RUPINDER DHANOA SIDHU,NEW DELHI vs. ACIT, CENTRAL CIRCLE- 31, NEW DELHI

The Assessee has preferred this appeal against the order dated 27/10/2017 impugned herein passed by the ld. Commissioner of Income Tax (Appeals)-30, New Delhi (hereinafter referred to as „ld. Commissioner‟), for Assessment Year 2012-13 u/s 250(6) of the Income Tax Act, 1961 (for short „the Act”), whereby, the CIT(A) affirmed the levy of penalty to the tune of Rs. 66,000/- u/s 271AAA of the Act, by the AO.

Brief facts of the case are that the Assessee had filed its return of income on 11.02.2013 by declaring income to the tune of Rs. 15,11,496/-. Thereafter, search and seizure action u/s 132 of the Act was initiated on 23.08.2011 and during the search of lockers in HSBC Bank situated at Gurgaon and Delhi, maintained by the Assessee jointly with her husband Shri Raman Singh Sidhu, cash of Rs. 13 lakhs (Rs. 12,50,000 + 50,000) was found. Consequently, statement of the Assessee and her husband were recorded on 23.08.2011 and 01.10.2011 respectively u/s 132of the Act. As per revenue‟s allegation, it has been clearly established beyond any doubt that cash found in the locker belongs to the Assesseeonly. During the course of assessment proceedings the Assessee was afforded opportunity to explain the source of cash of Rs. 13 lakhswith documentary evidence, though the Assessee explained, however, did not find favour from the AO and the AO made the addition of Rs. 13 lakhs u/s 69A of the Act. Simultaneously, also initiated penalty u/s 271AAA of the Act by issuing notices dated 27.02.2015 and 08.04.2015 u/s 274 read with section 271AAA of the Act.

The Assessee challenged the said addition also before the ld CIT(A), who vide order dated 23.10.2015 confirmed the addition to the tune of Rs. 6,60,000/- out of addition of Rs. 13 lakhs. Thereafter, fresh show cause notices dated 20.01.2016 and 24.03.2017 have been issued to the Assessee for penalty proceedings u/s 271(1) of the Act. Though, the Assessee replied the said show cause notices by submitting that the addition of Rs. 10,59,987/- (including amount of Rs. 6,60,000/-) sustained in quantum appeal pertains to amount regarding other receipts as reimbursement of expenses. The Assessee was not confronted with any document with regard to the same and no incriminating material with regard to the above was found and seized during the search. It was also claimed by the Assessee, since the addition in an unabated assessment not based on incriminating document found and seized during the search are under challenge, there is no case of penalty. Hence, no penalty should be imposed u/s 271AAA of the Act on sustaining of the additions in appeal. The AO although considered the explanation of the Assessee, however, imposed the penalty u/s 271AAA of the Act on the ground that the Assessee could not prove the source of this unexplained cash and not declared in her total income. It was assessed as unaccounted income of the Assessee. The said penalty order was challenged by the Assessee before the ld. CIT(A) who vide impugned order dated 27.10.2017 affirmed the levy of penalty amounting to Rs. 66,000/- against which the Assessee is in appeal before us.

Heard the parties and perused the material available on record.

At the very outset the Assessee has emphasized that in this particular case no specific query was raised and/or posed to the Assessee by drawing her attention to the provisions of section 271AAA of the Act. Therefore, in view of the jurisdictional High Court judgment in Pr. CIT vs. Emirates Technologies Pvt. Ltd. In decided on 18.07.2017,the penalty is unsustainable. There is no denial from the ld. DR to the facts contended by the Assessee.