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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI S.S. GODARA & SHRI PRADIP KUMAR KEDIA
आदेश / O R D E R PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed by the assessee against the penalty order passed under s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 13/03/2014 by the Assessing Officer (AO) relevant to Assessment Year (AY) 2005-06 and confirmed by the Commissioner of Income Tax(Appeals)-6, Ahmedabad [CIT(A) in short] vide order dated 24/02/2016.
ITA No. 1149/Ahd/2016 Firoz Y. Kaliwala vs. Asst.Year – 2005-06 - 2 - 2. As per the grounds of appeal, the assessee has assailed the action of the CIT(A) in confirming the penalty of Rs.18,49,480/- levied by the AO under s.271(1)(c) of the Act on quantum additions/disallowances confirmed in quantum proceedings.
When the matter was called for hearing, the Ld.AR for the assessee referred to the penalty order under s.271(1)(c) of the Act and submitted that the penalty has been imposed on the estimated additions made towards alleged unaccounted sales and towards estimated seed capital investment additions as reduced by the ITAT in quantum proceedings to a lump sum amount of Rs.10 lakhs from Rs.54.94 lakhs confirmed by the CIT(A). The Ld.AR submitted that the entire addition in the quantum proceedings was based on estimations and assumptions without any tangible material in this regard. Therefore, while quantum additions may be plausible to some extent, the penal proceedings on such estimations is not permissible under s.271(1)(c) of the Act having regard to different nature and scope of the penalty proceedings.
The Ld.DR, on the other hand, relied upon the orders of the authorities below.
We have carefully considered the rival submissions and perused the orders of the authorities below and placed on record. We observe that the Coordinate Bench of the Tribunal in the quantum proceedings
ITA No. 1149/Ahd/2016 Firoz Y. Kaliwala vs. Asst.Year – 2005-06 - 3 - (IT(SS)A No.447/Ahd/2012 and Ors. order dated 29/03/2017) has found merit in the disallowance on account of estimated Gross Profits out of unaccounted sales as well as towards seed capital investment additions in principle. However, the Coordinate Bench having regard to the facts and the circumstances of the case has granted suitable relief on quantification of such additions arising out of aforesaid action. Therefore, it is not possible to accept the plea on behalf of the assessee that the additions made giving rise to the penalty proceedings are solely based on assumptions and presumptions. The AO has noted that the assessee had also acquiesced on the existence of an unaccounted income in the statement made under s.132(4) of the Act and under s.131 of the Act has referred to the orders in the orders of the appellate authorities. However, declarations made were later retracted. The unaccounted sales have surfaced from the search proceedings under s.132 of the Act. The seed capital investment on such unaccounted sale is a naturally corollary to such unaccounted sales the estimation of which has been judicially noticed by the Coordinate Bench. Therefore, consequence of penalty towards such addition is inescapable. Hence, without repeating the findings of CIT(A), we decline to interfere with the order of the CIT(A) confirming the imposition of penalty. Needless to say, the quantification of penalty will depend on ultimate additions/disallowances sustained on giving effect to the appellate order in quantum proceeding.
ITA No. 1149/Ahd/2016 Firoz Y. Kaliwala vs. Asst.Year – 2005-06 - 4 - 6. In the result, appeal of the assessee is dismissed. This Order pronounced in Open Court on 23/ 02/2018
Sd/- Sd/- (एस.एस.गोदारा) (�द�प कुमार के�डया) �या�यक सद�य लेखा सद�य ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 23/ 02/2018 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-6, Ahmedabad �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 20.2.18 (dictation-pad 7-pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …21.2.18 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….23.2.18 7. Date on which the file goes to the Bench Clerk…………………23.2.18 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………