ASHOK KUMAR JAIN,GHAZIABAD vs. ASSESSMENT UNIT, DELHI

At the time of hearing, no one attended the proceedings on behalf of the assessee. Therefore, this appeal is decided on the basis of material available on record and after hearing Ld. Sr. DR for the Revenue.

Heard the Ld. Sr. DR for the Revenue at length and perused the material available on record. It is observed that in the instant case, order was passed u/s 143(3)/147 of the Income Tax Act, 1961 on 26.05.2023 by making an addition of Rs.1,23,22,120/-. While completing the assessment proceedings, the penalty proceeding under section 271(1)(c) of the Income Tax Act 1961 was also initiated by the Assessing Officer for concealment of particulars of income. Thereafter in terms of the impugned order dt. 11.02.2025, the AO has levied the penalty of Rs. Rs.44,07,859/- being 100% of the tax sought to be evaded u/s 271(1)(c) of Income Tax Act 1961 for concealment of particulars of income. In the meantime, the coordinate bench of the Tribunal, in the case of assessee in quantum proceedings in ITA No. 3335/Del/2024 has set aside the order of lower authorities and restored the matter to the file of AO for fresh adjudication by making following observations: 7. “Heard the contentions of both parties and perused the material available on record. AO had made the addition on account of LTCG declared by the assessee from the sale of shares of M/s. Achal Investment Ltd. which was treated as penny stock by the AO based on the inquiries and investigations carried out by the Investigation Wing of the Department. The assessee claimed that all the evidences were field to prove the LTCG as genuine however, no opportunity was provided by the AO of the persons based on whose statements, genuine transaction was alleged as sham transaction. In view of the these facts, and in the larger interest of justice, we set aside the orders of the lower authorities and remand the matter back to the file of the AO with the directions to provide an opportunity to the assessee for cross-examination of the witnesses of the Revenue i.e. persons whose statements are relied upon for holding the transaction of sale of scrips of M/s. Achal Investment Ltd. in the hands of the assessee as bogus. With these directions, all Grounds of appeal raised by the assessee are allowed for statistical purposes.”

As could be observed that the order under which the present penalty proceedings u/s 271(1)(c) of the Act was initiated, has been set aside thus the penalty has no legs to stand and therefore, we delete the penalty so levied by the AO. However, the AO is at liberty to reinitiate the penalty proceedings u/s 271(1)(c) of the Act, if the circumstances suggest so, in the set aside assessment proceedings. With these directions, all the grounds of appeal raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed.