SMT. SUCHITRA S. DHANANI,,INDORE vs. THE ACIT, CIRCLE-1(1)(2),, VADODARA

This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-1, Vadodara dated 03.10.2016 pertaining to A.Y. 2010-11 and following grounds have been taken:

Brief facts of the case are that a search and seizure action u/s 132 of the I T Act was carried out at the residence as well as the business premises of (Dhanani Group) on 11-02-2011. Accordingly, notices u/s l53A(a) the return of income was issued to the appellant. The return of income was furnished on 13.2.2013 declaring total income of Rs. 5,93,640/-. The assessment was finalized u/s. 153A r.w.s. 143(3) of the Act on 31.03.2013 assessing the total income of Rs. 21,67,690/-, While finalizing the assessment order, Assessing Officer made an addition of Rs. 4,20,000/- on account of unexplained house hold expenses and Rs. 11,54,050/- on account of unexplained investment in jewellery. While framing the said order, penalty u/s. 271(l)(c) initiated on the both addition. The appellant did not file any appeal m relation to the addition on account of unexplained investment in jewellery, on account of household expenses was reduced to Rs. 1,80,000/- by CIT(A)-I, Baroda. Thereafter, the AO provided another opportunity of being he appellant and then he imposed the penalty of Rs. 4,12,300/- u/s 271(1)(c) of the Act, against which, this appeal has been filed.

Against the order of the imposition of penalty, assessee preferred first statutory appeal before the ld. CIT(A) who partly allowed the appeal of the assessee.

Now appellant has come before us by way of second appeal.

We have gone through the relevant record and impugned order. In this case, assessee is a widow and on 11.02.2011, search proceeding u/s. 132 were initiated on the Dhanani Group. The residential premises to the appellant’s husband were also covered u/s. 132 and the locker of the appellant were also searched. Thereafter, notice u/s. 153A was issued on the appellant and in response to the notice, she reiterated her original return of Rs. 5,93,639/-. Thereafter, A.O. framed assessment on 31.03.2013 and made following additions: (a) Unexplained Investment in Jewellery Rs. 11,54,050/- (b) Alleged undisclosed household expenses Rs. 4,20,000/-

Thereafter appellant filed an appeal before the ld. CIT(A) who partly allowed the appeal by restricting the addition to Rs. 1,80,000/-.

And appellant contention is that her husband Shri Sajid Dhanani was handling the financial affairs and he passed away during the course of assessment proceedings. Hence, She could not provide the complete details during the assessment proceedings and accordingly accepted the addition on the said account.

Like above said case, it was a case where there was no circumstances to lead to a reasonable and positive inference that the assessee’s case- that the cash credits were arranged as temporary loans, was false. The facts and circumstances are equally consistent with the hypothesis that it could have been sundry loans in small amounts obtained from different parties. Therefore, even taking recourse to Explanation 1, same circumstances or state of evidence on which the cash credits were treated as income, could not by themselves justify the imposition of penalty without anything more on record produced by the assessee or the department.

And apart from above said, ld. A.O. has imposed penalty on both the count that furnishing inaccurate particulars of concealment of income for which assessee is liable for penalty u/s. 271(1)(c).

In support of its contention, ld. A.R. cited an order our Bench in the matter of Shri Hatish Prabhudas Chaudhary Vs. ITO in ITA No. 3557/Ahd/2016 dated 19.06.2018 wherein we held: “Couple with this, we simultaneously notice that the action of the AO is quite vague. The 'satisfaction' in the course of the assessment was formed for alleged 'furnishing of inaccurate particulars of income'. The penalty notice does not specify the nature of default and thus suffers from vice of ambiguity. The AO, however, in departure with the satisfaction formed in the assessment proceedings, went on to impose penalty on a different ground i.e. concealment of particulars of income. Ostensibly, the original basis of initiation of penalty has been altered in a significant way by the AO himself by imposing the penalty. The

Respectfully following the Hon’ble Gujarat High Court order as well as in parity without own Bench order, we delete the penalty imposed and confirmed by the revenue.

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