STAR ENGINEERS,ANKLESHWAR vs. WARD 2(1), BHARUCH, BHARUCH

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT (PHYSICAL HEARING) Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member

ITA No: 432/SRT/2025 Assessment Year: 2015-16 Star Engineers Ward-2(1), Plot No. 8005, GIDC Bharuch Industrial Estate, GIDC, Vs Ankleshwar, Gujarat-393002 PAN: ACAFS7543L (Respondent) (Appellant) Assessee Represented: Shri Abbas Gulam, C.A. Revenue Represented: Shri Ajay Uke, Sr. DR Date of hearing : 28-04-2026 Date of pronouncement : 06-07-2026 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

This appeal is filed by the Assessee as against the appellate order dated 11.02.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), confirming the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2015-16. 2. Brief fact of the cases, the assessee is a partnership firm engaged in the manufacturing, trading and job work for Dished-

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end work, plate bending work, automobiles works and all types of fabrication and contract work and other supporting activity. For the assessment year 2015-16, the assessee firm filed its return of income claiming a loss of Rs.2,05,27,340/- on 29.09.2015. The return was taken for scrutiny assessment and made additions on account of unsecured loan of Rs.39,50,210/- ; disallowance on account of capital introduction of Rs.22,99,018; protective addition on account of unsecured loan of Rs.3,14,39,205/- and disallowance of donation of Rs.10,000/-. Thus the Assessing Officer completed the assessment determining the total income of Rs.1,26,71,090/- and demanded tax thereon. 3. Aggrieved against the assessment order, the assessee filed an appeal before Ld. CIT(A)-3, Baroda, who partially allowed the appeal vide order dated 05.10.2018 namely allowed the substantive addition Rs.16,10,000/-; confirmed the addition of Rs.4,03,210/- and Rs.50,000/- out of Rs.39,50,210/-. Thereafter the Assessing Officer proceeded with the penalty proceedings by issuing notices to the assessee and issued a final show cause notice, as to why not to levy penalty u/s. 271(1)(c) of the Act for concealment of income of Rs.20,63,210/- and levy Rs.6,37,532/- being the minimum penalty. The assessee failed to reply to the penalty notice thereby, the Assessing Officer levied minimum penalty of Rs. 6,37,532/- u/s. 271(1)(c) of the Act. 4. Aggrieved against the penalty order, the assessee filed an appeal before Ld. CIT(A). During the appellate proceedings, Ld. CIT(A) given four opportunities of hearing on 02.07.2024,

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24.07.2024, 13.01.2025 and 29.01. 2025, however the assessee has not responded to the above hearing of notices. Ld. CIT(A) issued final notice to comply on or before 05.02.2025 to the email address as mentioned in Form No. 35. However, the assessee failed to reply to the above notices, which are resulted in passing ex-parte appellate order as follows:- “5. Decision: In this case, return of income declaring loss of Rs. 2,50,27, filed on 29.09.2015. Order u/s 143(3) was passed on 26.12.2017 assessing total income at Rs. 1,26,71,093/-. The AO made substantive addition of Rs. 39,50,210/- on account of unsecured loan and Rs. 22,99,018/- on account of capital introduction. Protective addition of Rs. 3,14,39,205/- was made on account of cash deposits. Penalty proceedings u/s 271(1)(c) were initiated for furnishing inaccurate particulars of income. A show cause notice was issued u/s 274 r.w.s. 271(1)(c) on 11.03.2020 and was served on the assessee.

5.1 The AO notes that the assessment order was challenged before the Ld. CIT(A) who confirmed substantive addition of Rs. 20,63,210/- vide order dated 05.10.2018. The appellant did not file any response during the penalty proceedings. Therefore, the AO proceeded to levy penalty u/s 271(1)(c) of Rs. 6,37,532/- being 100% of tax sought to be evaded.

5.2 The appellant has challenged the penalty stating that necessary documents to prove unsecured loans were filed before the AO itself. As such, the case does not fall within the meaning of inaccurate particulars of income. Similar argument is made in respect of the other addition.

5.3 As already mentioned, the appellant has not responded during the appellate proceedings. The claim made by the appellant in the grounds of appeal that its case is covered by provisions of section 271(1)(c) is not correct. It is stated that documents were sufficient to prove creditworthiness and existence of lender Shri Nileshbhai Vasava. However, it is clear that this argument has not been accepted by the Ld. CIT(A) who has confirmed the addition. Similar is the case in respect of amounts related to Manubhai L. Mangukiya (Rs. 4,03,210/-) and Sonukumar R. Bhagat (Rs. 50,000/-). Since both the additions have

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been upheld by the Ld. CIT(A), the arguments made in the grounds of appeal cannot be accepted. It is accordingly held that the AO has correctly levied the penalty and the same is accordingly confirmed.

“1) The learned CIT(A) erred in fact and in law in passing the order against the principle of natural justice. 2) The learned CIT(A) erred in fact and in law in confirming the action of learned AO in passing the penalty order without granting an opportunity of being heard and considering the facts and material on the record. 3) In the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the action of the Ld. Assessing Officer by upholding the penalty under section 271(1)(c) of Rs. 6,37,532 disregarding the legal/factual matrix of the case. 4) The learned CIT(A) erred law and on facts in confirming the penalty under section 271(1)(c) even the AO was failed to specify charge under which limb the proceeding has been initiated and failed even in the penalty order to show as there was furnishing inaccurate particulars of income or concealment of income. 5) The learned CIT(A) erred in fact and in law in confirming the action of the learned AO without specifying charge in his order as there was furnishing inaccurate particulars of income or concealment of income and did not indicate under which limb the penalty is upheld. 6) The Ld. CIT(A) failed to appreciate that the Appellant had submitted all details and documentary evidence in respect of the additions of Rs. 3,53,89,415 to Hon'ble CIT(A) and out of which only an amount of Rs. 20,63,210 were upheld by the CIT(A). 7) The Ld. CIT(A) erred in fact and in law in confirming the action of the learned AO merely based on the addition made is upheld by the CIT(A), without appreciating the facts as proper information was provided by the appellant.”

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merits and pass order in accordance with the provisions of law and by giving proper opportunity of hearing to the assessee. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order is pronounced under the provisions of Rule 34(4) of IT(AT) Rules, 1963 on 06/07/2026.

Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat : Dated 06/07/2026 *Santosh आदेश क� �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Surat 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत