MAHESH THAKURIA HUF,JAIPUR vs. ITO WARD 4(1), JAIPUR, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1236/JPR/2025 (Assessment Year:2010-11)

Mahesh Tahkuria HUF Vs. ITO E-662, Vaishali Nagar, Ward 4(1) Jaipur Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:AAFHM 3385 K Appellant .. Respondent Appellant by : Sh. Shrawan Gupta, Adv. Respondent by : Sh. Gaurav Awasthi, JCIT Date of Hearing 03.06.2026 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 National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), confirming the levy of penalty for concealment/furnishing of inaccurate particulars of income under Section 271(1)(c) of the Income Tax Act, 1961(hereinafter referred to as “the Act”). 2. The assessee in this appeal has taken following grounds of appeal:-

P a g e | 2 ITA No. 1236/JPR/2025 Mahesh Thakuria HUF 1. The impugned penalty order u/s 271(1)(c) dated 22-06-2018 as well as notices are bad in law and on facts of the case, also without proper approval and satisfaction of the competent authority, also being barred by limitation, for want of jurisdiction and various other reasons and hence the same may kindly be quashed. 2. Rs.53,640/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the penalty of Rs. 53,640/- imposed by the ld. AO u/s 271(1)(c) of the Act, also erred in not considering the request and material available on record, also no penalty is leviable in the present case looking to the facts and legal position of law. Hence the penalty so imposed by the AO and confirmed by the ld. CIT(A) is totally contrary to the provisions of law and facts on the record and hence the same may kindly be deleted in full. 3. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 3. The solitary plea of the ld. Counsel for the assessee before me, against the levy of penalty was that the income assessed by the AO was below the taxable limit prescribed in law. That no taxes were payable by the assessee on the income assessed therefore. That therefore, there was no evasion of taxes by the assessee, and hence no penalty was leviable u/s 271(1)(c) of the Act, as the machinery provision for the levy of penalty failed. 4. In this regard, he drew my attention to the fact that in the assessment framed on the assessee u/s 147 r.w.s. 143(3) of the Act, the assessee was noted to have declared income for the impugned year of Rs.1,20,550/-, addition, however, was made on account of alleged bogus transaction of trading in shares. The assessee had returned income of Rs.1,20,329/-, on account of the same under the head “business income”, which included commodity profit of Rs.1,78,856/-. The AO noted the transaction of trading in commodities to be of bogus transaction, and assessed the entire profits earned on the same as taxable under the head “income for other sources”.

P a g e | 3 ITA No. 1236/JPR/2025 Mahesh Thakuria HUF 5. Further, he made addition on account of commission paid for filing the accommodation entry of Rs.3,577/-, and after setting of business losses of the assessee of Rs.58,529/-, the income of the assessee was assessed at Rs.1,24,130/-. Since the income assessed was below taxable limit, no tax demand was raised on the assessee, however, the AO levied penalty on the income which was returned by the assessee under the head “income from business and Profession” and was held to be taxable by the AO under the hear “income from other sources” amounting to Rs.1,78,800/- charging the assessee with having furnished inaccurate particulars of income. Computing the tax concealed on the said income of the assessee at the rate of 100% of the tax sought to be evaded at Rs.53,640/-, penalty of the said amount was levied on the assessee. 6. The provisions of Section 271(1)(c) dealing with the levy of penalty for concealment/furnishing inaccurate particulars of income read as under:- Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person— ……………………. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or …………………….

P a g e | 4 ITA No. 1236/JPR/2025 Mahesh Thakuria HUF (iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. …………… 8. Therefore, as per sub-Section (iii) of Section 271(1) the penalty to be levied is to be based on the tax sought to be evaded. The determination of tax sought to be evaded is provided in Explanation 4 to Section 271 which reads as under:- …………. Explanation 4.—For the purposes of clause (iii) of this sub-section,— (a) the amount of tax sought to be evaded shall be determined in accordance with the following formula— (A – B)+ (C – D) where, A = amount of tax on the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions); B = amount of tax that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished; C = amount of tax on the total income assessed as per the provisions contained in section 115JB or section 115JC; D = amount of tax that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished: Provided that where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished on any issue is considered both under the provisions contained in section 115JB or section 115JC and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D : Provided further that in a case where the provisions contained in section 115JB or section 115JC are not applicable, the item (C – D) in the formula shall be ignored; (b) where in any case the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, the amount of tax sought

P a g e | 5 ITA No. 1236/JPR/2025 Mahesh Thakuria HUF to be evaded shall be determined in accordance with the formula specified in clause (a) with the modification that the amount to be determined for item (A – B) in that formula shall be the amount of tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income; (c) where in any case to which Explanation 3 applies, the amount of tax sought to be evaded shall be the tax on the total income assessed as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148. ………. 9. Clause (a) of Explanation 4 works out tax sought to be evaded on the basis of the tax payable as per the assessed income reduced by the taxes that have been paid by the assessee on the income reduced by the concealed income, that is the tax sought to be evaded is calculated or determined on the basis of the tax, which the assessee would have been liable to pay on the concealed income. 10. Clause (b) is attracted only when the amount of income in respect to which particulars have been concealed or inaccurate particulars furnished has the effect of either a) Reducing the loss declared in the return, or, b) Converting the loss into income. 11. In the facts of the present case, for the purpose of determining the tax sought to be evaded by the assessee for levying penalty neither clause (a) is invoked nor clause (b).The reason being that since as per clause (a), the assessee ought to have been liable to pay tax in the first place which is not the situation in the facts of the present case. Therefore the said sub-clause is not invoked. 12. Sub-clause (b) also is not invoked, since in the facts of the present case, the particulars of income concealed have neither reduced

P a g e | 6 ITA No. 1236/JPR/2025 Mahesh Thakuria HUF the loss declared in the return nor converted the loss into income. There is no loss returned by the assessee in its return of income. So there is no question of reducing the loss or converting the loss into income. 13. Clearly, the machinery provision for computing the amount of penalty to be levied in the present case completely fails. Ld. DR was unable to point out the specific provision as per which the penalty could be levied in the present case. Therefore, I hold, that there is no question for levying any penalty u/s 271(1)(c) of the Act in the facts of the present case. Accordingly, the penalty levied is deleted . 14. In effect, the appeal of the assessee stands allowed. Order pronounced in the open court on 30.06.2026.

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 30.06.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur