ISMAILBHAI SAVDIBHAI HIRA,AHMEDABAD vs. THE ITO, WARD-5(3)(1), AHMEDABAD

The assessee filed his return of income for AY 2009-10 on 31.08.2015 declaring total income amounting to Rs.45,055/-. A search action u/s 132 of the Act was carried out in the case of Shri Vikas A. Shah on 03.01.2013 and certain documents were found in the name of assessee i.e. Shri Ismail Savadibhai Hira. After following the procedures, a notice u/s 153C of the Act was issued thereby recording the reasons for re-opening on 27.02.2015 and thereafter the assessee filed his return of income. The Assessing Officer made addition u/s 68 of the Act in respect of cash/clearing deposits in bank account with Bank of India and also made addition related to the same section thereby making additions of Rs.1,16,902/- and Rs.5,51,003/-. The Assessing Officer also made addition of Rs.5,30,180/- u/s 69 of the Act on account of unexplained income in respect of trial balance of M/s. Red Carpet Resorts Pvt Ltd. The assessment was completed on 18.12.2015. The CIT(A) granted partial relief and confirmed the addition of Rs.1,05,338/- u/s 68 of the Act and also that of Rs.5,51,003/- under the same section related to the said addition. The CIT(A) also confirmed the addition of Rs.5,30,180/- u/s 69 of the Act.

Being aggrieved by the order of the CIT(A), the assessee filed appeal before the Tribunal and the Tribunal vide order dated 24.06.2022 granted further relief and confirmed the addition of Rs.5,51,003/- made u/s 68 of the Act and the addition of Rs.5,30,180/- made u/s 69 of the Act.

The assessee preferred appeal before the Hon’ble Gujarat High Court which is at the admission stage as of today. Meanwhile, the Assessing Officer to 207/Ahd/2024 Ismailbhai Savdibhai Hira Vs. ITO AY : 2009-10, 2010-11, 2011-12 & 2014-15 [3] initiated proceedings u/s 271(1)(c) of the Act by issuing notice dated 15.02.2023 u/s. 271(1)(c) of the Act. The assessee filed submissions and after taking cognizance of the same submissions, the Assessing Officer levied penalty of Rs.3,24,355/- in respect of concealment of income u/s 271(1)(c) of the Act.

Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld. AR submitted that in the initial assessment order the penalty u/s 271(1)(c) was initiated for furnishing of inaccurate particulars of income and the concealment of income for the two components which was confirmed by the Tribunal in quantum appeal. The Ld. AR submitted that the notice issued u/s. 271(1)(c) of the Act is also related to the ‘furnishing of inaccurate particulars of income’ only and not that of ‘concealment of income’. The Ld. AR further submitted that the Assessing Officer imposed penalty for ‘concealment of income’. Therefore, Ld. AR submitted that the assessee has never furnished inaccurate particulars or concealed any income as the assessee has filed the return of income declaring total income u/s. 153C of the Act. The addition itself categorically mentions that the assessee willfully and deliberately concealed its unexplained income while not disclosing the bank account number with Syndicate Bank; but related to the account with Bank of India, the assessee has categorically given the details and therefore, the additions made cannot be treated as furnishing of inaccurate particulars or concealment of income as the assessee has not maintained any books of accounts which is the finding in the quantum appeal of the assessee.

The Ld. DR relied upon the assessment order, order of the penalty and the order of the CIT(A). to 207/Ahd/2024 Ismailbhai Savdibhai Hira Vs. ITO AY : 2009-10, 2010-11, 2011-12 & 2014-15 [4]

We have heard both the parties and perused all the relevant material available on record. From the perusal of the assessment order, it can be seen that the penalties imposed on the component of addition of Rs.5,51,003/- was initiated for ‘concealment of income’ u/s 271(1)(c) and addition of Rs.5,30,180/- was initiated for ‘furnishing of inaccurate particulars of income’. In the assessment order, in paragraph No.6, it has only initiated penalty u/s 271(1)(c) r.w.s. 274 for ‘furnishing inaccurate particulars of income’; and when the notice u/s 274 r.w.s. u/s 271(1)(c) has been issued, the same was for ‘furnishing of inaccurate particulars’ only. Since the assessee has not maintained the books of accounts as mentioned in the order of the assessee in quantum appeal being IT(SS)A Nos. 454 to 457/Ahd/2017, order dated 24.06.2022, the question of concealment of income and furnishing of inaccurate particulars will not come into picture as the assessee has filed return of income u/s 153C of the Act when the notice u/s 153C r.w.s. 153A(1)(a) of the Act was issued to the assessee on 27.02.2015. The penalty provisions act independently and while invoking the penalty u/s 271(1)(c), both the limbs can be invoked jointly or separately with the additions made by the Assessing Officer, but while invoking Section 271(1)(c) of the Act, the Assessing Officer has to categorically mention in the assessment order as well as in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act that why there is a component of concealment of income or why there is a component of furnishing of inaccurate particulars on the part of the assessee. By not giving any reason or any finding of the assessee’s conduct, the invocation of penalty u/s 271(1)(c) fails and in the present case the Assessing Officer has not given the details in the penalty order as to how the assessee has made concealment of income related to addition of Rs.5,51,003/- u/s 68 of the Act and to the addition of Rs.5,30,180/- u/s 69 of the Act as these components were already there in the bank account transactions maintained by the assessee and therefore it cannot be treated as concealment of income. Thus, the penalty imposed by the Assessing to 207/Ahd/2024 Ismailbhai Savdibhai Hira Vs. ITO AY : 2009-10, 2010-11, 2011-12 & 2014-15 [5] Officer u/s 271(1)(c) of the Act is not justified and, therefore, appeal filed by the assessee in ITA No. 204/Ahd/2024 is allowed.

As regards to to 207/Ahd/2024, the same are identical to ITA No. 204/Ahd/2024 and the Ld. DR also stated that these are identical appeals. Hence, the same are also allowed.

In the result, all the four appeals of the assessee are allowed.