SH. HIMANSHU JAIN,CHANDIGARH vs. ACIT, CHANDIGARH

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ITA 1082/CHANDI/2018Status: DisposedITAT Chandigarh21 October 2019AY 2008-094 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that when the substantial question of law regarding the quantum addition is pending before the High Court, the penalty under Section 271(1)(c) is not leviable. The issue was set aside to the AO to be decided after the High Court's decision.

What were the facts?

A search operation revealed transactions of Rs. 25,90,000/- which were added as undisclosed income. The Assessing Officer levied penalty under Section 271(1)(c) which was confirmed by the CIT(A).

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the quantum addition is debatable and a substantial question of law is pending before the High Court.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 132,Section 153A(1)(b),Section 143(3)

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आदेश/Order PER N.K. SAINI, VICE PRESIDENT

These two appeals by the Assessee are directed against the separate order

each dated 30/06/2018 for the A.Y. 2007-08 and 2008-09 passed by the Ld. CIT(A)-

3,Gurgaon.

2.

Common issue involved in both these appeals relates to the confirmation of

penalty levied by the A.O. under section 271(1)(c) of the Income Tax Act, 1961

(hereinafter referred to as ‘Act’), both these appeals were heard together, so, these

are being disposed off by this consolidated order for the sake of convenience and

brevity.

3.

At the first instance, we will deal with the appeal in ITA No. 1081/Chd/2018 for the

Assessment Year 2007-08.

4.

Facts of the case in brief are that a search and seizure operation under section

132 of the Act was carried out at the residential and business premises of M/s Ind Swift

Group of Cases on 26/05/2011. During the course of search certain incriminating

materials were found which revealed that transactions of Rs. 25,90,000/- were recorded

for the Financial Year 2006-07 relevant to the Assessment Year under consideration. The

assessment in this case was completed under section 153A(1)(b) r.w.s 143(3) of the Act,

on 31/01/2014 at an income of Rs. 77,12,420/- by making the addition of Rs. 25,90,000/-.

The A.O. initiated the penalty proceedings under section 271(1)(c) of the Act and since

no reply was furnished from the assessee side. The A.O. passed the ex-parte order and

considered the amount of Rs. 25,90,000/-as undisclosed income for which the assessee

concealed the particulars of his income.

5.

Being aggrieved the assessee carried the matter to the Ld. CIT(A) who also

passed the ex-parte order and sustained the penalty levied by the A.O.

6.

Now the assessee is in appeal.

7.

Ld. Counsel for the assessee submitted that the issue relating to the quantum

addition is pending before the Hon'ble Jurisdictional High Court. It was pointed out that

the investment in property was in joint name and the assessee purchased the same

jointly with Shri C.D. Singla S/o Shri Ami Chand R/o H.No. 357, Sector 6, Panchkula in

equal partnership but the A.O. considered the transaction in the hands of the assessee

only. It was submitted that the assessee informed the A.O. about the relevant facts and

also stated in response to the show cause notice dt. 24/01/2014 that the said land was

in dispute and Court cases were pending at JMIC Rajpura against sellers for non

execution of sale agreement. A reference was made to page no. 9 & 10 of the

assessee’s compilation. He also furnished the copy of the order of Hon'ble Jurisdictional

High Court dt. 11/02/2019 in ITA No. 55 – 2018 (O&M) wherein it has been observed that

the said O&M was admitted for determination of substantial question of law. It was

accordingly submitted that when the substantial question of law has been admitted,

the addition itself becomes debatable and the penalty under section 271(1)(c) of the

Act is not leviable. Reliance was placed on the judgment of Hon'ble Karnataka High

Court in the case of CIT Vs. Dr. Harsha N. Biliangady [2015) reported in 379 ITR 529

(Karnataka).

8.

In his rival submissions the Ld. Sr. DR strongly supported the orders of the

authorities below.

9.

We have considered the submissions of both the parties and perused the

material available on the record. On a similar issue the Hon'ble Karnataka High Court in

the case of CIT Vs. Dr. Harsha N. Biliangady (supra) held as under:

“ Where penalty was imposed in respect of any addition where the High Court has admitted the appeal on substantial question of law, then the sustainability of the addition itself becomes debatable, and in such circumstances penalty could not be levied under section 271(1)(c).” In the present case the contention of the Ld. Counsel for the Assessee that the

substantial question of law relating to the quantum addition is pending before the

Hon'ble Jurisdictional High Court therefore we deem it appropriate to set aside this issue

back to the file of the A.O. to be decided the same after the outcome of the decision

of the Hon'ble Jurisdictional High Court on quantum addition.

10.

The facts relating to the issue raised in ITA No. 1082/Chd/2018 are identical to the

facts involved in ITA No. 1081/Chd/2018, therefore our findings given in the former part

of this order shall apply mutatis mutandis in this case also.

11.

In the result, both the above appeals of the Assessee are allowed for statistical

purposes.

(Order pronounced in the open Court on 21/10/2019 )

Sd/- Sd/- संजय गग� एन.के.सैनी, (SANJAY GARG ) ( N.K. SAINI) �या�यक सद�य/ Judicial Member उपा�य� / VICE PRESIDENT AG Date: 21 /10/2019 आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :

1.

अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

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