GAUTAM HIRALAL GANDHI,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, 22(1), MUMBAI

This appeal is filed by the assessee against the order passed by the Commissioner of income-tax (Appeal) [the learned CIT(A)], National Faceless Appeal Centre (NFAC) dated 29th June, 2021 for A.Y. 2016-17, wherein the penalty levied under Section 271(1)(c) of the income tax Act, 1961 (the Act) by ACIT, Circle 21(1), Mumbai of Rs.1,10,000/- was confirmed. Therefore, assessee is in appeal on this solitary issue.

Briefly stated facts shows that the assessee is an individual engaged in the business of plastic products. He filed return of income on 15th October, 2015 at a total income of Rs.1,22,83,260/-. The assessment under

The learned Assessing Officer noted that assessee has not shown interest of Rs.20,575/- received from HDFC Ltd. of Rs.2,05,752/- and from executive engineering of Rs.91,370/-. Thus, total interest of Rs.2,97,122/- was not shown in the income of the assessee.

The assessee submitted that these incomes are credited to assessee’s account, however as the income belongs to Jolly Containers, where assessee is a partner. Therefore, the same is chargeable to tax there.

The learned Assessing Officer rejected the contention of the assessee stating that the income was credited in the name of the assessee and corresponding TDS also claimed, therefore, he made an addition of Rs.2,97,122/-. On the same, penalty proceedings under section 271(1)(C) of the Act were initiated separately for ‘concealment of income and furnishing inaccurate particulars of income’. Accordingly, total income of the assessee was assessed at Rs.1,25,83,380/-.

Assessee did not prefer any appeal and therefore, penalty proceedings initiated were concluded by order dated 28th June, 2019 levying penalty of Rs.1,10,000/- on the above addition of Rs.2,97,122/-.

The explanation before learned Assessing Officer by the assessee was that assessee started his business initially as proprietor of Jolly Containers, at that time there were certain investment in fixed deposits and also security

The assessee preferred the appeal before the learned CIT(A), who confirmed the penalty on the merits. The assessee also contested before him that the notice issued to the assessee under section 274 of the Act was without striking off of one of the twin charges. Further, as per assessment order, the learned Assessing Officer initiated

The learned Authorised Representative submitted the paper book containing 48 pages and referred to page no. 30 of the paper book stating that notice issued under section 274 read with section 271(1)(c) of the Act dated 11th June, 2019 shows that none of the twin charges have been struck off by the learned Assessing Officer . It is stated in the assessment order that the penalty was initiated for twin charges and ultimately, levied for ‘furnishing of inaccurate particulars’. It was stated that case of the assessee is squarely covered by the decision of Hon'ble Supreme Court in case of CIT vs. SSA'S Emerald Meadows [2016] 73 taxmann.com 248 (SC). Even on the merits, he submitted that income belongs to the partnership firm and not to the assessee. He further referred to the assessment order in the case of partnership firm where the above income of Rs.2,97,122/- was already offered to tax under section 143(3) of the Act.

The learned Departmental Representative vehemently supported the orders of the lower authorities.

We have carefully considered the rival contentions and perused the order of the lower authorities. In the present

In the result, the appeal filed by the assessee is allowed reversing the findings of the lower authorities. The learned Assessing Officer is directed to delete the penalty of Rs.1,10,000/- levied & confirmed under section 271(1)(c) of the Act.

In the Result, the appeal is allowed.