SH. AASHISH ARORA,LUDHIANA vs. ITO, W-3(2), LUDHIANA

Following grounds have been raised in this appeal:

1(i) On the facts and in the circumstances of the case the Ld. CIT(A) has erred both on the facts and in law in upholding order of the A.O. levying penalty both for concealment of income and furnishing inaccurate particulars of income in respect of additions of Rs. 1,36,00,030/- made under section 68 by the A.O. (ii) The Ld. CIT(A) has failed to appreciate that inappropriate words in the penalty notice issued by the Ld. A.O. for levy of penalty are not stuck off and the notice does not specify as to whether the assessee has concealed its particulars of income or has furnished inaccurate particulars of income. (iii) The Ld. CIT(A) has failed to appreciate that the accounts of the appellant were duly audited and additions to the capital accounts of the appellant were from the known sources. (iv) The Ld. CIT(A) has also failed to appreciate that the Ld. A.O. has not brought any evidence on records to draw positive inference as to whether additions to the capital accounts of the appellant represent concealed income or it is on account of furnishing of inaccurate particulars of income. 2(i) On the facts and in the circumstances of the case the Ld. CIT(A) has erred both on the facts and in law in upholding order of the A.O. levying penalty both for concealment of income and furnishing inaccurate particulars of income in respect of additions of Rs. 28,25,138/-, in Saving Bank Account of the appellant. (ii) The Ld. CIT(A) has failed to appreciate that inappropriate words in the penalty notice issued by the Ld. A.O. for levy of penalty are not stuck off and the notice does not specify as to whether the assessee has concealed its particulars of income or has furnished inaccurate particulars of income. (iii) The Ld. CIT(A) has failed to appreciate that the accounts of the appellant were duly audited and additions of Rs. 28,25,138/- in Saving Bank account of the appellant were from the known sources. (iv) The Ld. CIT(A) has also failed to appreciate that the Ld. A.O. has not brought any evidence on records to draw positive inference that as to how credit entries in saving bank account of the appellant, duly recorded in the books of account of the appellant represent concealed income and furnishing inaccurate particulars of income. (v) The Ld. CIT(A) has also failed to appreciate that penalty for concealment is attracted if there are clear findings by the Ld. A.O. to hold under which provisions of law addition of Rs. 28,25,138/- was made.

From the aforesaid ground it would be clear that the only grievance of the Assessee relates to the sustenance of penalty levied by the A.O. under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’).

Facts of the case in brief are that the assessee filed the return of income on 24/05/2014 declaring total income of Rs. 34,05,640/-. The assessment however was framed by the A.O. at an income of Rs. 2,63,32,375/- under section 144 of the Act by making various additions which included the addition of Rs. 1,36,00,030/- made under section 68 and Rs. 28,25,138/- on account of deposit in the saving bank account. The A.O. also added Rs. 56,68,679/- on account of trading addition by applying G.P. Rate, another addition of Rs. 46,499/-, Rs. 1,86,399/- and Rs. 6,00,000/- were made on account of absence of the evidence for claiming the deduction under Chapter VI A, disallowance of deduction claimed under section 57 of the Act and estimated addition on account of household expenses respectively.

Being aggrieved the assessee carried the matter to the Ld. CIT(A) who deleted the penalty in respect of trading addition of Rs. 56,68,679/- by observing that the said addition was on estimate basis. He also deleted the penalty on the disallowance and the additions which were considered to be general in nature and were made by the A.O. by passing the exparte assessment order. The Ld. CIT(A) sustained the penalty under section 271(1)(c) of the Act on the addition of Rs. 1,36,00,000/- and Rs. 28,25,138.

Now the assessee is in appeal.

Ld. Counsel for the Assessee at the very outset stated that when the appeal of the assessee on the penalty levied by the A.O. under section 271(1)(c) of the Act was filed, the another appeal on quantum addition was pending before the Ld. CIT(A) who deleted the addition of Rs. 1,36,00,030/- and the addition of Rs. 27,22,138/- out of the addition of Rs. 28,25,138/-. He furnished the copy of the order of the Ld. CIT(A)-1, Ludhiana dt. 09/07/2019 wherein the aforesaid addition had been deleted vide para 9 and 13 of the said order. It was further submitted that the remaining addition of Rs. 1,03,000/-(Rs. 28,25,138/- (-) Rs. 27,22,138/-) on account of cash deposited in bank account was deleted by the ITAT “A” Bench Chandigarh vide para 14 of the order dt. 29/09/2020 (copy of the aforesaid orders of the Ld. CIT(A) and ITAT were furnished which are placed on the record). Accordingly it was submitted that the additions on the basis of which the impugned penalty under section 271(1)(c) was levied by the A.O. and sustained by the Ld. CIT(A) is not in existence. Therefore the impugned penalty deserves to be deleted.

In her rival submissions the Ld. Sr. DR strongly supported the impugned order passed by the Ld. CIT(A).

We have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that the addition on the basis of which the impugned penalty under section 271(1)(c) of the Act was sustained by the Ld. CIT(A) are not in existence. On a similar issue the Hon'ble Supreme Court in the case of K.C. Builders and Another Vs. Asst. CIT reported at 265 ITR 562 held as under:

In the result, appeal of the Assessee is allowed.