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Income Tax Appellate Tribunal, DELHI BENCH ‘F+SMC’, NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
ORDER
PER AMIT SHUKLA, JUDICIAL MEMBER :
The foresaid appeal has been filed by the assessee against impugned order dated 30.10.2018 passed by Ld. CIT (Appeals)-26, New Delhi in relation to the penalty proceedings u/s 271(1)(c) for assessment year 2013-14.
The assessee is aggrieved by levy of penalty of Rs. 5,78,509/- on account of addition on account of ALV of the property of Rs. 13,52,828/-.
The facts in brief are that a search and seizure operation was carried out on 11.09.2013 and 17.09.2013 in the case of A K N Group. The assessee was also covered in the same search. Accordingly, notice u/s 153A was issued to the assessee on 30.06.2014, in response to which, assessee has filed return of income on 30.03.2015 declaring income of Rs. 24,37,540/- which also included the ALV of certain property, but ALV of one property was not shown because according to the assessee it was not habitable. The AO’s firstly, observed that, since no return of income was filed by the assessee u/s 139 and has been filed after the date of search that to be in response to notice u/s 153A, therefore, penalty is leviable on such ALV of the property. Assessing Officer has finally levied penalty u/s 271(c) on one of the property whose ALV was not declared.
3. The Ld. CIT (A) has confirmed the penalty after observing held as under:- “c. I have considered the factual; aspects of the case. The AO was required to submit remand report in this regard per letters dated 23.08.2018 and then on 24.09.2018 allowing final opportunity. The AO has not submitted his report. Penalty is levied for acts of tax evasion by the tax payer and the machinery is laid down in the Income Tax Act, 1961. The provisions of statute cover the situations in which the appellant-assessee has concealed income or furnished the inaccurate particulars, in certain situations. In the amended scenario, the AO is bound to levy penalty u/s 271AAB as the period is specified year as per section 271AAB. On the facts situation, the levy of such penalty is mechanical and it hinges on the assessee substantiating the explanation about the earnings-source and mode involved et al, thereby proving the bonafide. The extant jurisprudence in this regard also helps viz- CIT Vs. Zoom Communication (P) Ltd. [191 Taxman 179 (DelhI)/[2010] 327 ITR 510 (Delhi)/[2010] 233 CTR 465], Union of India v. Dharamendra Textile Processors [(2007) 295 ITR 244] and MAK Data P. Ltd. vs. CIT [38 taxmann.com 448 (SC)/[2013] 358 ITR 593 (SC)/[2013] 263 CTR ]. The appellant has failed on the facts on these counts in view of the specific facts of this case. The AO has invoked section 271(1)(c) on additions, made on matters not related to search. Accordingly, section 271AAB shall not be applicable here. This penalty under section 271(1)(c) is upheld accordingly. Further, the quantum addition has been upheld in first appeal before CIT (A), the objections regarding premature imposition of penalty are rendered infructuous.”
Before us, the Ld. Counsel for the assessee has challenged the impugned penalty order on the ground that the same is barred by limitation in terms of Section 275, because the appeal of the assessee was pending before the CIT (A), therefore, AO was not correct in law to impose the penalty, as same was premature in terms of Section 275(1)(a). On merits, he submitted that, firstly, no incriminating material was found in the course of search regarding ALV; and secondly, assessee has himself disclosed the ALV of all the property in the return of income filed in response to notice u/s 153A and has also explained the reason in detail before the Assessing Officer. Apart from that, no specific charge has been specified in the assessment order or show cause notice as under which limb penalty is being levied.
The Ld. DR has strongly relied upon the order of the AO and CIT(A), and pointed out that the Ld. CIT(A) has confirmed the penalty on the ground that addition has been made on the matters not related to search and therefore, provision of section 271(1)(c) is not applicable and also the quantum of addition has been upheld in the first appeal.
After considering the rival submissions and from a bare perusal of the assessment order, it is seen that the Assessing Officer has added notional rent in respect of one property at G-17A, NDAC, Delhi, as assessee has not shown any rental income from such property. Assessee’s explanation was that it was very old building and partly in a dilapidated condition hence it was incapable of being let out. However, Assessing Officer after inquiry found that there was a well build structure and therefore, ALV should be computed. Accordingly, he impugned notional rent of Rs. 1,61,051/- per month and determined the total annual letting value at Rs. 19,32,612/- and after allowing deduction u/s 24(a) of Rs. 5,79,784/- he computed the income from house property at Rs. 13,52,828/-. Further from the perusal of the computation of income it is seen that assessee at shown income from house property from various properties and the net income from the house property was disclosed at Rs. 23,42,090/-. However, in respect of one property which has been added by AO which was not shown in the computation of the taxable income, assessee had explained that said property was very old and partly damaged and not in the condition of the let out. Whether such an old property can be let out has not been established and simple inquiry that some structure was standing cannot be conclusive that it will fetch rental value at market rate. Simply because a property has not been let out due to certain reasons, then notional ALV computed by the Assessing Officer does not leads to any inference that assessee has furnished any inaccurate particulars of income. Apart from that, the notional rent which has been computed by the AO is purely based on estimate without any credible material on record. Computing the ALV of the property without ascertaining its condition which otherwise also was not let out cannot justify levy of penalty. If the assessee has disclosed all the property and its notional ALV was disclosed then in respect of one property has explained the reason then it cannot be held that assessee has purposely concealed any particulars or furnished any particulars. Thus, in these circumstances, penalty u/s 271(1)(c) cannot be levied and same be directed to be deleted. The other grounds and issues raised before us have become purely academic.
In the result, appeal of the assessee is allowed. Order pronounced in open court on this 21st October, 2019.