SHRI RAMCHAND LAXMANDAS BABANI,JAIPUR vs. INCOME TAX OFFICER, JAIPUR

आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES,’’SMC” JAIPUR

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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihyla-@ITA No. 192/JPR/2025
fu/kZkj.ko"kZ@AssessmentYear : 2011-12

Shri Ramchand Laxmandas Babani
P.No.2, Shiv Shankar Colony
Janta Colony, Jaipur – 302 004 (Raj) cuke
Vs.
The ITO
Ward -6(4)
Jaipur
LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: ANYPB 6571 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Mohit Balani, Advocate (Thru” V.C.) jktLo dh vksjls@Revenue by: Shri Gautam Singh Choudhary, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing

: 25/06/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 21/08/2025

vkns'k@ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [ for short CIT(A) ]dated 10-07-
2024, for the assessment year 2011-12 raising therein following grounds of appeal.
‘’1. The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of the AO in levying penalty amounting to Rs.2,60,090/- u/s 271(1)(c) of the Act. Under the facts, the appellant cannot be charged with any of the mischief contemplated u/s 271(1)(c) of the Act.

2
ITANO. 192/JPR/2025
5. The ld.CIT(A) has erred in law and on facts of the case in not appreciating that the AO has initiated penalty u/s 271(1)(c)of the Act without recording mandatory satisfaction as contemplated under the Act at the time of framing the assessment order.

Reg: I.T.A. Nos.192/JPR/2025 for Asst. Year 2011-12 in the matter of SHRI
RAMCHAND LAXMANDAS BABANI- Fixed on 25.06.2025 before Bench 'SMC'

Sub: An application for admitting additional evidence as per Rule 29 of ITAT
Rules, 1963

Sr. No.
Nature of document
Annexure
1. The declaration letter of Laxmi Construction on dated 5-02-2002
A 2. All the above documents are necessary and vital for the adjudication of issue of penalty u/s 271(1)(c) of the Income tax act on the pretext of Selling of immovable property with disallowance of cost of improvement adjudicated by Ld
Assessing officer and sustained by CIT(A). The aforesaid documents support the 3
ITANO. 192/JPR/2025
SHRI RAMCHAND LAXMANDAS BABANI VS ITO, WARD 6(4), JAIPUR stand of the Appellant that, the penalty of 22,60,090 levied under section 271(1)(c) is unjustified, as the disallowance of 1,53,549 towards cost of improvement was made solely due to the non-submission of supporting documents at the assessment stage. The Appellantnow seeks to submit additional evidence, including a Declaration Letter with "Laxmi Construction" for improvement work amounting to 193,000, along with the working of indexed cost.
These documents directly support the genuineness of the claim made and demonstrate that the expenditure was actually incurred in connection with the long-term capital asset sold. The failure to produce such evidence earlier was not deliberate or intended to conceal income.

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ITANO. 192/JPR/2025
1. That the Appellant has filed an Appeal against the order u/s 250 dated
10.07.2024 by way of which the respondent has rejected each ground of appeal.

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ITANO. 192/JPR/2025
(a) It is therefore, most respectfully prayed that this Hon'ble Cou may be pleased to condone the delay of 155 days in filing the Appeal against the order dated
10.07.2024 passed by the learned CIT(E).

(b) And pass any other and further order(s) as this Hon'ble Court deems fit, just and equitable in these facts and circumstances of the case.

To this effect, the assessee has filed an affidavit deposing therein the above facts of the case.
3.2
On the other hand, the ld. DR objected to such an ordinate delay and submitted that the Court may decide the issue as deemed fit and proper in the case.
3.3
We have heard both the parties and perused the materials available on record and from the submissions of the assessee, the Bench feels that the assessee was prevented as he was not properly advised to file the appeal and thus it has resulted delay. The feels that reasons advanced by the assessee are sufficient reason for not filling the appeal in time and therefore, we condone the delay considering the judicial precedent cited
(supra). Hence, the delay so made by the assessee in filing the appeal before ld.CIT(A) is condoned.

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The narration so made by the ld.CIT(A) in his order is reproduced as under:-
‘’ Page 30: On going through the facts of the case and the documents at hand it emerges that the appellant has not furnished any proof of evidence of sale or any sale receipts/ voucher etc. Hence, these grounds of appeal adduced by the appellant are not upheld.

In view of the above, these grounds of appeal are accordingly dismissed and the addition made by the AO on this account is hereby, confirmed.

[(1)] Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serves on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner

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SHRI RAMCHAND LAXMANDAS BABANI VS ITO, WARD 6(4), JAIPUR and setting forth such other particulars as may be prescribed, and the provisions ofthis Act shall, so far as may bess, apply accordingly as if such return were a return required to be furnished under section 139:]

Section 271(1)(c) of the Income-tax Act, 1961-Penalty For concealment of income (Computation of Penalty) Assessment year 2002-03 Return of income filed in response to notice under section 153A is to be considered as return filed under section 139 for purpose of penalty under section 271(1)(c) and penalty is to be levied on income assessed over and above income returned under section 153A, if any [In favour of assessee)

In view of specific provision of section 153A, the return of income filed in respome to notice under section 153A is to be considered as return filed under section 139, as the Assessing Officer has made assessment on the said return and, therefore, the return is to be considered for the purpose of penalty under section 271(1)(c) and the penalty is to be levied on the income assessed over and above the income returned under section 153A, if any Section 271(1)(c) does not specify any time-limit during which the amount of tax with interest has to be paid. When the assessees had paid the entire amount with interest, the Assessing Officer ought to have granted him immunity available under section 271(1) Therefore, penalty under section 271(1)(c) cannot be levied on the income shown in the return filed under section 153A

CASES REFERRED TO CITv Chhabra Emporium [2003] 264 ITR 249/130 Tasman 818 (Delhi) (para
6.3), CIT v. V Chandr [2004] 266 ITR 175/136 Taxman 537 (Mad.) (para 6.3),
GebilalKanhaialal (HUF) v. AM. CIT270 ITR 523/120051 143 Tasman 42 (Rai)

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(para 6.3), Axsit. CIT. GehilalKanhaialal HUF 20121 348 ITR 561/210 Taxman
244/25 taxmann.com 214 (SC) (para 6.3), CIT v. Kanhaiyalal 2008] 299 ITR 19
(Raj.) (para 6.3), CIT v. Radha Kishan Goel [20051 278 ITR 454 (All) (para 6.3),
CIT v. Abdul Rashi 201.31 40 taxmann.com 244 (Chattisgarh) (para 6.3), SMJ.
Housing v. CI7[2013] 357 ITR 698/38 tasmann.com 203 (Mad) (para 6.3), CIT
Vegetable Products Lad [1973] 88 ITR 192 (SC) (para 6.3) and Shourya Towers
(P) Ladv. Dy CIT[20131 359 ITR 523/213 Taxman 20 (Mag 30 taxmann.com.10
(Delhi) (para 7).

Saurabh M. Soparkar, Sr. Counsel and Mrs. Swati Soparkar, Adv for the Appellant P.G. Desai and Sudhir M. Mehta, Advs., for the Respondent

The Copy of judgment is placed along with these submissions and marked hereto as Annexure-"A".

Further Reliance is placed upon Shri Mahesh T Pandya Vs. ITO In Ita No. 388/SRT/2018 -Annexure "B"

Shri Ajoy Sharma Vs. DCIT in ITA No. 543 to 547/JP/2024-Annexure "C"

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The appellant shall be grateful if the above submissions are considered while disposing of the appeals for the year under consideration.’’

To support the submissions, the ld. AR of the assessee has filed following index of papers.
Sr. No.
Particulars
Pages
1. Copy of notice u/s 148 as on dated 28-03-2018
1
2. Copy of return filed by assessee on dated 30-08-2018
2
3. Copy of assessment order on dated 15-12-2018
3-6
4. Copy of notice u/s 271(1)© on dated 5-04-2019
7
5. Copy of reply of notice u/s 271(1)© filed by the appellant on 11-
04-2019 with Attachment – Demand Challan
8-11
6. Copy of order u/s 271(1)( c) on dated 25-06-2019 with copy of computation of sheet of penalty on dated 25-06-2019
12-20
7. Copy of written submission filed by the assessee before the ld.
CIT(A) on dated 16-04-2024 with 1. Passport
2. Acknolwegement 176793211160424(1)
21-33

This is to certify that page no. 1-20 were placed before the Assessing Officer whereas pages no. 21-33 is the copy of written submission filed before the ld. CIT(A)

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08-2018 declaring total income at Rs. 10,88,400/- which includes long term capital gain of Rs.10,72,028/- and income from other sources Rs.15,368/-.
Accordingly, the assessment u/s 147/143(3) of the I.T. Act had been completed on 15-12-2018 at the total income of Rs.12,77,950/-. Hence, the AO initiated penalty u/s 271(1)( c) of the Act on the basis that the assessee had concealed the income while filing the return of income and ultimately levied penalty amounting to Rs.2.60 lacs. In first appeal, the ld.CIT(A) has confirmed the action of the AO. In appeal before us, the assessee submitted that the penalty u/s 271(1)(c) of the Act in the present case had been levied on the basis that the assessee had not shown the long term capital gain while filing the original return of income. During the course of hearing, the ld. AR of the assessee had drawn attention of the Bench towards section 148 (supra) which amply clears that before making assessment u/s 147 of the Act, the AO has to necessarily issued a notice requiring the assessee to file the return of income and for the purpose of the Act, such return is treated u/s 139 of the Act. In the present case, as the alleged concealed income was shown in the return of income u/s 148 of the Act. Out of that return so filed the ld. AO levied the penalty on the whole income and the addition for disallowance of claim. Thesimilar issue has 13
ITANO. 192/JPR/2025
Vs. Suresh Chandra Mittal wherein the High Court held as under :
5. We find ourselves in agreement with the view taken by the Tribunal. It is well-settled that under section 271(1)(c), the initial burden lies on the revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority.
However, the proviso to Explanation 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide.
6. In the present case, though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing
Officer, but once the revised assessment was regularised by the revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner
(Appeals) in the facts and circumstances of the case. This reference is, accordingly, answered in the affirmative holding that the Tribunal was justified in doing so.

Thus, considering that aspect of the matter the ld. AR of the assessee submitted that the question of applicability of penal provisions u/s 271(1)(c) does not arise on the returned income filed by the assessee in response to notice u/s. 148 of the Act. Keeping in mind that aspect of the matter the bench noted that in the quantum proceeding there was disallowance of Rs.1,53,549/- towards cost of improvement and Rs.36,000/- towards transfer expenses were made only due to non-submissions of bills during assessment. The ld. AR of the assessee submitted an additional evidence

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SHRI RAMCHAND LAXMANDAS BABANI VS ITO, WARD 6(4), JAIPUR including a declaration letter with ‘’Laxmi Construction’’ for improvement working amounting to Rs.93,000/- along with working of indexed cost.
These documents directly support the genuineness of the claim made and demonstrate that the expenditure was actually incurred in connection with long-term capital asset sold. The ld. AR of the assessee submitted that omission was not deliberate or with the intent of concealing income and thus the penalty levied on such disallowance is not justified. To this effect, we take reference of the decision of Hon’ble Supreme Court in the case of CIT vs Reliance Petroproducts Pvt Ltd. 322 ITR 158 (SC). The relevant para 11& 12 of the order is reproduced as under:-
‘’11. In this behalf the observations of this Court made in Sree Krishna Electricals v. State of Tamil Nadu(2009) 23 VST 249 as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil
Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed

"So far as the question of penalty is concerned the items which were not included in the tumover were found incorporated in the appellant's account books. Where certain items which are not included in the numover are disclosed in the dealer's own account books and the assessing authorities include these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside."

The situation in the present case is still better as no fault has been found with the particulars submitted by the assessee in its Return.

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12. The Tribunal, as well as, the Commissioner of Income-tax (Appeals) and the High Court have correctly reached this conclusion and, therefore, the appeal filed by the revenue has no merits and is dismissed.

Hence, in view of the above facts and circumstances of the case, the Bench does not concur with the findings of the ld. CIT(A) and thus the penalty confirmed by the ld. CIT(A)u/s 271(1)(c) of the Act amounting to Rs.2.60 lacs is directed to be deleted.
5.0
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 21 /08/2025. ¼Mk0 ,l- lhrky{eh ½

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(Dr. S. Seethalakshmi)

(Rathod Kamlesh Jayantbhai)
U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member
Tk;iqj@Jaipur fnukad@Dated:- 21 / 08/2025
*Mishra
आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
1. The Appellant- Shri Ramchand Laxmandas Babani, Jaipur
2. izR;FkhZ@ The Respondent- The ITO, 6(4), Jaipur
3. vk;djvk;qDr@Theld CIT
4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत
5. xkMZQkbZy@ Guard File (ITA No.192/JP/2025) vkns'kkuqlkj@ By order,

सहायकपंजीकार@Aेेजज. त्महपेजतंत