SRI SURESH CHIKKAJALA RAMAKRISHNAPPA,BANGALORE vs. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-6(1)(2), BANGALORE

2.The learned CIT[A] is not justified in upholding the penalty of Rs. 68,61,132/- levied u/s. 271[1][c] of the Act in respect of the additions made in course of the assessment proceedings that were accepted by the appellant under the facts and in the circumstances of the appellant's case.

The learned CIT[A] ought to have appreciated that there was no concealment of income or furnishing of inaccurate particulars in respect of the addition of Rs. 14,90,517/- made on account of estimate of the business income at 20% of the receipts as against 18% admitted by the appellant under the facts and in the circumstances of the appellant's case.

The learned CIT[A] ought to have appreciated that there was no concealment of income or furnishing of inaccurate particulars in respect of the Short Term Capital Gains determined on the sale of lands of Rs. 2,01,85,740/-that was voluntarily brought to the notice of the learned A.O. in course of the assessment proceedings under the facts and in the circumstances of the appellant's case.

The learned CIT[Al failed to appreciate that the appellant has neither concealed any income nor furnished inaccurate particulars of income in respect of the above additions made to warrant levy of penalty and therefore, the penalty levied u/s.271[1][c] of the Act requires to be cancelled. (B)/2019 3 5. Without prejudice to the above, the penalty levied is highly excessive and liable to be reduced substantially.

For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 2. Brief facts of the case are as under: Assessee filed its return of income on 01/05/14 declaring total income of Rs.2,22,08,070/-. Subsequently on issuance of statutory notices, and response by representative of assessee, assessment under section 143(3) was completed is determining total income at Rs.4,38,84,320/- by making following additions:  addition of Rs.14,90,517/- by increasing the net profit or business income from sale of plots from 18% to 20%:  addition of Rs.2,01,85,740/-under the head short term capital gain on sale of immovable property: 2.1 Against these additions, no appeal was filed before Ld.CIT (A) and assessee accepted the same. However, rectification application dated 23/03/16 is was filed before Ld.AO, on which order under section 154 was passed is determining total income at Rs.3,71,97,731/-. 2.2 Ld. AO initiated penalty proceedings under section 271(1)(c ), while passing the assessment order. Ld.AO initiated penalty proceedings against addition of Rs.2,01,85,740/- under the head short term capital gain on sale of immovable property. Ld. AO passed penalty order levying being 100% penalty for concealment of income. (B)/2019 4 3. Aggrieved by penalty order, assessee preferred appeal before Ld. CIT (A) who confirmed the same. 4. Aggrieved by order passed by Ld. CIT (A) assessee is in appeal before us now. 4.1 At the outset Ld.AR submitted that additional ground is raised on legal issue of challenging validity of notice under section 274 read with 271 of the Act, 1961. He submitted that in the said notice there is no striking off in appropriate limb of penalty and therefore is notice is not specific. He submitted that as this ground emanates from records no separate evidence/documents needs to be verified and the said ground deserves to be admitted. 5. Ld.Sr.DR though objected, could not controvert that additional ground so raced forms part of original record. We have perused submissions advanced by both sides in light of records placed before us. 5.1 The issue raised by assessee in additional ground emanates from the assessment record and do not require any fresh evidence to adjudicate upon. We therefore, respectfully following decision of Hon’ble Supreme Court in case of National thermal Power company Ltd reported in 229 ITR 383 and Hon’ble Karnataka High Court in case of Gundathur Thimappa and sons reported in 70 ITR 70, we admit the additional ground so raised. 6. We have analysed the issue having regards to grounds of appeal