ACTION CONSTRUCTION EQUIPMENT LTD.,FARIDABAD vs. DCIT, CENTRAL CIRCLE- 1, FARIDABAD

The facts, in brief, are that the assessment u/s 153A(1) of the Income Tax Act (hereinafter referred to ‘the Act’) was completed on 26.12.2011 at assessed income of Rs.32,88,91,470/- by the ACIT Central Circle-I, Faridabad. It is noted by the Assessing Officer (“AO”) that the issue related to deduction 80IC of the Act was set-aside back to the file of the Assessing Officer. It is further observed by Assessing Officer that, in respect of addition of Rs.15,96,494/- made during the course of assessment on account of unaccounted receipt/expenditure as noted in Saraswati note pad which was found and seized from the premises of the assessee company, the assessee did not file any appeal. The Assessing Officer initiated penalty proceedings on this addition and subsequently by the impugned order dated 29.09.2015 imposed penalty u/s 271(1)(c) of the Act of Rs.5,42,648/-.

Aggrieved against this, the assessee preferred appeal before the ld. CIT(A), who sustained the penalty and now the assessee is in appeal before the Tribunal.

Ld. Counsel for the assessee submitted that the grievance of the assessee against imposition of the penalty are that the Ld. CIT(A) failed to appreciated the facts that the addition was made on the basis of certain figures noted in note pad which did not belong to the assessee, There was no material to assume that the expenditure was incurred by the assessee. Hence, no penalty could be imposed on such ad-hoc addition. Moreover, the penalty has been imposed without specifying specific charge in the notice issued u/s 274 of the Act. Therefore, assumption of jurisdiction was contrary to the settled proposition of law. Further, the ld. counsel for the assessee submitted that the facts were identical in the Assessment Year under appeal and Assessment Year 2010-11 interestingly, the Assessing Officer in the Assessment Year 2010-11, dropped the penalty proceedings, however imposed in the Assessment Year under appeal in arbitrary and unjustified manner. He further submitted that even otherwise also this penalty cannot be sustained as the same has been imposed without specifying the charge. In support of this contention, Ld. Counsel for the assessee relied on the judgement of Hon’ble Jurisdictional High Court rendered in the case of PCIT vs Sahara Life Insurance Company Ltd. reported in 432 ITR 84.

Per contra, the Ld. Sr. DR opposed the submissions and supported the orders of the authorities below.

We have heard the rival submission, perused the material available on record and gone through the orders of the authorities below. The Revenue has not controverted the fact that the facts are identical as were in the Assessment Year 2010-11 and the penalty proceeding pertaining of this year was dropped. The assessee has placed on record the order of the Assessing Officer pertaining to the Assessment Year 2010-11 dated 29.09.2015, wherein, the Assessing Officer had himself dropped the penalty proceedings. However, in the Assessment Year under appeal, the Assessing Officer imposed penalty by observing as under:-

The Assessing Officer has not given any reason as to why he dropped the penalty in Assessment Year 2010-11 and sustained the imposition of penalty for Assessment Year 2009- 10 under the same set of facts. Moreover, in the impugned penalty order, the Assessing Officer has stated that non-filing of appeal goes to demonstrate the acceptance by the assessee of furnishing/concealing of income to the tune of Rs.15,96,494/-.

In the result, the appeal of the assessee is allowed.