VED PARKASH BHARTI,PANIPAT vs. ACIT, KARNAL

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ITA 1509/DEL/2015Status: DisposedITAT Delhi25 November 2020AY 2009-106 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued under section 274 was defective as it did not specify which limb of section 271(1)(c) (concealment or furnishing inaccurate particulars) the penalty proceedings were initiated for. The assessment order also lacked clarity on this aspect.

What were the facts?

During a search operation, a pen drive revealed transactions totaling Rs. 5,43,71,946. While the assessee explained most of it, Rs. 89,17,140 remained unexplained, leading to an addition. The assessee also surrendered Rs. 8 Crore in a statement under section 132(4). The Assessing Officer (AO) levied a penalty under section 271(1)(c) for concealment of income.

What were the issues?

Whether the penalty levied under section 271(1)(c) is valid when the notice issued under section 274 is vague and does not specify the limb of the offense.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 132(4),Section 274

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI

Before: SHRI SUDHANSHU SRIVASTAVA & SHRI PRASHANT MAHARISHI

For Appellant: Shri Amit Goel, CA, Shri Nippun Mittal, CA
For Respondent: Shri Sanjay Tripathi, Sr. DR
Hearing: 11/11/2020Pronounced: 25/11/2020

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A)-3, Gurgaon dated 05.01.2015 for the Assessment Year 2009-10, wherein penalty u/s 271(1)(c) of the Act levied by the Assistant Commissioner of Income Tax, Central Circle, Karnal amounting to Rs. 2860160/- vide order dated 30.09.2013 u/s 271(1)(c) of the Act is confirmed. 2. The assessee has raised the following grounds of appeal:- “1) The search & seizure operation was conducted on Ved Bharti Group of case on 8-4-2010 & 9-4-2010. During the-" search operation a pen drive was found & seized from the vehicle no. HR06N0063 parked in front of Residence of assessee. The vehicle was in the name of Company in which Assessee is one of the director. In the per drive transaction of Rs. 5,43,71,946/- were there for which assessee explained 4,54,54,816/- transactions and the balance amount of Rs. 89,17,140/- remained unexplained and addition were made in the returned income. 2) During search operation the assessee surrendered Rs.

8. Crore as per statement under section 132(4) dated 8-4- 2014 & 9-4-2014. Page | 1 3) The assessee had declared 6.04 Crore in the returns of income filed for AY 2011-12 filed u/s 153A(1). 4) To fulfill the commitment made regarding surrender as per statement under section 234 the A.O made addition of Rs. 110 Lacs for A.Y. 2011-12 and 89,17,140 in A.Y. 2009-10. The assessee duly accepted the addition made by the Assessing Officer as he has already surrendered the amount in statement given u/s 132(4). 5) The assessee did not prefer any appeal since he wanted peace of mind & wanted to avoid any litigation. 6) During Assessment proceeding the assessee furnished that he had agreed for addition of Rs. 89,17,140/- since it was declared in the statement given u/s 132(4) in which he surrendered the income. 7) The A.O. levied penalty u/s 271(1)© since the A.O. believed that the assessee has not explained the entries of Rs. 89,17,140/-. 8) Further in appeal before Commissioner of Income Tax Appeal-3, Gurgaon. The assessee gave the reply in which he relied upon the case law of Prem Arora vs. Deputy Commissioner of Income Tax (2012) 78DTR (Delhi) Tribunal in which the ITAT deleted the additions in which the assessee has disclosed the surrender amount in returned income u/s 153(A) and deleted the penalty u/s 271(l)(c).”

3.

Brief facts of the case shows that there was a search on the assessee on 08-9.04.2010. Consequent to that assessee who is deriving income from salary, business and other sources was issued notice u/s 153A on 10.02.2011. In response assessee submitted that original return filed may be treated as return u/s 153A. In the return of income the assessee declared regular income of Rs. 222131/- and agricultural income of Rs. 88200/-. Assessment u/s 153A was passed wherein, addition of Rs. 8917140/- was made with respect to surrendered income and deficit therein. Assessment order u/s 153A was passed on 25.03.2013 determining total taxable income of Rs. 9139271/-. During the course of assessment proceedings the ld AO initiated penalty proceedings stating that assessee is liable for penalty u/s 271(1)(c) of the Act for concealing and furnishing inaccurate particulars of his income.

4.

The assessee did not prefer any further appeal.

5.

Therefore, the ld AO initiated penalty proceedings. In response to the penalty proceedings the assessee submitted that assessee has accepted this addition and explained the entries of the disclosures. No documentary evidence etc are found during search. Assessee also stated Page | 2 that it has accepted the addition to buy peace and to avoid further litigation. The ld AO rejected the contentions of the assessee stating that assessee has concealed income of Rs. 8917140/- and levied a penalty of Rs. 2860160/- by the order dated 30.09.2013.

6.

The assessee preferred appeal before the ld CIT(A) who confirmed the same and therefore, assessee is in appeal before us.

7.

At the time of hearing the assessee submitted a paper book wherein, at page No. 19 he referred to the application for admission of additional ground of appeal

stating that no satisfaction has been recorded by the ld AO in the assessment order and therefore penalty orders are liable to be cancelled. He also raised the second ground that the notice u/s 274 issued in this case is defective and contrary to the provision of law and therefore penalty u/s 271(1)(c) of the Act is liable to be cancelled. He submitted that the additional ground raised by the assessee are though covered in ground No. 1 of the appeal of the assessee, however, they bring out the specific reason for raising the above ground. He submitted that these grounds are purely legal in nature and goes to the root of the matter and therefore, should be admitted.

8. The ld DR vehemently objected to the admission of the additional ground and stated that same were never raised before the lower authorities.

9. We have carefully considered the rival contentions and find that additional ground raised by the assessee goes to the root of the matter of levy of penalty as it challenges the validity of the penalty itself. These are legal ground, does not require any further investigation of the fact and hence same are admitted.

10. On the additional ground we have heard rival contentions and find that in the assessment order itself the ld AO at the time of making the assessment order did not specify any one limb of the reason for levy of penalty. In the assessment order he initiated the penalty proceedings stating that assessee is liable for penalty u/s 271(1)(c) of the Act for concealing and furnishing inaccurate particulars of income. In the show cause notice issued u/s 274 of the Act read with section 271(1)(c) of the Act dated 25.03.2013 he has not struck off any of the twin charges. At Page | 3

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