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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: SH. R. K. PANDA
This appeal filed by the assessee is directed against the order dated 27.10.2016 of the CIT(A)-10, New Delhi relating to A. Y. 2010-11. 2. None appeared on behalf of the assesse at the time of hearing. It was further seen that the notice issued by the registry through RPAD was returned un-served by the postal authorities. Therefore, this appeal is being disposed off on the basis of material available on record and after hearing the Ld. DR.
Levy of penalty of Rs.1,70,317/- by the Assessing Officer u/s. 271 (1) (c) of the Act which has been confirmed by the CIT(A) is the only issued raised by the assessee in the grounds of appeal.
Facts of the case, in brief, are that assessment in this case was completed u/s. 147 /143(3) of the Act on 28.03.2016 at a total income of Rs.2,79,810/- as against the returned income of Rs.1,04,490/- by making addition of Rs.1,70,317/- on account of long term capital gain. It was noted by the Assessing Officer that the assessee during the year had sold jewellery and had earned long term capital gain amounting to Rs.1,70,317/- which was not offered to tax and accordingly added the same to the total income of the assessee.
In appeal the Ld. CIT(A) confirmed the penalty so levied by the Assessing Officer by observing as under :-
4.3 During the course of assessment proceedings on 15/02/2016, the AR of the appellant was asked to explain the source of cash deposit in his bank account and next date of hearing was on 25/02/2016. On 25/02/2016, the appellant submitted the source of cash deposit inter- alia by way of sale of gold and silver jewellery. When the AO confronted the AR of the appellant regarding the issue of capital gain on the sale of gold and silver jewellery, the appellant filed details of LTCG of Rs.1,70,317/- vide letter dated 04/03/2016. Addition on account of LTCG amounting to Rs.1,70,317/- was made by the AO. Penalty proceedings u/s 271(1 )(c) were also initiated and Page | 2 penalty of Rs.71,886/- at the rate of 300% of tax sought to be evaded was imposed u/s 271 (1 )(c). It has been submitted by the appellant that LTCG was voluntarily offered to tax during the course of assessment proceedings and therefore, penalty should not be levided. It has also been submitted that due to pending dispute, the rent for the above mentioned four months was not received by the appellant and therefore, the rental income for the said period was not included in the return of income. It is a fact that LTCG was not offered voluntarily but was offered to tax when specifically confronted by the Assessing Officer while matter was under investigation that too after so many hearings before the AO. In this regard, reliance is placed on the decision of the Hon'ble Supreme Court in the case of Mak Data P. Ltd vs CIT 358 ITR 593 (SC) The Hon’ble Court has held that - “The statute does not recognize those types of defences under Explanation 1 to sec. 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty". Further reliance is also made on the decision of Hon'ble Delhi High Court in the case of CIT v Zoom Communication Pvt. Ltd. 327 ITR 51. Considering the above, I confirm the penalty imposed by the AO. Accordingly, the above ground of appeal is dismissed.
6. Aggrieved with such order of the CIT(A) the assessee is in appeal before the Tribunal.
7. I have perused the orders of the AO and CIT(A) and heard the Ld. DR. It is an admitted fact that despite sale of jewellery and earning long term capital gain, the assessee has not disclosed the same in the return of income which was added by the Assessing Officer and thereafter initiated penalty proceedings u/s. 271 (1) (c) of the Act and levied penalty of Rs.71,886/- being 300% of the tax sought to be evaded. In my opinion levy of penalty @ 100% is not justified. I, therefore, restrict the same to 100% tax sought to be evaded which amounts to Rs.23,962/-.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 08.07.2019.