BHURAMAL RAJMAL SURANA & SONS PVT. LTD.,DELHI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1384/JPR/2024 (Assessment Year:2015-16)

Bhuramal Rajmal Surana Vs. ACIT & Sons Pvt. Ltd. Central Circle 2 M-26, Greater Kailash-II Jaipur Market New Delhi 110048 �थायीलेखासं./जीआइआरसं./PAN/GIR No:AACCB 0074 A Appellant .. Respondent Appellant by : Sh. S.R. Sharma, CA & Sh. Rajnikant Bhatra, CA Respondent by : Mrs. Aarti Rawat, Addl. CIT Date of Hearing 24.06.2026 Date of Pronouncement 30.06.2026 O R D E R The present appeal has been filed by the assessee against the order passed by the Office of the Commissioner of Income Tax, Appeal CIT(A), Jaipur-04 (hereinafter referred to as “Ld. CIT(A)”), dated 27.09.2024, confirming the levy of penalty under Section 271AAB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. The grounds of appeal raised by the assessee are read as under:

P a g e | 2 ITA No. 1384/JPR/2024 Bhuramal Rajmal Surana & Sons Pvt. Ltd. 1. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming penalty of Rs. 10,95,540/- imposed by the learned AO u/s 271AAB of the IT Act, 1961 after (a) rejecting submission of the appellant that reason for imposition of penalty was not specified neither in assessment order nor in notice issued for imposition of penalty. (b) upholding finding recorded by the learned AO that imposition of penalty u/s 271AAB is mandatory in nature, and (c) rejecting submission of the appellant that penalty u/s 271AAB cannot imposed only on the basis of admission of income by the appellant without proving it to be undisclosed income within meaning of section 271AAB of the IT Act, 1961. 2. That without prejudice to the ground No. (1) above the ld. CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the ld. AO that appellant has allegedly not been able to substantiate manner in which additional income offered to tax during the course of search was derived and thereby confirming imposition of penalty of Rs. 10,95,540/- under sub section 1(c) of section 271AAB of the IT Act, 1961 @30% on above said additional income. 3. That the appellant crave permissions add to or amend to any of grounds of appeal or towithdraw any of them. 3. The issue in the present appeal relates to penalty levied u/s 271AAB of the Act, amounting to Rs.10,95,540/-. In the facts of the present case, a search action u/s 132 of the Act was carried on the Members of Surana Group on 15.10.2014, of which the assessee is one of the member. The assessee filed his return of income on 28.09.2015 for relevant assessment year i.e. AY 2015-16, declaring a total income of Rs.36,51,800/-, which included income surrendered during the course of search on account of alleged excess stock. Subsequently, assessment was framed u/s 143(3) of the Act holding the alleged excess stock to be Rs.1,02,39,890/- and accordingly making addition of the balance not declared by the assessee of Rs.65,88,088/-The

P a g e | 3 ITA No. 1384/JPR/2024 Bhuramal Rajmal Surana & Sons Pvt. Ltd. difference in the amounts of excess stock surrendered by the assessee and that found by the AO arose primarily on account of the manner of calculation of value of closing stock , with thye AO giving no benefit of discount which the assessee claimed to give to its customers and also on account of a lower GP rate applied by AO for arriving at the closing stock as per Books available with the assessee . .Penalty proceedings u/s 271AAB of the Act were initiated on the assessee. 4. Aggrieved with the assessment order, the assessee filed an appeal to the Ld. CIT(A), who deleted the addition of Rs.65,88,088/-. Thereafter, the hearing in the penalty proceedings were initiated and after considering the submissions filed by the assessee, the AO levied penalty on the surrender made by the assessee in his return of income of excess stock of Rs.36,51,800/-. The penalty was levied as per clause (c) of Sub-Section (1) of Section 271AAB of the Act at the rate of 30% of the alleged undisclosed income of Rs.36,51,800/- amounting to Rs.10,95,540/-, the same was confirmed by the Ld. CIT(A). 5. Before me, the contention of the ld. Counsel for the assessee was that, in identical facts and circumstances, the penalty levied by the AO in the case of group concerns of the excess stock surrendered by the assessees was deleted by the Ld. CIT(A) in his order passed. He drew my attention to the order passed by the Ld. CIT(A) in the case of Bhuramal Rajmal Surana Manufacturers Vs. ACIT Central Circle 2 Jaipur in appeal No. CIT appeal Jaipur 4/10035/2020-21 AY 2015-16, copy of which was placed at paper book page No.101 to 170.

P a g e | 4 ITA No. 1384/JPR/2024 Bhuramal Rajmal Surana & Sons Pvt. Ltd. 6. He further, pointed out that this decision of the Ld. CIT(A), was upheld by the ITAT in its order passed in ITA No.284/JPR/2025 dated 26.05.2026, Copy of which was placed before me at paper book page No.171 to 173. Further he pointed out, that the penalty in the said case was deleted for the reason that there was no discrepancy in the quantity of stock found during the course of search and the dispute pertained solely to the valuation of stock by the Departmental Valuer. Noting the said fact, it was held that the excess stock based on valuation by the Departmental Valuer could not be treated as undisclosed income in terms of the definition provided in Explanation to Section 271AAB of the Act. 7. Thereafter, ld. Counsel for the assessee pointed out that, in the facts of the present case also, the ld. CIT(A), in his order passed in quantum proceedings dated 12.11.2018 categorically noted at page No.9 thereof, that with respect to excess stock of business and in the assessment order passed by the AO there is no finding that excess stock in quantity was found during search. Copy of the order of Ld. CIT(A) , passed in quantum proceedings, was placed before me and the relevant finding at page No.9 of the order pointed out to me. He therefore, contended that the facts in the present case being identical to that in the case of the sister concern of the assessee i.e. Bhuramal Rajmal Surana Manufactures (Supra), the issue of levy of penalty was squarely covered in favour of the assessee by the decision both of the Ld. CIT(A) and that of the ITAT in the said case. He contended that the Ld. CIT(A) in quantum proceedings having categorically noted that

P a g e | 5 ITA No. 1384/JPR/2024 Bhuramal Rajmal Surana & Sons Pvt. Ltd. there was no difference in the quantity of stock found during search, the AOs rejection of this contention of the assessee was not acceptable. 8. He further pointed outfrom para b page 2 of the AOs order also that he had noted the excess stock to be on account of difference in the value of stock unearthedduring the course of search itself. 9. Thereafter he pointed out from page 60 of Ld. CIT(A)s order in penalty appeal, that the Ld. CIT(A) had not accepted assessee’s contention of no difference in quantity of stock being found, stating that the assessee had not placed on record any working or any justification to show that the quantity of stock as per books of accounts and that found during search were the same. He drew my attention to the findings at page 60 of his order. He contended that in quantum proceedings, when the Ld. CIT(A) himself had given categorical finding that there was no difference in the quantity of stock found during search and that reflected in his books of accounts, the Ld. CIT(A) could not have given a contrary finding on this aspect, without assigning any reasons thereto. His pleaded therefore, that the order passed by Ld. CIT(A) was based on incorrect findings of fact and therefore, needed to be set aside. 10. The ld. DR before me, was unable to controvert the facts pointed out by the ld. Counsel for the assessee as above. She was unable to controvert the fact that the penalty was levied on account of surrender made by the assessee, only of the difference in valuation of stock and not on account of any difference in the quantity of stock found during search. She was unable to controvert the fact that the ld. CIT(A) in

P a g e | 6 ITA No. 1384/JPR/2024 Bhuramal Rajmal Surana & Sons Pvt. Ltd. quantum proceedings in the case of the assessee had categorically given a finding of fact that there was no difference in the quantity of stock found during search on the assessee. She was unable to controvert the fact that in identical facts and circumstances, where no difference in quantity of stock was found during search and the surrender made by the assessee was only on account of valuation of stock, the ITAT held that there was no undisclosed income of the assessee, so as to attract levy of penalty u/s 271AAB of the Act in the case of Bhuramal Rajmal Surana Manufactures (Supra). 11. In view of the above, I agree with the ld. Counsel for the assessee that the issue of penalty in facts of the present case, where the same has been levied on account of surrender made by the assessee of the difference in the valuation of closing stock alone and not on account of any excess stock found, is not tenable, since the amount surrendered does not qualify as undisclosed income, as held by the ITAT in the case of Bhuramal Rajmal Surana Manufactures (Supra). The issue is squarely covered by the decision of ITAT in the said case. I therefore, direct the penalty levied of Rs. 10,95,540/- to be deleted. 12. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 30.06.2026.

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 30.06.2026

P a g e | 7 ITA No. 1384/JPR/2024 Bhuramal Rajmal Surana & Sons Pvt. Ltd. Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur