DCIT -CC-7(3), MUMBAI vs. KAVITA SINGH, MUMBAI

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ITA 1597/MUM/2019Status: DisposedITAT Mumbai02 March 2021AY 2008-094 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal affirmed the CIT(A)'s decision to delete the penalty. It agreed that penalty cannot be levied on additions deleted by the ITAT and that the confirmed additions for old paintings did not warrant a penalty. The restoration of the jewellery addition also meant no penalty could be levied.

What were the facts?

The Assessing Officer made additions for unexplained investment in paintings and jewellery and levied a penalty under Section 271(1)(c). The CIT(A) deleted the penalty, noting that most additions were deleted by the ITAT and the remaining confirmed additions involved very old paintings for which bills were not expected to be preserved. The jewellery addition was restored to the AO for re-adjudication.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when substantial additions are deleted by higher authorities and the remaining additions pertain to old assets where proof of purchase is difficult to retain.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 153A,Section 274,Section 271AAA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “H” MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN

For Appellant: Ms. Shruti Desai, AR
For Respondent: Mr. Gurbinder Singh, DR, Ms. Shruti Desai, AR
Hearing: 22/02/2021Pronounced: 02/03/2021

ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the Revenue. The relevant assessment year is 2008-09. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-49, Mumbai [in short ‘CIT(A)’] and arises out of penalty levied u/s 271(1)(c) of the Income Tax Act 1961, (the ‘Act’).

2.

The ground of appeal filed by the Revenue reads as under :

On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was correct in deleting the penalty as levied by the AO; wherein the AO was satisfied that the assessee has concealed the particulars of income and furnished inaccurate particulars in respect of investments in paintings and jewellery within the meaning of section 271(1)(c) and has allowed the appeal of the assessee considering only the fact that the notice was issued u/s 274 r.w.s. 271(1)(c)/271AAA of the I.T. Act.

3.

Briefly stated, the facts of the case are that the Assessing Officer (AO) completed the assessment u/s 143(3) r.w.s. 153A on 30.12.2009. Addition of Rs.2,28,95,000/- on account of unexplained investment in paintings and Rs.41,81,027/- on account of unexplained jewellery was made by the AO. Later on, the AO levied a penalty of Rs.95,00,000/- u/s 271(1)(c) of the Act.

4.

Aggrieved by the penalty levied by the AO, the assessee preferred an appeal before the Ld. CIT(A). We find that vide order dated 17.12.2018, the Ld. CIT(A) deleted the said penalty on merits by observing that :

“6.8 Even on merits, as could be seen from the facts and circumstances of the case, 98% of the additions have been deleted by the Hon'ble ITAT with regard to unexplained investment in paintings. With regard to the addition on account of investment in unexplained paintings, the Hon'ble ITAT has given relief to the tune of Rs.2,04,35,000/- and no penalty can be levied on this deletion made by the Hon'ble ITAT. What has been confirmed is only an investment to the tune of Rs.4,60,000/- for five paintings. Out of this, two paintings are very old, one of Naina Dalal costing Rs.3,00,000/- which was made in 1973 and the other of William Danial costing Rs.50,000/- which was made in 1843. The assessee is not expected to preserve the bills for such a long period. The addition has been confirmed in the absence of evidence from the assessee but this is not a case which would warrant levy of penalty either for concealment of income or for furnishing of inaccurate particulars. With regard to the addition on account of unexplained investment in jewellery, it has already been mentioned that the same has been restored to the file of the AO for re- adjudication. When the addition itself has been set aside, there is no case for levy of penalty on this addition.”

5.

Before us, the Ld. Departmental Representative supports the order passed by the AO. On the other hand, the Ld. counsel for the assessee relies on the order of the Ld. CIT(A).

6.

We have heard the rival submissions and perused the relevant materials on record. In the instant case, the Tribunal has deleted addition to the tune of Rs.2,04,35,000/- on account of unexplained investment in paintings. As recorded by the Ld. CIT(A), what has been confirmed is only an investment to the tune of Rs.4,60,000/- on five paintings. Out of this, two paintings are very old, one of Naina Dalal costing Rs.3,00,000/- which was made in 1973 and the other of William Danial costing Rs.50,000/- which was made in 1843. We concur with the observation of the Ld. CIT(A) that “the assessee is not expected to preserve the bills for such a long period.” With regard to addition on account of unexplained investment in jewellery, we find that the same has been restored to the file of the AO for adjudication. In such a scenario, the Ld. CIT(A) has rightly deleted the penalty levied by the AO. We affirm the order of the Ld. CIT(A).

7.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open Court on 02/03/2021.

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