THE DCIT-3(1), INDORE vs. SHRI RITESH AJMERA, INDORE

PER KUL BHARAT, J.M: This appeal by the revenue pertaining to the

assessment year 2008-09 and cross objection filed by the

assessee against order of the Ld. CIT(A)-I, Indore (M.P.)

dated 17.10.2016. Both revenue and assessee have

challenged the order of the Ld. CIT(A). The assessee has

challenged the legality of the initiation of proceedings and

the penalty confirmed in respect of the additions sustained

by the Tribunal. Since the assessee has challenged legality

of the proceedings, we deem it proper to adjudicate cross

objection first on the issue of legality of the proceedings

u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter

called as ‘the Act’). The assessee has raised following

grounds of cross objections:

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore] 2. (a)That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not considering the material fact that the appellant had neither concealed nor furnished in accurate particulars of his income for the year under consideration and therefore he was not liable for any penalty u/s 271(1)(c) of the Act. (b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not considering the material fact that penalty proceedings are different from assessment proceedings and merely on the basis of certain finding in assessment proceedings, penalty u/s 271(1)(c) cannot be imposed automatically. 3.(a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the penalty imposed by the A.O. qua the amount of cash deposits aggregating to Rs.5,00,000/- made by the appellant in his bank account. (b) That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the penalty imposed by the A.O. qua the amount of alleged unexplained investment of Rs.25,50,000/- in M/s. Phoenix Devcons Pvt. Ltd. 4. That, the cross objector further craves leave to add, alter and/or amend ground of cross objections, as and when considered necessary. 2. Brief facts are that search & seizure operation u/s 132

of the Act were conducted at various premises of assessee

society persons and concerns commonly known as ‘M/s.

Satellite Group’ on 15.11.2009. A notice u/s 153A of the

Act dated 13.10.2010 was issued and served upon the

assessee requiring the assessee to file return of income. In

response thereto, the assessee submitted before the A.O.

that the return filed originally may be treated as return

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore] filed in response to the notice u/s 153A of the Act. The

A.O. thereafter proceeded to make assessment after

considering the facts and the material available on record.

The A.O. made two additions in respect of unexplained

cash deposits in UCO bank of Rs.15 lakhs, unexplained

investment in M/s. Phoenix Technology of

Rs.2,25,00,000/-. The A.O. initiated the penalty

proceedings separately. In quantum proceedings, the

matter was travelled up to the stage of the Tribunal and it

is reported by the Ld. CIT(A) that a sum of

Rs.1,90,00,000/- was deleted out of Rs.2,15,50,000/- in

respect of the unexplained investment. Further, the Ld.

CIT(A) directed the A.O. to re-compute penalty on an

amount of Rs.30,50,000/- sustained by the Tribunal.

Tribunal. Ground No.1 & 2 are against the legality of

notice issued u/s 271(1)(c) of the Act. It is noticed that this

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore] ground was not taken before the Ld. CIT(A). It is submitted

by the Ld. Counsel for the assessee that this being the legal

ground, the judgement of the jurisdictional High Court in

the case of Principal CIT Vs. Kulwant Singh Bhatia in ITA

No.9 of 2018 dated 9.5.2018 (M.P.) was not available at the

time of the proceedings before Ld. CIT(A). He further

submitted that in view of the judgement of the Hon'ble

Supreme Court in the case of NTPC Vs. CIT (1998) 229 ITR

353 (SC) the legal ground can be taken up at any stage.

Ld. Counsel for the assessee took us through the penalty

order. He submitted that the A.O. has not specified the

charge for which the penalty has been levied.

the assessee. He submitted that the A.O. has specified the

charge in the assessment order.

materials available on record and gone through the orders 5

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore]

of the authorities below. The grievance of the assessee is

that the A.O. has not made any specific charge to the

penalty being imposed. We have gone through the records.

These grounds were not raised by the assessee before Ld.

CIT(A). The Hon'ble jurisdictional High Court in the case of

CIT Vs. Tolaram Hassomal 298 ITR 22 (M.P.), wherein the

Hon'ble High Court has held as under:

“8. In view of the foregoing discussion, we do not consider it necessary to examine any other issues, i.e., the questions already framed and decided by the Tribunal though urged by learned counsel for the Revenue on various legal grounds with reference to decided cases of the Supreme Court and the High Courts by contending that none of them are legally sustainable and hence, we answer only additional question of law framed in favour of the Revenue and against the assessee (respondent). As a result, the appeal succeeds and is hereby allowed. The impugned orders of the Tribunal is set aside, so also that of the Commissioner of Income tax (Appeals) which was the subject matter of appeal before the Tribunal in an appeal filed by the assessee. Indeed, this being a consequence of the indulgence granted by the Tribunal to the assessee in permitting them to raise four additional grounds to urge the same has to be given effect to. As a consequence, the Commissioner of Income-tax (Appeals) is now directed to decide the appeal filed by the respondent (assessee) afresh on the merits including on the four additional grounds raised by the assessee. We, however, make it very clear that the Commissioner of Income- tax (Appeals) wouild not take into consideration any of the findings and the observations made by the Tribunal on any of the issues raised by the assessee, nor the Commissioner of Income-tax (Appeals) will be influenced by any of them. In other words, the Commissioner of Income-tax (Appeals) will decide the appeal strictly in accordance with law on the merits as if there is no finding on any of the issues ever recorded by the Tribunal because once we set 6

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore] aside the order of the Tribunal, then such order is regarded as being not in existence and cannot be looked into for any purpose, nor can be relied on or referred to by any authority much less an authority subordinate to the Tribunal. Needless to observe, the four additional issues urged by the assessee will have to be decided by the Commissioner of Income-tax (Appeals) keeping in view the law laid down by the Supreme Court and the High Courts in several cases holding the field in their right perspective. Let this be done within six months by the Commissioner of Income-tax (Appeals) from the date of appearance. Parties to appear before the Commissioner of Income-tax (Appeals) on April 3, 2006.” 6. Therefore, respectfully following the same, the

additional ground raised in the form of legal in ground

Nos.1 to 2(b) of the assessee are restored to the file of the

Ld. CIT(A) for considering the same in the light of the

judgement of the Hon'ble M.P. High Court in the case of

Principal CIT Vs. Kulwant Singh Bhatia (supra).

confirmed by the Ld. CIT(A). All the cross objections goes

to the route of legality of the penalty and hence, we deem it

proper that these grounds are also restored to the file of the

Ld. CIT(A) to decide it afresh. Ground Nos.3(a) & 3(b) of the

assessee’s appeal are allowed for statistical purposes.

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore] 8. Ground No.4 is general in nature and needs no

separate adjudication.

taken up the following grounds of appeal:

deleting the penalty to the extent of addition confirmed by

the Tribunal and deleting rest of the penalty.

submitted that Ld. CIT(A) was not justified in deleting the

penalty. He submitted that quantum proceedings and

penalty proceedings are two different and distinct

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore] proceedings. Ld. CIT(A) ought to have confirmed the

penalty.

submitted that the addition has been deleted; therefore,

there is no question of levy of penalty.

materials available on record and gone through the orders

of the authorities below. There is no dispute with regard to

the fact that the addition on which penalty has been levied

has already been deleted by the Tribunal in IT(SS)A No.190

to 192/Ind/2013 in assessee’s own case, in which the

addition of Rs.1,90,00,000/- was deleted out of the total

addition of Rs.2,15,50,000/-. Therefore, we do not see any

infirmity in the order of the Ld. CIT(A) and the same is

hereby confirmed. The grounds raised by the revenue are

dismissed.

[ITA 51/Ind/2017 & CO 14/Ind/2018] [Shri Ritesh Ajmera, Indore] 14. In the result, appeal filed by the revenue is dismissed and the cross objections filed by the assessee are allowed for statistical purposes.

Order was pronounced in the open court on 03 .01.2019.

Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIALMEMBER Indore; �दनांक Dated : 03/01/2019 VG/SPS Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order

Assistant Registrar, Indore