RAJU VERMA,DEHRADUN vs. DCIT, CENTRAL CIRCLE, DEHRADUN
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Income Tax Appellate Tribunal, DEHRADUN BENCH AT NEW DELHI
Before: SHRI SAKTIJIT DEY & SHRI M. BALAGANESH
PER SAKTIJIT DEY, J.M.:
Captioned appeals by the assessee arise out of a consolidated
order dated 21.09.2017 of ld. Commissioner of Income-tax (Appeals)-IV,
Kanpur, confirming penalty imposed u/s. 271(1)(c) of the Income-tax
Act, 1961 for nine assessment years, viz., 1998-99 and 2004-05 to 2011-
However, presently, we are concerned with assessment years 2010-
11 and 2011-12.
2 ITA Nos. 7797 & 7798/Del/2017
Briefly, the facts are, the assessee is a resident individual deriving
income from salary, house property and other sources. There was a
search and seizure operation conducted u/s. 132 of the Act on the
assessee on 14.03.2012. Pursuant to such search and seizure operation,
proceeding u/s. 153A of the Act was initiated. In response to notice
issued u/s. 153A of the Act, Assessee furnished its returns of income for
the assessment years under dispute. In course of assessment
proceedings, Assessing Officer found that during the search and seizure
operation, a bank account held by the Assessee in HSBC Bank,
Switzerland was found. It was noticed that the said bank account was
opened by the Assessee in financial year 1996-97 and as on the date of
search and seizure operation, the balance standing in the said bank
account was USD 181,426. When confronted with the foreign bank
account, the Assessee made a disclosure of Rs.90.56 lacs at the
conversion rate of Rs.49.92 per USD, which comprised of the principal
component and accumulated interest thereon till closing of account in
financial year 2013-14. In course of assessment proceedings, the
Assessing Officer, after examining the facts relating to disclosure of
income by the Assessee at the time of search and seizure operation and
3 ITA Nos. 7797 & 7798/Del/2017
other materials on record, was of the view that the interest component
earned by the Assessee on the deposits in the foreign bank account has
to be taxed in the year of accrual only. Since, the Assessee had not
offered such interest income in the year of accrual, the Assessing Officer
charged interest at the conversion rate prevailing during the relevant
period and made additions of Rs.27,09,452/- and Rs.33,13,904/- in the
assessment years 2010-11 and 2011-12 respectively. Of course, similar
additions were also made in assessment year 1998-99 and assessment
years 2004-05 to 2009-10. Based on such additions, the Assessing
Officer initiated proceeding for imposition of penalty u/s. 271(1)(c) of
the Act and ultimately passed orders imposing penalty of various
amounts in different assessment years, as noted above. The penalties so
imposed were also confirmed by ld. first appellate authority.
Before us, ld. Counsel, appearing for Assessee, submitted that in
so far as the present assessment years are concerned, the quantum
appeals are still pending before ld. Commissioner (Appeals). Therefore,
without disposing of the quantum appeals, ld. first appellate authority
should not have decided the penalty appeals. Without prejudice, he
submitted, identical additions made by the Assessing Officer in
4 ITA Nos. 7797 & 7798/Del/2017
assessment years 2006-07 to 2009-10 have been deleted by the
Tribunal. In this context, he relied upon order dated 29.07.2022 passed
in ITA Nos. 1805 to 1808/Del/2017. He submitted, even ld.
Commissioner (Appeals) himself had deleted identical addition while
deciding Assessee’s appeal in assessment year 2009-10. Proceeding
further, he submitted, penalty imposed u/s. 271(1)(c) of the Act under
identical facts and circumstances for assessment year 1998-99 and
2004-05 to 2009-10 have also been deleted by the Tribunal. In this
context, he placed on record relevant orders of the Tribunal. Thus, he
submitted, the present appeals are squarely covered in favour of the
Assessee by earlier decisions of the Tribunal.
Learned Departmental Representative strongly relied upon
observations of the Assessing Officer and ld. Commissioner (Appeals).
However, he could not controvert Assessee’s submission that issues are
covered by the earlier decisions of the Tribunal.
We have considered rival submissions and perused the materials
on record. Undisputedly, the additions leading to imposition of penalty
u/s. 271(1)(c) of the Act were on account of interest on the balance
standing in the foreign bank account of the Assessee. It is a fact on
5 ITA Nos. 7797 & 7798/Del/2017
record that the assessee had offered the entire balance standing in the
foreign bank account along with accumulated interest thereon in the
return of income filed for the assessment year 2013-14. However, the
Assessing Officer was of the view that the interest income has to be
assessed on accrual basis in the relevant assessment years, wherein, the
interest income accrued. Accordingly, he added the interest income on
accrual basis in assessment year 1998-99 and assessment years 2004-
05 to 2011-12. It is observed, while deciding quantum appeals of the
Assessee, contesting the addition of interest income on accrual basis,
the Tribunal in assessment years 2006-07 to 2009-10 (supra) has
deleted the additions made by the Assessing Officer. In fact, ld.
Commissioner (Appeals) himself has deleted identical addition while
deciding Assessee’s appeal for the assessment year 2009-10. As
discussed earlier, in the impugned order, ld. Commissioner (Appeals)
has disposed of appeals for nine assessment years, starting from 1998-
99 and 2004-05 to 2011-12, confirming the penalty imposed u/s.
271(1)(c) of the Act. Pertinently, while deciding Assessee’s appeals,
challenging the imposition of penalty u/s. 271(1)(c) of the Act, the
Tribunal, having taken note of the fact that while deciding quantum
6 ITA Nos. 7797 & 7798/Del/2017
appeals, the additions on account of interest income have been deleted,
concluded that penalty imposed u/s. 271(1)(c) of the Act is
unsustainable. Accordingly, the Tribunal has already deleted penalty
imposed in assessment year 1998-99 and 2005-06 in ITA No.
7785/Del/2017 and others dated 08.11.2021. Further, the Tribunal has
deleted similar penalty imposed in assessment years 2006-07 to 2009-
10 in ITA No.7793/Del/2017 and others dated 16.12.2022. Factually,
the present appeals stand on identical footing. Therefore, when the
Assessee has succeeded both in quantum as well as penalty proceedings
before the Tribunal in respect of identical additions made in other
assessment years, the penalty imposed u/s. 271(1)(c) of the Act in the
present assessment years have to be deleted, as they stand on similar
footing. Accordingly, we have no hesitation in deleting penalty imposed
u/s. 271(1)(c) in both the assessment years under dispute.
In the result, appeals are allowed as indicated above.
Order pronounced in the open court on 10/05/2023.
Sd/- Sd/- (M. BALAGANESH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 10.05.2023
