JYOTINDRA OCHHAVLAL SHAH(DECEASED),AHMEDABAD vs. INCOME TAX OFFICER, WARD-2(2)(2), AHMEDABAD

We notice at the outset that the instant lis emanates from a search action dated 27.09.2001 carried out in M/s. Nirma group cases. This assessee worked as the purchase manager of the said entity. His residential premises was also covered in the above search. The said action culminated in Section 158BC proceedings. The assessee filed his return on 28.11.2002 for the above block period stating undisclosed income of Rs.61lacs. The Assessing Officer completed a regular assessment inter alia making various additions including the two in question i.e. salary paid to Accountant and depreciation involving sums of Rs.16,000/- and Rs.40,150/-; respectively. He further initiated the impugned penalty proceedings u/s.158BFA(2) of the Act. There is no dispute that the CIT(A) as well as this tribunal confirmed the same in orders dated 24.09.2004 & 23.07.2010; respectively.

We now advert to the impugned penalty proceedings. The assessee’s case therein was that the said two disallowances did not amount to concealment of any undisclosed income from being assessed. The Assessing Officer brushed aside the same in his penalty order dated 28.03.2011. He strongly reiterated the relevant quantum proceedings to levy the impugned penalty of Rs.98,031/- in respect of various issues (including the two hereinabove). The CIT(A) affirms the same.

We have given our thoughtful consideration to rival contentions. We notice first of all that the CIT(A) has not discussed correctness of the impugned penalty appeal qua the instant two issues in page 8 para 1 of the lower appellate order. Learned Departmental Representative submits that the impugned penalty imposed u/s.158BFA(2) stands on an entirely different footing than the one u/s.271(1)(c) of the Act. There can hardly be any dispute about the said distinction. The hon’ble jurisdictional high court in CIT v. Becharbhai P. Parmar (2012) 341 ITR 499 (Guj) holds that the impugned penalty u/s. 158BFA(2) is not to be mandatorily imposed. We proceed in this legal backdrop to notice that the assessee had claimed to have paid salary to his Accountant Shri Bharat Trivedi amounting to Rs.16,000/-. He could not prove any services rendered by the said payee. Same appears to be the case regarding depreciation. The assessee’s case

This assessee’s appeal is allowed. [Pronounced in the open Court on this the 15th day of January, 2018.]