SURINDER KUMAR ARORA,NEW DELHI vs. ACIT, NEW DELHI

आदेश / ORDER

PER SUSHMA CHOWLA, V.P. The present two appeals filed by assessee are against order of CIT(A)-XXXIII, New Delhi dated 10.10.2013 relating to assessment years 2008-09 & 2009-10 against the penalty levied under section 271(1)(c) & 271AAA of the Income-tax Act, 1961 (in short ‘the Act’) respectively.

10. “That the notice issued and the penalty order passed u/s 271(1)(c) are illegal, bad in law and without jurisdictional as search has taken place after 01.06.2007 and as per provision of section 271AAA sub-section 3 no penalty u/s 271(1)(c) can be imposed in respect of the alleged undisclosed income.

11. That the notice issued under section 271(1)(c)/274 of the Act, and the order passed under section 271(1)(c) of the Act are illegal, bad in law and without jurisdiction. 12. That no satisfaction has been recorded while completing the assessment proceedings, hence the notice issued under section 274 of the Act, and the order passed under section 271(1)(c) of the Act are illegal, bad in law and without jurisdiction. 13. That the penalty has been initiated vide notice under section 271(1)(c)/274 of the Act dated without any specific charge, hence, the said notice and the order passed under section 271(1)(c) of the Act are illegal, bad in law and without jurisdiction.”

5. On the perusal of record, we find that the penalty proceedings in the case has been initiated with the remark “………………penalty proceedings u/s 271(1)(c) of I.T.Act read with explanation 5A for concealment of particulars of income are being initiated separately.” However, from the copy of the notice issued u/s 274 r.w.s. 271 of the Act, we find that the Assessing Officer has failed to strike off irrelevant portion of the notice not applicable. & 840/Del/2014 Assessment Years 2008-09 & 2009-10

6. We find that the said issue stands covered in favour of the assessee by the decision of Hon’ble Delhi High Court in Pr.CIT vs Sahara India Life Insurance Company Ltd. in judgement dated 02.08.2019. Applying the ratio laid down by the Hon’ble Delhi High Court to the present case, we hold that where the Assessing Officer has failed to strike off the irrelevant portion not applicable to the assessee, there is no merit in the penalty order passed u/s 271(1)(c) of the Act. The same is held to be bad and invalid in law. Accordingly, we delete the penalty levied u/s 271(1)(c) of the Act. Since we have adjudicated the issue on preliminary ground, we do not adjudicate the issue on merit.

7. The issue raised is against the levy of penalty u/s 271AAA of the Act.

8. Briefly in the facts of the case the assessee had originally furnished return of income declaring total income of Rs.45,66,220/-. Search u/s 132 of the Act was carried out on 10.02.2009 in Dawat group of cases including the assessee. Thereafter, the assessment was completed at total income of Rs.56,68,720/-. Penalty proceedings u/s 271AAA of the Act were initiated against the assessee. The reasons for the assessment against the assessee at higher figure was that during the assessment proceedings, the assessee was asked to file the details of income from trading business, which was shown under the head “other income” to the extent of Rs.5,31,076/- in the computation of income filed with his return & 840/Del/2014 Assessment Years 2008-09 & 2009-10 of income. He was also asked to specify the nature of business carried out by him, the basis of computing such income and to identify the parties with whom such business was conducted. The assessee was asked to explain unrecorded transactions in the seized documents, in response to which the assessee offered additional income of Rs.13,02,500/-, over and above, the income returned in return of income filed in response to notice u/s 153A of the Act. The assessee had declared undisclosed income to the tune of Rs.17 crores on the basis of seized documents for the group. But later on, the same was retracted and the additional income was offered to the extent of Rs.1.60 crores (approx.) for Assessment Year 2008-09 & Rs.2.12 crores (approx.) for Assessment Year 2009-10 for the group. The assessee’s share in the undisclosed income was Rs.4,00,314/- and Rs.5,31,076/- which was shown in the return of income for Assessment Years 2008-09 & 2009-10 respectively. The Assessing Officer notes that when the assessee was asked to explain the nature of undisclosed income, he offered the additional income of Rs.13,02,500/-. The assessee took shelter of sub-section (2) of section 271AAA of the Act and pointed out that no penalty was leviable. The Assessing Officer noted that the Dawat group to which the assessee belonged, had offered only part of the additional income originally offered, hence, the assessee was held to be in default and penalty u/s 271AAA of the Act was levied at Rs.1,83,357/-.

9. Before the CIT(A), the plea was that the additional income was offered while search procedure was going on, where the search started on 17.02.2009 and was completed on 27.03.2009. The CIT(A) however, & 840/Del/2014 Assessment Years 2008-09 & 2009-10 upheld the order of the Assessing Officer confirming the levy of penalty u/s 271AAA of the Act at Rs.1,83,357/-.

10. The Ld.AR for the assessee pointed out that the issue raised in the present appeal is squarely covered by the decision of Tribunal in the case of Shri Ashwani Kumar Arora vs ACIT in order dated 16.08.2017 relating to Assessment Year 2009-10.

11. The Ld.DR for the Revenue placed reliance on the orders of the authorities below.

12. We find that similar issue raised against the levy of penalty u/s 271AAA of the Act arose in the case of other members of the Dawat group of cases, wherein search was carried out on 10.02.2009. On same facts wherein the additional income was alleged to be offered to tax during assessment was brushed aside by the Tribunal observing as under:-

13. The ld DR has pointed out that the manner of earning of the surrendered income has not been disclosed by the assessee whereas the assessee by letter dated 21.01.2010 has disclosed the manner of earning the said income by way of trading in commodities and real estate and also stated this fact is substantiated from the seized material. Moreover this factual position is not denied by the AO and this is not the basis for imposing the penalty. In that view of the matter and in view of such facts and circumstances of the case, the CIT(A) is not justified in confirming the action of the AO and accordingly, we direct the AO to delete the penalty imposed under section 271AAA of the Act. Accordingly, the appeal of the assessee is allowed.”

Order pronounced in the open court on 28th February, 2020.