NALANDA BUILDERS &DVELOPERS I P LTD,AGRA vs. DCIT CENTRAL CIRCLE, AGRA

In the Income-Tax Appellate Tribunal, Agra Bench, Agra

Before : Shri Laliet Kumar, Judicial Member And Dr. Mitha Lal Meena, Accountant Member

ITA Nos.142 to 145/Agr/2017 Assessment Years: 2009-10 to 2012-13

Nalanda Builders & Developers (I) vs. DCIT, Central Circle, Ltd, first Floor, Shanti Mall, Church Agra Road, Agra. PAN –AACCN2200J (Appellant) (Respondent)

Appellant by S/Sh. Rajendra Sharma, Manuj Sharma, Advocates Respondent by Sh. Sunil Bajpai, CIT/DR & Sh. Waseem Arshad, Sr. DR

Date of Hearing 15.07.2019 Date of Pronouncement 16.07.2019

ORDER Per Bench: These are four connected the appeals filed by the assessee, feeling aggrieved

by the orders passed by ld. CIT(A) confirming the penalty orders on various grounds

including the following grounds : 1. That the CIT (Appeals) has erred on facts and in law while enhancing the penalty and imposed the same under Section 271AAB(1)(c) as against imposed by the AO under Section 271AAB (1)(b) of the Income Tax Act, the penalty enhanced by the CIT (Appeals) is highly unjustified, penalty imposed by the AO and enhanced by CIT (Appeals) is not called for. Penalty so imposed and enhanced by CIT (Appeals) is liable to be cancelled. 2. That while enhancing the amount of penalty @ 30% at Rs.46,27,350/- as against imposed by the AO at Rs.30,84,900/-, the learned CIT (Appeals) has not appreciated the facts, that the AO has imposed the penalty under Section

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271AAB (1)(b) of the Income Tax Act which is against the exparte order passed by the CIT (Appeals), against the quantum of addition for which the appeal is preferred and is pending before the Hon'ble ITAT. That during the pendency of appeal pending with Hon'ble ITAT, Agra Bench, the penalty imposed by the AO and enhanced by the CIT (Appeals) is highly unjustified, same is liable to be cancelled. 3. That while enhancing the penalty as imposed under Section 271AAB(l)(b) of the Income Tax Act by the AO, the authority below has not appreciated the facts that the additions are being made in the assessment under Section 68 of the Income Tax Act which are confirmed by CIT (Appeals) in exparte order. The penal provisions under Section 271AAB (1)(b) of the Income Tax Act are not attracted in respect of the additions are being made under Section 68 of the Income Tax Act, The penalty imposed by the AO, enhanced by the CIT (Appeals) is against the provisions of Section 271AAB(1)(b)/271AAB(1)(c) of Income Tax Act, same are liable to be cancelled. 4. That while enhancing the penalty, the CIT (Appeals) has not allowed the proper opportunity to the appellant for filing of his explanation, the penalty enhanced without providing of proper opportunity is against the principles of natural justice, particularly when the appeal in respect of quantum is pending before Hon'ble ITAT, penalty imposed by AO and enhanced by the CIT (Appeals) is liable to be cancelled. 5. That the appellate order dated 15.02.2017 is bad in law, liable to be set aside.

passed by the Assessing Officer. While confirming the penalty orders, the ld. CIT(A)

in paragraph No. 4.1 had recorded his findings to the following effect : 4.1 I have carefully gone through the penalty order in the above cases. It is seen that the AO has imposed penalty @ 20% of undisclosed income u/S 271AAB of the Act. Further, it is also noticed that the penalty has been imposed on undisclosed amount which represents the undisclosed income on which addition has been made in the assessment u/s 153A/143(3). Here, it is relevant to reproduce sub section 1(b) of section 271 AAB;

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(b) a sum computed at the rate of twenty percent of the undisclosed income of the specified previous year, if such assessee- (i) in the course of the search, in a statement under sub-section (4) of section 132 does not admit the undisclosed income; and (ii) on or before the specified date- (A) Declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income. From these provisions, it is clear that the penalty will be imposed under this sub- section only, if the case is not covered by sub-section 1(a) and 1(c) of the section 271AAB. Moreover, it is also necessary that the appellant has not disclosed whole of the amount (undisclosed income) in response to notice u/s 153A. It is evident by fact that the AO has made addition of undisclosed income. In the present case, it is seen that the appellant has not disclosed whole of the amount in the return filed in response to the notice u/s 153A/143(3). Moreover, he has also not disclosed total amount in the statement u/s 132(4). Thus, it is clear that, on these facts, the case of appellant is not covered by section 271 AAB (1) (a)(b). Thus, the provisions of section 271 AAB (1)(c ) are clearly attracted and opportunity was given to the appellant by issuing of notice for enhancement on 19/01/2017. The date of hearing was fixed for 30/01/2017. However, non- appeared and only adjournment letter was sent. Next date of hearing was fixed for16.02.2017. None attended on this1 date also. Thus, it is clear that appellant has nothing to say on either grounds of appeal filed by him or on the enhancement notice dated 19/01/2017 issued by this office. In view of the above, since the penalty cannot be imposed u/s 271 AAB(1) (a)(b) as done by the AO. Penalty should be imposed u/s 271AAB (1)(c). The minimum rate at which penalty should be imposed should not be less than 30%. The AO has already levied penalty of Rs, 30,84,900/- for A.Y. 2009-10, Rs 61,22,750/- For

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A.Y. 2010-11, Rs. 71620/- for A.Y. 2011-12 and Rs. 30,000/- for A.Y. 2012-13 respectively. It is increased @ 30% to an amount of Rs. 46,27,350 for A.Y. 2009- 10, Rs. 91,84,125/- For A.Y. 2010-11, Rs.1,07,430/- for A.Y. 2011-12, Rs. 45,000/- for A.Y. 2012-13 respectively. The appellant is directed to pay this amount as penalty. The AO is also directed to recover the amount as penalty u/s 271 AAB (1) (c ) of the Act.”

ld. CIT confirming the penalty was passed invoking the ratio of the decision in the

matter of Multiplan India Ltd., deserves to be set aside. Secondly, when the quantum

appeals are being set aside by the Tribunal, therefore, there is no order in the eyes

of law. Therefore, imposition of penalty is not available and thus, the order passed

by the ld. CIT(A) is required to be set aside.

in not participating the proceedings before the ld. CIT(A). Therefore, strict view

should be taken against the assessee.

records. The Tribunal vide separate order passed in quantum appeals Nos. 35 to

38/Agr/2017 has set aside the orders of the authorities below in the quantum

proceedings and has remanded the matter back to the file of CIT(A) to decide the

same afresh after giving notice of 14 days to the assessee. Since the order on

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quantum of appeal has been set aside and the penalty order is consequence of the

quantum proceedings, therefore, the order passed by the ld. CIT(A) confirming the

penalty is also liable to the set aside and is sent back to the file of ld. CIT(A). At this

stage, we would like to observe that if the ld. CIT(A) in the quantum proceedings

comes to the conclusion that no quantum addition is made out then these penalty

proceedings are liable to be dropped. However, if the ld. CIT(A), after examining the

records and further affording opportunity of hearing to the assessee, comes to the

conclusion that additions as proposed by the Assessing Officer or otherwise are

liable to be made then the ld. CIT(A) shall issue a separate notice to the assessee

asking to show cause as to why penalty be not imposed on the assessee. Needless to

say that the assessee shall cooperate and participate in the proceedings before the

ld. CIT(A) in the quantum proceedings as well as in the penalty proceedings as and

when called upon by the ld. CIT(A). Needless to say the assessee shall not take

undue adjournments in the matter and shall cooperate with the early disposal of

appeals in the time line granted by the ld. CIT(A).

Order pronounced in the open court. Sd/- Sd/- (Dr. Mitha Lal Meena) (Laliet Kumar) Accountant Member Judicial member

Dated: 16.07.2019 *aks*