ACIT, GUWAHATI vs. HARVINDER SINGH SEHGAL, THANGAL BAZAR, MANIPUR

ITA 379/GTY/2025Status: DisposedITAT Guwahati09 October 202624 pages
AI SummaryAllowed

What were the facts?

The assessee, Harvinder Singh Sehgal, proprietor of M/s Navsheen Associates, is the appellant, and the revenue is the respondent. The assessment year is 2021-22. The appeals arise from the order of the CIT(A) dated 16.09.2025, which partly allowed the assessee's appeal against a penalty order passed under Section 271DA of the Income Tax Act, 1961. During a survey, incriminating materials were found. An assessment order under Section 147 read with Section 143(3) was passed on 28.03.2024, adding Rs.5,65,53,927/- as additional business income, surrendered by the assessee to buy peace. The Assessing Officer (AO) initiated penalty proceedings under Section 271DA for alleged contravention of Section 269ST. A penalty of Rs.5,68,04,927/- was imposed on 13.12.2024. The CIT(A) restricted the penalty to Rs.1,66,26,527/-, deleting Rs.4,01,78,400/-. Both the assessee and the revenue have filed appeals against this order.

What did the Tribunal hold?

The Tribunal held that the penalty order was not sustainable. Regarding the limitation issue (Ground No. 2 of Assessee), the Tribunal noted the well-settled law that the initiation of penalty proceedings is reckoned from the date of satisfaction in the assessment order. The AO recorded satisfaction on 28.03.2024, and the penalty order was passed on 13.12.2024, which, if considered from the satisfaction date, would be beyond the limitation period. However, the Tribunal did not explicitly decide on the limitation point as it found merit in other grounds. On the substantive issue of contravention of Section 269ST (Grounds 4, 5, and 6 of Assessee), the Tribunal observed that the penalty was imposed based on unsigned, unverified loose documents with mixed entries and partial matching of RTGS transactions. The AO failed to conduct independent inquiries, obtain statements from parties, or bring corroborative material on record. The surrender of income to buy peace does not, by itself, establish actual cash receipts violating Section 269ST, especially when the assessee's books were not rejected, and no cash trail or corroborative evidence was found. The Tribunal relied on the decision in Sanjay Kalsi Vs. DCIT, where a similar surrender for peace was held not to establish a violation of Section 269ST. Therefore, the penalty order was deleted. The revenue's appeal was dismissed as infructuous.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the penalty order dated 13.12.2024 is barred by limitation under Section 275(1)(c) of the Act, considering the AO's satisfaction recorded on 28.03.2024. Assessee's contention: The penalty order is beyond the limitation period as the initiation date should be reckoned from the date the AO recorded satisfaction in the assessment order (28.03.2024), not the subsequent notice date. Revenue's contention: Not recorded. 2. Whether, on the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the penalty under Section 271DA without establishing that the appellant had actually received any sum in contravention of Section 269ST. Assessee's contention: The penalty was confirmed without appreciating that the assessee had not actually received any sum in contravention of Section 269ST. The surrender of income was to buy peace, not an admission of cash receipt. The seized documents were unverified, unreliable, and not supported by evidence. The AO failed to establish cash receipts, reject books of account, or find any undisclosed assets or cash trail. Revenue's contention: The CIT(A) erred in deleting the penalty, as the assessee received cash on different dates after making corresponding RTGS payments, as reflected in impounded document 'NA-02', contravening Section 269ST. The RTGS transactions matched bank statements, proving the impounded document pertained to the assessee and cash was received in contravention of Section 269ST.

Which sections of the Income-tax Act were involved?

Section 271DA,Section 269ST,Section 275(1)(c),Section 133A,Section 147,Section 143(3),Section 292C,Section 273B,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, GUWAHATI “DB” BENCH

Before: SHRI LAXMI PRASAD SAHU & SHRI YOGESH KUMAR U.S.

For Appellant: Shri Prateek Jain, CA
For Respondent: Shri M.C. Omi Ningshen, CIT, DR
Hearing: 02.09.2026Pronounced: 09.10.2026

PER YOGESH KUMAR U.S., JUDICIAL MEMBER:

These two Appeals are filed by the Assessee and the Revenue against the order of the Commissioner of Income Tax (‘Ld. CIT(A)’ for short) dated 16.09.2025, passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) for the Assessment Year 2021-22 & 2021 respectively, wherein the Ld. CIT(A) has partly allowed the Appeal of ITA No.374 & 379/Gty/2025 Harvinder Singh Sehgal; A.Y.: 2021-22 & 2021 the Assessee challenging the Or

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 271DA

All 209 judgments and leading authorities on Section 271DA →

Recent GST High Court judgments

Search GST case law →