ACIT, NEW DELHI vs. ORIENTAL STRUCTURAL ENGINEERS PVT. LTD., NEW DELHI

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ITA 3170/DEL/2017Status: DisposedITAT Delhi24 December 2021AY 2013-146 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that penalty under Section 271AAB was justified on cash payments exceeding sale consideration as it fell within the definition of undisclosed income. However, penalty on the Rs. 30 crores surrender was not justified as it related to a liability already recorded in the books.

What were the facts?

During a search operation, the assessee made certain cash payments for land purchases and other transactions which were not fully recorded in their books. The assessee also surrendered an amount of Rs. 30 crores related to an assumed cessation of liability already recorded in their books.

What were the issues?

Whether penalty under Section 271AAB is leviable on cash payments exceeding sale consideration and on an amount surrendered which was already recorded as a liability in the books of account.

Which sections of the Income-tax Act were involved?

Section 271AAB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI

Before: SH. N. K. BILLAIYA & SH. SANDEEP GOSAIN

For Respondent: Ms. Sarita Kumari, CIT DR
Hearing: 15/12/2021Pronounced: 24/12/2021

This appeal filed by the revenue is preferred against the order of the CIT(A)-31, New Delhi dated 22.02.2017 for A.Y. 2013-14.

2.

The grievance of the revenue read as under :-

3.

Briefly stated the facts of the case are that a search and seizure operation u/s. 132 of the Act was carried out in Bakshi Group of cases on 10.12.2012 and the premises of the assessee were also covered.

4.

From the seized material the AO noticed that various payments appeared to be made in cash. The total cash payments were found to be Rs.52,502/- out of which the assessee has surrendered amount of Rs.47215/-. The AO further found that the assessee has purchased land at Nagpur amounting to Rs.2128000/- cash payment was made to the tune of Rs.941500/-as per agreement to sell the consideration was Rs.18.83 lacs but only Rs.941500/- was found to be recorded in the books. The AO further noticed that for another property the sale consideration of Rs.23,80,000/- but only Rs.1193500/- was found recorded in the books. Thus, the difference of Rs.1883000/- + 1186500 was surrendered at the time of search. The taxes were paid accordingly. The assessee has accepted the source of fund being out of surrendered amount of Rs.30 lacs in A.Y.2012-13. The AO imposed penalty u/s. 271AAB on cash payments of Rs.2128000/- made at Nagpur. The CIT(A) deleted the penalty so levied by holding as under :-

5.

Before us the counsel for the assessee vehemently stated that the said disclosure do not come within the purview of the definition of undisclosed income given in the explanation to section 271 AAB. Strong reliance was placed on the decision of the coordinate Bench at Jaipur in order dated 05.04.2019.

6.

We have carefully perused the factual matrix relating to the surrender made by the assessee. We find that the surrender was made when cash payments were found over and above the sale consideration of the properties based on the incriminating material found at the time of search. Therefore, in our considered opinion the reliance on the decision of the coordinate Bench (supra) is clearly distinguishable on facts of the case. Since addition and the surrender thereof fulfill all the conditions of section 271AAB the levy of penalty is justified. We accordingly reverse the findings of the CIT(A)and uphold the levy of penalty on Rs.2128000/-. Ground No.1 is accordingly allowed.

7.

Ground No.2 relates to the deletion of the penalty on Rs.51134176/-.

8.

Facts relating to this issue show that the entire group had surrendered of Rs. 65 crores and the surrender amount has been disclosed in the respective hands of the members of the group. The assessee offered the amount of Rs.51134176/- just to take care any addition / deletion that may arrive in the group cases which means that the amount of Rs.51134116/- is merely a balancing figure which has no direct correlation to any incriminating material found at the time of search. The CIT(A) has rightly deleted the penalty levied by the AO on this amount, therefore, no interference is called for. Ground No.2 is dismissed.

9.

Ground No.3 relates to the deletion of the penalty on Rs.30 crores, the underlying facts show that the AO levied penalty for the reason that the assessee had surrendered this amount only after an action u/s. 132 (1) was conducted.

10.

A perusal of the factual matrix show that this amount was added/ surrendered on the assumed cessation of liability which was already recorded in the books of account. Since the liability was already recorded in the books of account and for some reason it was offered for taxation for the year under consideration would not bring it in the realm of the definition of undisclosed income has defined in the explanation of section 271 AAB. The CIT(A) has rightly deleted the penalty levied on this amount and, therefore, no interference is called for.

11.

In the result, the appeal filed by the revenue is accordingly partly allowed.

Order pronounced in the open court on 24.12.2021.

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