PR. COMMISSIONER OF INCOME TAX CENTRAL vs. PUNA RAM JANGID

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ITA/148/2017HC RajasthanRJHC01016872201713 April 2018Author: GOPAL KRISHAN VYAS,RAMCHANDRA SINGH JHALA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the impugned order of the ITAT. The Court noted that the ITAT's decision was based on an earlier judgment in ITA No.204/Jodh/2016, where the quantum additions had been deleted. The Tribunal's reasoning that if quantum additions are deleted, the penalty cannot stand, was accepted. The Court found that the entire finding of the authorities below was based on an assessment of law, and therefore, the appeal by the Revenue lacked merit. Consequently, the appeal was dismissed. The operative direction was the dismissal of the appeal, with no specific issue left undecided.

What were the facts?

The Revenue filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2010-11. A search and seizure operation was conducted on the assessee, Shri Puna Ram Jangid, on 15/16.12.2009. The assessee filed a return declaring a total income of Rs.94,90,890/-, including a surrendered income of Rs.90,28,293/-. The assessment was completed at Rs.1,52,65,590/- with additions of Rs.57,74,000/-, and later recomputed to Rs.2,81,34,242/-. The Assessing Officer initiated penalty proceedings under Section 271-AAA, stating the assessee failed to specify or substantiate the manner in which undisclosed income was derived, despite paying tax on it. The CIT(A) cancelled the penalty, and the ITAT upheld this decision, noting that additions had been deleted in a related appeal, rendering the penalty unsustainable.

What were the issues?

1. Whether a substantial question of law arises from the ITAT's order upholding the cancellation of penalty under Section 271-AAA of the Income Tax Act, 1961, when the quantum additions were deleted in a prior appeal. Assessee's Contention: The assessee argued that since the additions forming the basis of the penalty were deleted in a prior appeal (ITA No.204/Jodh/2016), the penalty order had no legs to stand. The CIT(A) had also cancelled the penalty, finding that the sole ground for the penalty was the failure to disclose the manner of earning undisclosed income, which was surrendered and reported. Revenue's Contention: The Revenue contended that the penalty under Section 271-AAA was validly initiated because the assessee did not fulfill the conditions under Clause (i) and (ii) of Section 271 AAA (2) by failing to specify or substantiate the manner of deriving the undisclosed income, even though tax was paid (fulfilling Clause (iii)).

Which sections of the Income-tax Act were involved?

Section 260A,Section 132,Section 142 (1),Section 143 (3),Section 153A,Section 153B,Section 154,Section 271-AAA,Section 271 AAA (2),Section 274

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 148 / 2017 Pr. Commissioner of Income Tax-Central, Jaipur. ----Appellant Versus Shri Puna Ram Jangid, G-132, Shastri Nagar, Jodhpur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.K. Bissa. _____________________________________________________ HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS HON'BLE MR. JUSTICE RAMCHANDRA SINGH JHALA

J U D G M E N T 13/04/2018

The instant Income Tax Appeal has been filed by the Appellant- Revenue under Section 260A of the Income Tax Act, 1961 (Act of 1961) against the order dated 10.07.2017 passed by learned Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in I.T.A. No.234/Jodh/2007 for the Assessment Year 2010-11. As per facts of the case, a search and seizure operation under Section 132 of the Act of 1961 was carried out at the residential and business premises of the Assessee and his family members on 15/16.12.2009. A notice u/s 142 (1) was issued on 24.01.2011 and in response thereto return of income declaring total income at Rs.94,90,890/- including surrendered income of Rs.90,28,293/-, was filed on 31.03.2011. (2 of 3) [ITA-148/2017]

Assessment under Section 143 (3) read with Section 153A/153B of the Act of 1961 was completed on 29.12.2011 at total income of Rs.1,52,65,590/- after making addition of Rs.57,74,000/-, which further rectified and total income was recomputed at Rs.2,81,34,242/- vide order u/s 154/143 (3) dated 07.03.2014. The Assessment Officer initiated penalty proceedings under Section 271-AAA of the Act in the Assessment Order mentioning in the order that the assessee failed to specify the manner in which the undisclosed income was derived or to substantiate the manner in which the undisclosed income was derived. Payment of tax on undisclosed income was derived. Payment of tax on undisclosed income of Rs.90,28,293/- offered in the return of income fulfilled only one condition i.e. condition as per Clause (iii) mentioned u/s 271 AAA (2) in respect of the said income. The assessee since did not fulfill conditions as per Clause (i) and (ii) mentioned u/s 271 AAA (2) i.e. neither specified the manner of deriving undisclosed income nor substantiated the manner in which undisclosed income was derived, therefore, AO passed the impugned penalty order under Section 271 AAA read with Section 274 of the Act.

Being aggrieved by the said penalty order, the assessee filed an appeal before the learned C.I.T. (A) and the learned C.I.T. (A) vide its order dated 23.02.2017 cancelled the penalty levied under Section 271 AAA of the Act and observed that the only ground on which penalty order of AO hinge around is the disclosing of manner of earning the undisclosed income which was surrendered during search and reported in the return of income.

(3 of 3) [ITA-148/2017]

Being aggrieved with the said order dated 23.02.2017 further appeal was preferred before the learned Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur (ITAT), and the learned ITAT vide a common order dated 10.07.2107 with regard to penalty imposed for A.Y. 2007-08, 2009-10 and 2010-11 observed that in I.T.A. No.204/Jodh/2016 quantum additions has been deleted on the ground of penalty does not have any legs to stand.

The instant appeal has been filed by the Income Tax Department against the orders passed by the learned C.I.T. (A) as well as order passed by learned I.T.A.T., Jodhpur.

After hearing the learned counsel for the appellant, we have perused the orders impugned. Admittedly the order passed by learned ITAT, is based upon earlier judgment passed in ITA No.204/Jodh/2016 and further the ITAT held that when the quantum additions have been deleted the penalty does not have any legs to stand.

In our opinion, no substantial question of law emerges in this appeal because the entire finding arrived at by the authorities below is based upon assessment of law, therefore, there is no force in this appeal.

Accordingly, the instant income tax appeal filed by the appellant Revenue is hereby dismissed.

(RAMCHANDRA SINGH JHALA) J. (GOPAL KRISHAN VYAS) J. DJ/- 32

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