SH. J.K. SINGH,NEW DELHI vs. ACIT, NEW DELHI

ITSSA 29/DEL/2014Status: DisposedITAT Delhi19 February 20259 pages
AI SummaryAllowed

What were the facts?

This appeal by the assessee, Late Shri J.K. Singh (represented by L/H Smt. Rita Singh), is against the order of the CIT(A)-XXV, New Delhi, dated 12.03.2014, concerning Block Assessment Years (BAYs) 1987-88 to 1996-97. A search under Section 132 of the Income-tax Act, 1961, was conducted on 26.02.1997. Subsequently, a notice under Section 158BC was issued. The Assessing Officer (AO) computed the total undisclosed income at Rs. 1,51,83,515/-, which was later reduced by the CIT(A) to Rs. 82,63,260/-. The AO also made an addition of Rs. 6,25,000/- for alleged unexplained investment in shares. The assessee did not contest this addition before the ITAT. Consequently, the AO levied a penalty of Rs. 3,25,000/- under Section 158BFA(2), which was confirmed by the CIT(A) as Rs. 3,75,000/-. The assessee is now in appeal before the ITAT.

What did the Tribunal hold?

The Tribunal held that penalty proceedings under Section 158BFA(2) are distinct and separate from assessment proceedings, akin to proceedings under Section 271(1)(c). The AO/CIT(A) had disbelieved the assessee's explanation regarding the shares found from his premises, which were claimed to belong to Arun Paliwal and held as collateral for a loan. However, the Tribunal found that the AO/CIT(A) had not discharged the onus of proving the assessee's explanation to be false. The Tribunal noted that while the Shanti Bai Yadav case was distinguishable, the decision in Elite Promoters Pvt Ltd was applicable. In Elite Promoters, it was held that penalty proceedings require the department to prove the assessee's explanation false, and mere confirmation of quantum addition is insufficient. The Tribunal concluded that the Revenue failed to discharge its onus to demonstrate that the investment in shares was actually made by the assessee. Therefore, the penalty levied under Section 158BFA(2) was held to be legally invalid. The order of the CIT(A) was set aside, and the AO was directed to delete the impugned penalty. No issue was expressly left undecided.

What were the issues?

1. Whether the learned Commissioner of Income Tax (Appeals) has erred in confirming the levy of penalty of Rs. 3,75,000/- under Section 158BFA(2) of the Act, when the addition of Rs. 6,25,000/- was based on mere possession of share transfer deeds without evidence of actual investment by the appellant, and was made on an estimated basis? Assessee's Contentions: - The quantum addition was not appealed before the ITAT due to its paltry amount. - Penalty proceedings are distinct from quantum proceedings, and the assessee's explanation was not proven false. - Relied on decisions in the assessee's own case for a similar block period, and in Shanti Bai Yadav (25 Taxmann.com 462) and Elite Promoters Pvt Ltd (ITSSA No. 22/DEL/2014). Revenue's Contentions: - Relied upon the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 132,Section 158BFA(2),Section 158BC,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘C’ BENCH,

Before: SHRI CHALLA NAGENDRAM PRASAD, & SHRI NAVEEN CHANDRA

For Appellant: Shri Salil Aggarwal, Sr. Adv, Shri Sailesh Gupta, CA
For Respondent: Shri Javed Akhtar, CITDR
Hearing: 27.01.2025Pronounced: 19.02.2025

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:

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This appealby the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XXV, New Delhi dated 12.03.2014, for Block A.Ys 1987-88 to 1996-97. 2. The assessee has raised the following grounds of appeal: “1That the learned Commissioner of Income Tax (Appeals) XXV, New Delhi has grossly erred both in law and on facts in confirming the levy of penalty of Rs. 3,75,000/- under section 158BFA(2) of the Act.

1.

1 That the learned Commissioner of Income Tax (Appeals) whileconfirming penalty under section 158BFA(2) of the Act, has also failed to appreciate the facts and circumstances of the case of the appella

The order continues below.

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