PRADEEP GARG, AJMER,AJMER vs. ITO 2(1) AJMER , AJMER

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 397/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2010-11 cuke Pradeep Garg ITO, Vs. Vinayakam, Opp. SBBJ Lohagal Ward 2(1), Road, Ajmer Ajmer LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGPPG8818D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Mahendra Gargieya, Adv. & Sh. Hemang Gargieya, Adv. jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 17/04/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 05/05/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

The present is filed by an assessee-appellant challenging the finding so recorded by the learned National Faceless Appeal Centre, Delhi [ for short CIT(A) ] dated 30/01/2024 confirming the levy of penalty for the assessment year 2010-11. The said order of the ld. CIT(A) arises because the assessee has challenged the levy of penalty order dated 26.03.2018 “Act”] by ITO, Ward 2(1), Ajmer [ for short AO]. 2. In this appeal, the assessee has raised following grounds: -

1. The impugned penalty order u/s 271(1)(c) of the Act dated 26.03.2018 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed.

2. That the impugned SCN issued u/s 274 r.w.s 271(1)(c) of the Act, is quite vague and did not at all specify which limb of S.271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment particulars of income or furnishing of inaccurate particulars of income. The impugned penalty based on such a notice being contrary to the provisions of law & facts kindly be quashed.

3. Rs.1,71,452/-: The ld. CIT(A)/NFAC erred in law as well as on the facts of the case in confirming the order imposing penalty u/s 271(1)(c) of the Act of Rs. 1,71,452/-. The penalty so imposed by the AO & confirmed by the ld. CIT(A)/NFAC being totally contrary to the provisions of law and facts kindly be deleted in full.

3. Succinctly, the fact as culled out from the records is that in this case return of income declaring an income of Rs. 3,47,613/- was filed by the assessee on 23.11.2010. Later on, it has come to notice that the assessee had purchased and sold certain lands which were not found declared in the filed return of income. Further. after getting approval from appropriate authority, the case of assessee for A.Y. 2010-11 was reopened u/s. 147 of I.T. Act and assessment in this case was completed u/s 143(3)/147 of I.T. the following addition:- i Unexplained investment in construction of boundary wall Rs. 2,03,925/- claimed in sale of Pushkar land ii Unexplained investment in construction of boundary wall Rs. 3,75,917/- claimed in sale of land to Smt. Neeta Garg, near Suchna Kendra, Jaipur Road, Ajmer iii Addition u/s. 64(1)(iv) of the Act Rs. 6,90,920/- iv Addition/disallowance made u/s. 40A(3) Rs. 5,40,650/- On the above addition penalty of Rs. 5,52,009/- was computed. But in the quantum appeal of the assessee ld. CIT(A) deleted the addition mentioned at sr no iii and iv. Considering that aspect of the matter ld. AO revised penalty of Rs. 1,71,452/-. Apropos to the addition sustained the relevant finding from the assessment order is reproduced herein below :

(i) Addition of Rs. 2,03,925/-on account of Unexplained investment in construction of boundary wall claimed in sale of Pushkar land :- During the course of assessment proceedings from the analysis of Trading a/c of property business it was noticed by the then A.O. that Rs. 2,03,925/- was debited for boundary wall expenses but no evidence of such construction was submitted by the assessee. Assessee could not furnished map of plots converted indicating the area and period of construction was also not clarified by the assessee. Even assessee could not substantiate the withdrawals of availability of fund for construction of boundary wall. Assessee submitted routine reply without any documentary supporting evidence. Therefore, Rs. 2,03,925/- was added back to the total income of the assessee on a/c of boundary wall expenses. (ii) Unexplained investment in construction of boundary wall claimed in sale of land to Smt. Neeta Garg, near Suchna Kendra, Jaipur Road, Ajmer:

In the same way, assessee has debited Rs. 3,75,917/-for boundary wall expenses but no proof of construction was submitted by the A.O. at the time of assessment proceedings. In reply, assessee only stated that to sale the part property to his wife and boundary wall constructed. The reply submitted by the assessee was general and vague. Considering the fact and circumstances of the case, A.O. had to add Rs. 3,75,917/- in total Income of the assessee on a/c of boundary wall expenses.

4. Aggrieved from that order of the ld. AO levying the penalty the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:

“5. After examination of the material on record, the appeal order is passed as herein under.

6. In the case, appeal order on AO’s order u/s 143(3) rws 254 has been passed on 23.11.2023. The same reads as under:- “Coming to the facts of the case, it is to be seen that assessee has not refuted the fact that in the photographs printed on transfer deed, there was no boundary wall surrounding the plot and in the transfer deed also there was no mention of existing boundary wall. Against these facts, assessee has filed the hand written letter from person who has claimed that he constructed the boundary wall and received payments on various dated. But all the payments were below Rs. 20,000/- and there was no evidence of any payment through banking channel. Therefore, the CIT(A) had correctly confirmed the addition. Since the so called letter from Kamal Raniwal was filed first time before CIT(A), ITAT remitted the matter to the AO to decide the issue afresh. On examination of the material on record, there is no doubt that the assessee has failed to establish the claim that boundary wall was constructed before the transfer took place and the claimed expenditure of Rs. 3,75,917/- was genuinely incurred. Therefore, AO was justified in treating the amount of Rs. 3,75,917/- as unexplained income of the assessee. Accordingly, the addition of that amount is confirmed."

6.1 Apart from the above, addition of Rs. 3,75,917/-, Hon'ble ITAT had confirmed another addition of Rs. 2,03,905/- and the facts and circumstances for that issue were also similar, i.e. bogus expenditure in construction of boundary wall for plot of land at Pushkar. For that plot also assessee had failed to establish that he had indeed made expenditure in construction of boundary wall. Thus, bogus expenditure was claimed to the tune of Rs. 5,79,822/- (3,75,917/- + 2,03,905/-) towards construction of boundary walls on two plots of land.

6.2 In written submission, assessee has mainly challenged the penalty proceedings on the technical ground that in the assessment order, AO had not specified whether the penalty proceedings were being initiated for furnishing inaccurate particulars of income or the penalty proceedings were initiated for concealment of particulars of income. He has taken the plea that penalty cannot be initiated on both limbs of section 271(1)(c). He has also pointed out that in the original (first) notice u/s. 274 rws 271, issued on 28.01.2016 as well as in the subsequent notice issued on 01.03.2018, AO had not struck off the non applicable limb of section 271(1)(c). As a result, there was no clarity whether the notice was for concealment of particulars of income or for furnishing inaccurate particulars of income. He has filed copies of those notices. For his contention, assessee has relied on judgments of Hon'ble Gujarat High Court and Hon'ble Supreme Court and Hon'ble Karnataka High Court (as mentioned in his submission dated 18.10.2023, as reproduced in Para No.4 above).

6.3 As per the facts on record, in the assessment order, it was recorded that penalty proceedings were initiated for "furnishing inaccurate particulars". This clearly shows that assessee was aware that the penalty proceedings were initiated for furnishing inaccurate particulars of income. Since there was clarity in the assessment order, the mistake in the penalty notice, which was issued through standardized proforma, in no way caused prejudice to the assessee and prevented him from filing an effective reply on the facts of his case. This issue stands settled by Hon'ble Supreme Court which had confirmed the judgment of Hon'ble High Court of Madras in the case of Gangotri Textiles Ltd. (order dated 25.08.2020). In that judgment, it has been observed that all violations will not result in nullifying the order passed by statutory authorities. If assessee fails to establish that he had been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply due to the defect in the notice, there is no case for treating the proceedings invalid. In view of above facts, assessee's contention regarding defective notice is rejected and Ground No.1 is dismissed.

6.4 Regarding Ground No.2, the fact remains that there was no evidence of incurring of expenses of Rs. 2,03,925/- and Rs. 3,75,917/- on two plots of land. As mentioned above, the addition of Rs. 2,03,925/- stands confirmed by ITAT and the addition of Rs. 3,75,917/- stands confirmed by CIT(A). Both the claims were made to evade tax on income arising as a result of sale of these plots of land. Assessee had furnished inaccurate particulars of income by claiming expenses towards cost. But such expenses were not incurred. In the given facts, AO was Pradeep Garg vs. ITO bound to initiate penalty proceedings for furnishing inaccurate particulars of income. Therefore, AO's action is upheld and penalty related to the income of Rs. 5,79,822/-(2,03,925/- + 3,75,917/-) is confirmed. As a result, Ground No.2 is dismissed.

General Facts: The appellant Shri Pradeep Garg resident of Ajmer is an Individual. He derives Income from salary, business capital gain and other sources. The appellant had e-filed his return of income u/s 139 of the Act on 23.11.2010 at the total income of Rs. 3,47,613/-. Assessment for AY 2010-11 was completed u/s 143(3)/147 of Income Tax Act, 1961 (hereinafter referred as “the Act'') on 28.01.2016 at total income of Rs. 21,59,025/-as against the income of Rs. 3,47,613/- assessed u/s 143(3) of the Act vide order dated 24.10.2011. Subsequently, the ld. AO initially imposed penalty u/s 271(1)(c) of the Act amounting to Rs. 5,52,009/-.

In the quantum appeal, aggrieved from the order u/s 143(3) of the Act, the assessee preferred an appeal before CIT(A). The ld. CIT(A) confirmed the additions related to Unexplained Investment in construction of boundary walls on the lands situated in Pushkar -Rs. 2,03,925/-(which is not involved here) and also of Rs. 3,75,917 /-situated near Suchna Kendra, Ajmer. The assessee filed further appeal before the Hon'ble ITAT, Jaipur who vide its order dt. 09.08.2019 restored the matter to the file of AO. Unfortunately, however, the ld. AO vide order dt.18.06.2021 and also ld. CIT(A) vide order dt. 23.11.2023 repeated the impugned addition without appreciating the facts, evidences and submission made by the appellant. The ITAT also confirmed these additions.

In the penalty, aggrieved from the order u/s 143(3) of the Act, the assessee preferred an appeal before CIT(A), but did not find his favour. The ld. CIT(A), partly allowed the appeal of the assessee vide order dated 30.07.2021 and the AO revised the penalty amounting to Rs. 1,17,452/- u/s 275(1A)/154 of the Act. Hence this appeal. Submission: 1. Legal arguments: 1.1 Assessment and penalty - separate proceedings: It is pertinent to note that the AO has levied the penalty for concealment of income only & only on the basis of findings recorded by the AO in the assessment order. It is a settled principle of law that assessment and penalty proceedings are separate and distinct from each other. Kindly refer Durga Kamal Rice Mills v/s CIT (2004) 265 ITR 25 (Cal.), CIT & Anr. v/s Anwar Ali (1970) 76 ITR 696 (SC), CIT v/s Ishtiaq Hussain (1998) 232 ITR 673 (All). The AO after reproducing the relevant portion of CIT(A) order for quantum and discussing the provisions u/s 271(1)(c), merely alleged but failed to bring any material whatsoever by making independent inquires to support the finding of concealment of income & furnishing of inaccurate particulars. The ld. AO simply stated that the assessee was unable to fully satisfy the CIT(A) regarding additions made, leading to only part relief on the additions made by the ld. AO, the findings of the AO in penalty proceedings are reproduced here: “On being aggrieved by the order, assessee preferred an appeal before the Ld. CIT(A), Ajmer and the Ld. CIT(A) has partly allowed the appeal of assessee vide his order No. 372/2015-16, dated 27.10.2016 and confirmed the addition of Rs. 2,03,925/- against the Pushkar Land and Rs. 3,75,917/-against the Suchna Kendra Land, Ajmer. The Ld. CIT (Appeals) in his order stated that either during the course of assessment proceedings or appellate proceedings, the assessee has not been able to furnish any evidence to substantiate his claim that he has incurred any expenditure towards construction of boundary wall on "Pushkar Land" sold by him. Therefore, the disallowance of Rs. 2,03,925/- made by the A.O. is hereby confirmed and also stated in respect of Suchna Kendra land that during the course of assessment proceedings, the assessee has not been able to furnish any evidence to substantiate his claim that he has incurred any expenditure towards construction of boundary wall on “Sunchna Kendra land” sold by him. The additional evidences furnished by the appellant during the course of appellate proceedings are not admitted under Rule 46A, as the appellant has not filed any application for admission of additional evidence under rule circumstances given in Clause (a) to (d) of sub-rule 1 of Rule 46A. Therefore, the disallowance of Rs. 3,75,917/- made by the A.O. is hereby confirmed.

Pradeep Garg vs. ITO The Ld. CIT (Appeals) deleted the additions in respect of following issues and noue decided the appeal in favour of assessee” Addition u/s 64(1)(iv) of the Act Rs. 6,90,920/- Addition/disallowance made u/s 40A (3) Rs. 5,40,650/- 1.2. Penalty so imposed being totally contrary to the provisions of law: The order imposing penalty is quasi-criminal in nature and, thus, the burden lies on the department to establish that the assessee had concealed his income. Since the burden of proof in penalty proceeding varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income or that a deduction has wrongly been claimed, cannot automatically be adopted, though a finding in the assessment proceedings constitutes good evidence in the penalty proceeding. In the penalty proceedings, thus, the AO is required to bring positive material showing intentional concealment.

“ GOA 3 & 4: Rs. 3,75,9179/- Addition u/s 69 on account of Unexplained investment in construction of boundary wall. Facts: The ld. AO has dealt with this issue at Pg.2 of Pr.3 onwards. The ld. AO ignoring the crucial findings by the Inspector held as under: “04. After going through the above report and reply submitted by the assessee, it is fact that boundary wall was constructed on the plot situated near Suchna Kendra. However, the following facts have been emerged on further analysis of the reply and documentary evidences available on record- (i) As per copy of the sale deed filed with the reply, it is nowhere mentioned in the sale deed or registry that there was any boundary wall constructed on the plot at the time of sale of the plot by the assessee to Smt. Neeta Garg. (ii) The assessee had submitted a letter dated 01/11/2009 regarding "Nirman Theka Karya" purported to be issued by Sh. Kamal Raniwal S/o Late Sh. Ramesh Raniwal, Kotra, Ajmer for payment of Rs. 2,43,160/- on various dates from 18.08.2009 to 31.10.2009. On going through the payment details mentioned in the said letter, it was found that payment of Rs. 17,000/- was made on 21.09.2010 (during F.Y. 2010-11) which pertains to the A.Y. 2011-12. As mentioned above, the letter purported to be issued by Sh. Kamal Raniwal is dated 01/11/2009 and the payment of Rs. 17,000/- was said to have been made on 21.09.2010, screenshot of letter is reproduced as under: ---------xxx---------xxx---------xxx ---------xxx---------xxx--------- The above entry raises a suspicion on the genuineness of the letter. Therefore, the account made for Nirman Theka Karya" was fabricated one and is suspicious. (iii) As per photographs printed on the sale deed, the boundary wall was not appearing in the photographs, this also shows that while registering the documents of sale deed to Smt. Neeta Garg, the boundary wall on the plot situated near Suchna Kendra, was not even in existence. “Thus, the expenses incurred on the boundary wall construction, were not properly supported with the documentary evidences, hence, the same were disallowed and added back to the income of the assessee during the assessment proceedings u/s 147/143(3) of the Act. As discussed above, on verification of the facts as per directions given by the Hon'ble ITAT, it has been established that the expenses incurred on the boundary wall construction, are not properly supported with the documentary evidences and the same are not allowable and hereby added to the total income of the assessee for the A.Y. 2010-11.” Furthermore, ld. CIT(A) erred in drawing wrong conclusion without appreciating the independent evidences and additional evidences, at pg.4 pr. 9 of order concluded the appeal proceedings as under:

“9. Coming to the facts of the case, it is to be seen that assessee has not refuted the fact that in the photographs printed on transfer deed, there was no boundary wall surrounding the plot and in the transfer deed also there was no mention of existing boundary wall. Against these facts, assessee has filed the hand written letter from person who has claimed that he constructed the boundary wall and received payments on various dated. But all the payments were below Rs. 20,000/- and there was no evidence of any payment through banking channel. Therefore, the CIT(A) had correctly confirmed the addition. Since the so called letter from Kamal Raniwal was filed first time before CIT(A), ITAT remitted the matter to the AO to decide the issue afresh. On examination of the material on record, there is no doubt that the assessee has failed to establish the claim that boundary wall was constructed before the transfer took place and the claimed expenditure of Rs. 3,75,917/- was genuinely incurred. Therefore, AO was justified in treating the amount of Rs. 3,75,917/- as unexplained income of the assessee. Accordingly, the addition of that amount is confirmed.”

Hence this ground.

Submission:

1. Impugned addition completely misconceived and without jurisdiction: At the outset, it is submitted that a reading of the assessment order and the order of the CIT(A) shows that this addition has been made on account of the unexplained investment made in the construction of the boundary wall. Thus, it is an addition made u/s 69 of the Act, though not mentioned specifically. On the other hand, however, the AO himself has contradicted his stand by doubting the very fact of construction of the boundary wall (at Rs. 2,43,160 + 60,000 + 22,760 + 46,500 + 3497 other expenses totaling into 3,75,917/-) Therefore, simply accepting the fact and assuming what the AO and CIT(A) has held is correct that there was no boundary wall constructed, there can't be any question of making any investment therein. This is, however, an alternate plea only, assuming what the authorities below have held, is correct. Thus this addition, therefore, deserves to be deleted at this stage itself.

2.1 Sufficient evidences and Inspector Report though available, but ignored: Alternatively, the short question to be decided is whether the appellant did construct a boundary wall, so as to be allowed the benefit of the cost of construction thereof while computing LTCG. Before the Hon’ble ITAT, additional evidence in the shape of a bill raised by the civil contractor, Shri Kamal Raniwal, was submitted (as was not admitted by the CIT(A)), which, was admitted by the Hon’ble ITAT, and the issue was restored to the file of the AO with certain observations and directions, reproduced here in above. It was also requested before the Hon’ble ITAT that the authorities below may kindly be directed have a physical verification at the site to ascertain the facts. The Hon’ble ITAT directed the directed the AO, to consider the evidences placed in support of construction cost, or else the AO may have a site inspection. The AO rejected the construction bill raised by the contractor, but chose to have a site verification. Pertinently, the Inspector duly visited and gave a factual report that a boundary wall was constructed at all side of the plot and is still available there.

2.2 Crucial Independent Evidence ignored: At the outset it is submitted that in compliance to the Hon’ble ITAT order, the ld. AO directed Ward Inspector to submit report w.r.t. boundary wall. On 14.06.2021. The Inspector submitted factual report (PB11-15) reproduced hereunder: “2. In pursuance to the above referred order, I personally visited the said site on 14.06.2021. The factual status report in this regard is submitted as under:- (i) The boundary wall claimed to have been constructed by the above assessee, is still found present on the plot. (ii) boundary wall is found constructed on all the sides of the plot.” It can’t be denied that ld. AO for the purpose of bringing correct facts on the surface directed inspector to submit his report on ground reality. Once his report is submitted which supports the claims of made by the assesse, the AO is no body to disregard or reject or ignore such an important factual report, the way AO did in the present case. He even did not whisper a single word if he found anything wrong or any defect in such inspection report of the Inspector. It appears the AO himself had made up his mind to make additions and had even ignored the crucial facts in support of claims made for construction of boundary wall. The AO thus clearly proceeded on a mere suspicion, whims, surmises & conjectures, without having any evidence at all.

2.3.1 The ld. AO, rejected all the evidences merely on suspicion: The fact is not denied that a detailed bill titled as “Nirman Theka Karya” raised by the civil contractor, Shri Kamal Raniwal, was submitted right before the CIT (A) in the first round and was now available before the AO, but was rejected merely on a silly ground that one of the payment of Rs. 17,000 was made on 21.09.2010, falling in FY 2010-11, AY 11-12 and therefore was held as fabricated and suspicious. A perusal of the bill shows (PB 21) that complete details of payment given to him on different dates, that nature of the construction done and the place, etc., with the dates have been given. It also contained the name and address of the contractor. The ld. AO made no inquiry from the contractor, who could be the best person to throw light on the fact, and in absence, therefore, the evidence available on record shall hold good and can't be ignored.

2.3.2 It is a fact that the AO did not bring any contrary evidence to rebut the said contract and he could not reject the same merely on suspicion. Since this was rejected without giving any opportunity/ confronting the appellant, an affidavit sworn by Shri Kamal Raniwal dt.15.07.2021(PB 23-24) was filed before the ld. CIT (A) wherein Shri Kamal Raniwal contractor categorically affirmed having constructed the boundary wall between the period 18.08.2009 to 31.10.2009 and getting the payment. The sworn statement was just to clarify the thing that 17,000/- was actually paid to him on 21.09.2009 and there was only a clerical mistake committed in the contractor's bill. Thus, the contractor bill together with the clarification through the duly sworn affidavit, both of which, remaining completely uncontroverted, were the evidences binding upon the authority’s bellow. There was no reason why not to accept these evidences in absence of any contrary evidence brought on record. Further, fact of construction of the boundary wall, the availability and existence thereof found by the Inspector in his factual report cannot be denied and has to be accepted. Kindly refer Mehta Parikh & Co. v. CIT (1956) 30ITR181(SC). 2.3.3 There apart, it is a matter of common knowledge and prevailing practice also that whenever a buyer an immovable property like a plot, a boundary wall is usually get constructed thereon. By the efflux of time, the boundary wall gets damaged, part thereof remains standing and part collapse. Thus this small item of expenditure should not have been given much a hype. May be thus, probable that in the photograph pasted in the sale deed it is not clearly visible. It is also a matter of common knowledge that photocopy quality at the office of the Registrar is very poor, cannot be conclusive with regard to construction of such a small item which otherwise a very old construction and might have damaged. Again since it is a usual practice that boundary wall is normally there on the plot and mostly in a damaged condition therefore there is hardly any need to or /any practice in making a specific mention of construction of the boundary wall in the registered sale deed. Had it been a case of construction of some room even though small, that must have find found place in the registered sale deed. These facts cannot be decisive in reaching to a conclusion against the assessee. Thus, on one on one hand there is a case where there are direct uncontroverted evidences in the shape of contractor bill and his affidavit, together with the Inspector's factual report are available on the record but on the other hand there is a vague allegation and weak evidences which are not reliable and there is no doubt hence the only inescapable conclusion is that the appellant did got a boundary wall constructed which existed and rightly claimed the cost of construction thereof. Hence, the authorities below seriously erred in recording an incorrect and perverse finding of fact contrary to the same. 2.4 Thus, the impugned additions have been made merely on suspicion. It is trite that no addition can be can be made merely on suspicion. It is well settled that suspicion howsoever strong, cannot take place of reality. Kindly refer Dhakeshwari Cotton Mills v/s CIT (1954) 26 ITR 775 (SC).

3. Onus on the AO- not discharged:

3.1 What is apparent is Real – Onus not discharged: It is a settled law that what is apparent is real unless controverted. The onus lay upon the person, who alleges that what is apparent is not real. Kindly refer CIT (Central) v/s Daulat Ram Rawatmull (1973) 87 ITR 349 (SC), followed in CIT v/s Bedi & Co. Pvt. Ltd. (1998) 230 ITR 580 (SC).

3.2 Further it is well settled law that an evidence/explanation submitted by the assessee, it has to be objectively tested. A good proof cannot be converted into no proof. Moreover, discretion conferred upon the AO has to be exercised judiciously as held in CIT vs Smt. P.K. Noorjahan (1999) 237 ITR 0570 (SC). Therefore, the impugned addition, kindly be deleted in full. GOA 5: CIT(A) erred in non-admission of additional evidence u/r 46A: Facts: The assessee during the course of appellate proceeding before CIT(A) submitted prayer for admission of additional evidence u/r 46A being two affidavits in related to issue under consideration. However, ld. CIT (A) at Pg.3 Pr.8 held as under: “7. As mentioned above, assessee has filed two affidavits. They are discussed as under: (i) Shri Kamal Raniwal son of Ramesh Raniwal, Ajmer. The affidavit is dated 15.07.2021 and claims that Kamal Raniwal had received Rs. 2,43,160/- on various dates from 18.08.2009 to 31.10.2009 and on 01.11.2009, he had given one confirmation (the hand written letter already mentioned above in this appeal order) and in that confirmation he had made a mistake that one payment of Rs. 17,000/- which was actually received by him on 21.09.2009 was wrongly written in the confirmation letter as 21.09.2010 (i.e. after the transfer of property). (ii) Other affidavit is of Ms. Neeta Garg, wife of Pradeep Garg (the assessee himself). The affidavit is dated 15.07.2021. In the affidavit, it is claimed that when she purchased the plot on 20.11.2009, boundary wall was already constructed on it.

their genuineness. That being the case, they are not evidence within the meaning provided in Rule 46A (3). As a result, the two affidavits are not treated as additional evidence. Since they are not in the nature of any evidence, they are not admitted.”

Hence this ground.

Submission: As stated earlier, the affidavit of Shri Kamal was merely to clarify that one of the entries was wrongly dated as 21.09.2010 as against 21.09.2009, which appears probable from a bare look upon the contractor bill (PB21-22) also. The AO however, held the contractor bill as fictitious and suspicious completely without confronting and without giving any opportunity to the appellant on this aspect, but straightforwardly made his observations adverse to the appellant, this itself constituted a sufficient ground for the very admission of the affidavit under Rule 46A. Again, Affidavit of Smt Neeta Garg was also quite relevant and was rightly filed wherein she affirmed the fact of getting a boundary wall constructed while purchasing the land, because there were contradictory claims on facts were made by both the parties. The ld. CIT(A) instead of understanding the evidential value and applying the same on the facts of the present case while deciding the issue before him, merely rejected the same by saying that they don't constitute any independent evidence, but has not explained how it is so. In fact, it cannot be denied that in the peculiar factual circumstances, these affidavits went to the root of the matter and were essential to decide the appeal. Powers of the first appellate authority are very wide and co-terminus with those of the AO. The Hon’ble ITAT in the first round also as held so and accepted the contractor's bill.”

“In respect of aforesaid additions of unexplained investment in boundary wall at Pushakar land and Suchna Kenda land, Ajmer, inaccurate particulars of income were furnished by the assessee and concealed the income”

3.2. It is further submitted that the AO did not appreciate that the two limbs i.e. the concealment of income or furnishing of inaccurate particulars of income carry different connotations, as held in the case of T. Ashok Pai (2007) 292 ITR 11 (SC) at page 19. This was taken note in Manjunatha (Supra) in para 61. The use of both the limbs by the AO mechanically, clearly shows a complete non- application of mind on his part and the requisite satisfaction, this way, is not at all discernible from the SCN. 3.3. Supporting Case Laws: 3.3.1. The Hon’ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory 359 ITR 565 (Karn), has held that notice u/s 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon’ble High court has further laid down that certain printed form where all the grounds given in Sec. 271 are given would not satisfy the requirement of law. In the said case in Pr. 59 it was held that: “NOTICE UNDER SEC. 274 59. As the provision stands, the penalty proceedings can be initiated on various ground set out therein. If the order passed by the Authority categorically records a finding regarding the existence of any said grounds mentioned therein and then penalty proceedings is initiated, in the notice to be issued under S. 274, they could conveniently refer to the said order which contains the satisfaction of the authority which has passed the order. However, if the existence of the conditions could not be discerned from the said order and if it is a case of relying on deeming provision contained in Expl.-1 or in Expl.-1(B), then though penalty proceedings are in the nature of civil liability, in fact, it is penal in nature. In either event, the person who is accused of the conditions mentioned in S. 271 should be made known about the grounds on which they intend imposing penalty on him as the S. 274 makes it clear that assessee has a right to contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in S. 271(1)(c) do not exist as such he is not liable to pay penalty. The practice of the Department sending a printed farm where all the ground mentioned in S. 271 are mentioned would not satisfy requirement of law when the consequences of the assessee not rebutting the initial presumption is serious in nature and he had to pay penalty from 100% to 300% of the tax liability. As the said provisions have to be held to be strictly construed, notice issued under S. 274 should satisfy the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended if the show cause notice is vague. On the basis of such proceedings, no penalty could be imposed on the assessee.”

The Hon’ble court also held that initiating penalty proceedings on one limb and find the assessee guilty on another limb is bad in law. It was held that “Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid.” 3.3.2. The above decision was followed in the case of Suvaprasanna Bhattacharya vs. ACIT dated 06.10.2015. 3.3.3. Further in the case of New Sorathia Engineering Co. vs. CIT (2006) 282 ITR 0642 (Guj), it was held that “In the absence of any specific finding in the penalty order or the order of the CIT(A) as to whether there was concealment of income of furnishing of inaccurate particulars by the assessee, impugned order of the Tribunal upholding penalty u/s 271(1)(c) is not sustainable.” 3.3.4. The Hon’ble Apex Court recently in the case of Pr.CIT, Central-I, Kolkata Vs. Basanti Properties (P.) Ltd. (2020) [2020] 114 taxmann.com 541 (SC) has dismissed SLP filed by the department against the decision of Hon’ble Kolkata High Court taking a similar view. Notably the High Court followed the decision of Hon’ble Apex Court in the case of Amrit Foods Vs. CCE (2005) 13 SCC 419 taking a similar view though in the context of penalty imposed under Rule 173 Q of Central Exercise Rules, 1944. 3.4. Covered issue: This aspect of the matter is now directly covered by a decision of this bench in the case of Shri Ramesh Chand Bansal vs DCIT in 400 & 401/JP/2015 vide order dated 21.06.2018, wherein it was held that: “……..Thus, the AO has not specified which limb of the provision, the assessee was asked to reply. This does not meet with the requirement of law. The Hon’ble Karnataka High Court in the case of CIT vs. M/s Manjunatha Cotton & Ginning Factory & Ors.(2013) 359 ITR 565 (Karn) held that sending printed form where all the grounds mentioned in S. 271 would not satisfy the requirement of law. The assessee should know the ground which he has to meet specifically, otherwise, the principle of natural justice is offended on the basis of such proceedings, no penalty could be could be imposed to the assessee……. X X X X ……………Accordingly, in view of the above facts and circumstances of the case as well as the decisions cited (supra) we hold that the notices issued u/s 274 r.w.s. 271(1)(c) of Pradeep Garg vs. ITO the Act dated 19.03.2013 are not valid and the same are quashed. Consequential levy of penalty in all the years are also deleted. Since we have deleted the penalty on legal Ground No. 4, therefore, the other legal ground being academic is not adjudicated upon. 4.0. In the result, the appeals of the assessee are allowed.” 3.5. It is submitted that in the above decisions the only stress was upon the SCN wherein only, the occasion arise for the first time for the assessee to reply towards the Show Cause as to why penalty be not imposed w.r.t one or w.r.t both the offences. But by not becoming specific in inviting a reply from the assessee, it is a gross violation of the principles of natural justice and therefore the Hon’ble Courts have treated such a notice to be vague and nullity and consequently the impugned penalty based thereon, has also been held to be without jurisdiction. On the other hand, however, the time of the completion of the assessment, it is only the initiation by the AO in the assessment order, when the assessee is not called upon to show cause against the very initiation hence, whether the penalty was initiated on one limb or the other or both the limbs, is irrelevant. Otherwise also, no appeal lay against the very initiation. Therefore, the law which is now well settled, is only and only w.r.t the vagueness in the SCN and there is no reference at all to the findings recorded or the initiation of the penalty proceeding in the assessment order. Therefore, to refer the initiation in the assessment order by the authorities to justify the imposition of penalty is complete misreading and misinterpretation of law of the land. 3.6. Under these facts & circumstances, it cannot be a case of imposition of penalty u/s 271(1)(c) for the reason that neither there was any concealment nor furnishing of inaccurate particulars. All the necessary facts were already disclosed and were available on record. It was only a matter of difference of opinion amongst the authorities below at different level. The assessee did submit its explanation which is bonafide and has also substantiated the same. Thus, it was neither a case of concealment nor a case of deemed concealment. 3.7 The ld. CIT(A) dealt with this issue in Para 6 and he relied upon a decision in case of Gangotri Textile in Para 6.3, which is completely misplaced in as much as the decision is not directly applicable nor directly related to the facts and controversy involved in the present case. He has not cited any decision which has overruled the various decisions cited/available before him. We strongly rely upon above submissions against the imposition of the penalty also. The facts and evidences submitted clearly speaks of the genuineness of the claim made hence even though the additions might have been confirmed by the ld. CIT(A) yet however, it is not the case fit for penalty in view of the settled legal positions submitted above. Also, in view of the fact that no opportunity of cross examination was provided to the assessee whose statements are alleged to be contradictory. Hence the imposed penalty deserves to be quashed.

S. NO. PARTICULARS PAGE NO.

7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee notice issued by the ld. AO dated 28.01.2016 did not specify the limb upon which he intend to levy the penalty. Even otherwise the disallowance of claim cannot be subjected to penalty as held by the apex court in the case of Reliance Petro Product(Supra). The ld. AR of the assessee so far as merits of the case is concerned filed an affidavit clarifying the payment details and the penalty considered that there is no means rea.

8. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). He vehemently argued that the addition were confirmed and that it was clear that the assessee could not support the claim and therefore, lower authority rightly confirmed the levy of penalty.

Respectfully following that binding judicial precedent we see no reason to sustain the penalty and therefore, the same is directed to be deleted.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 05/05/2025.

Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05/05/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Pradeep Garg, Ajmer 2. izR;FkhZ@ The Respondent- ITO, Ward 2(1), Ajmer 3. vk;dj vk;qDr@ The ld CIT vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 397/JP/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत