaccounted cash expenses and bank deposits amounting to Rs.90,59,009/- and also an additional penalty was levied for the difference of Rs.59,009/- on the ground of concealment of income. The ld. AR contended that the assessee has neither concealed the income nor has filed inaccurate particulars.

The learned Departmental Representative ('ld.DR' for short), on the other hand, controverted the said facts and stated that the ld. A.O. has levied penalty for the reason that the assessee has concealed the particulars of his income as well as furnished inaccurate particulars. The ld. DR further stated that the assessee has been non compliant throughout the assessment proceedings. The ld. DR relied on the orders of the lower authorities.

We have heard the rival submissions and perused the materials available on record. It is observed that there was a survey action u/s. 133A of the Act conducted on the assessee where certain incriminating documents containing entries of expenditure expenses amounting to Rs.2,88,14,556/- under various heads were found. The assessee had claimed it to be merely an estimate of expense and not the actual expenditure incurred. The assessee had also declared additional amount of Rs.90 lacs during the year under consideration for which the ld. A.O. had made an addition of Rs.3,78,80,282/- along with the difference of Rs.59,009/-. The assessee has also contended that the copies of the impounded documents pertaining to the estimation of expenses were not furnished to the assessee during the survey proceedings. The assessee has also challenged the quantum addition made by the ld. A.O. the additions made by the ld. A.O. and vide order dated 28.03.2012 levied the impugned penalty of Rs.1,7,50,502/- being 100% of the tax sought to be evaded on the income of Rs.3,78,80,282/- on the ground that the assessee has concealed the particulars of his income by furnishing inaccurate particulars as per the provision of section 271(1)(c) of the Act.

The ld.CIT(A), on the other hand, has upheld the penalty levied by the ld. A.O. on the ground that the ld. CIT(A) in the quantum appeal had confirmed the addition made by the ld. A.O. and the Tribunal vide an ex parte order dated 19.04.2019 had set aside the appeal back to the file of the ld. CIT(A) and subsequently the addition was confirmed by the ld. CIT(A) vide his order dated 15.03.2022. The ld. CIT(A) in an appeal against the penalty order has held that the assessee has concealed the particulars of his income which were unearthered only during the survey proceeding u/s. 133A of the Act and the same was not found in the books of accounts. The ld. CIT(A) further held that one of bank account of the assessee was also not included in the books of accounts and that the assessee has removed certain entries pertaining to cash from his computer during the year under consideration. The ld. CIT(A) held that there was concealment of income and as a consequence was by furnishing inaccurate particulars of income of the assessee and, hence, the ld. A.O. had rightly mentioned that it was a case of concealment of income by furnishing inaccurate particulars. The ld. CIT(A) upheld the penalty levied by the ld. A.O. was issued by ld. A.O. without striking out the irrelevant limb thereby not specifying as for what reason penalty in the case of the assessee was levied. The ld. AR placed reliance on the full bench decision of the Hon'ble Jurisdictional High Court in the case of Mohd.

From the above observation, we are of the considered opinion that the facts of the assessee’s case is squarely covered by the decision of the Hon'ble High Court in the case of Mohd. Farhan A. Shaikh (supra) where the ld. A.O. has failed to strike out the irrelevant limb in the statutory notice issued for levy of penalty, thus, in our opinion is not a curable defect and would vitiates the penalty proceeding in toto. We, therefore, direct the ld. A.O. to delete the impugned penalty. As we have decided this issue on the legal ground, the other grounds of appeal become academic in nature.

In the result, the appeal filed by the assessee is allowed.

The assessee has challenged the penalty levied u/s. 271(1)(c) of the Act made by the ld. A.O. and upheld by the ld. CIT(A) on identical grounds as that in ITA No. 100/Mum/2022. upheld the penalty of Rs.8,60,000/- u/s. 271(1)(c) of the Act for which the ld. A.O. vide letter dated 12.01.2018 had cancelled the penalty levied amounting to Rs.8,60,000/-. The ld. AR further stated that as the penalty order vide already been cancelled, this appeal filed by the assessee would become infructuous.

The ld. DR, had nothing to controvert the same. We, therefore, dismiss this appeal as infructuous.

In the result, the appeal filed by the assessee is dismissed.