SHRI GURUSAMY RAMAMURTHY,,PONDICHERRY vs. ITO, WARD - 1,, PUDUCHERRY

आदेश/ O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER :

The assessee filed these appeals against the orders of

Commissioner of Income Tax (Appeals)-Puducherry, in ITA Nos.

109&112/CIT(A)-PDY/2018-19 dated 26.06.2019 for the assessment

year 2016-17, respectively.

:-2-: ITA Nos. 2348 & 2349/Chny/2019 2. M/s. Gurusamy Ramamurthy, the assessee, an HUF filed its

return for assessment year 2016-17 on 25.07.2016 admitting the total

income at Rs. 2,66,650/-. While making the assessment, the

Assessing Officer rejected the assessee’s agricultural income claim to

the extent of Rs. 10 lakhs for want of details/evidences and completed

the assessment, which the assessee itself accepted by its letter dated

04.12.2018. Subsequently, the Assessing Officer issued notice u/s.

247 r.w.s 271(1)(c) of the Act and after considering the assessee’s

reply, levied penalty u/s. 271(1)(c) of the Act. Aggrieved, the

assessee filed appeals against both the orders before the CIT(A). The

CIT(A) dismissed the appeals. Aggrieved against those orders, the

above appeals were filed by the assessee.

CIT(A) erred in confirming the addition made by the AO without

adverting the evidences furnished by the assessee from Shri.

Chandrakesavan, by way of confirmation letters dated 29.10.2015

(2nos.) and 05.01.2016, the certificates issued by the Village

Administrative Officer evidencing the ownership of agricultural land

and the availability of casurina in those lands etc. Therefore, he

prayed that the addition made by the AO, sustained by the Ld. CIT(A)

:-3-: ITA Nos. 2348 & 2349/Chny/2019 may be deleted. Per contra, the Ld. DR inviting our attention to the

copy of assessee’s letter dated 04.12.2018, placed in the paper book

filed by the assessee submitted that the assessee has clearly stated

that I could not produce purchaser of casurina and I am willing to

offer Rs. 10 lakhs to the income returned. Therefore, the Ld. DR

submitted that the addition made by the AO and sustained by the Ld.

CIT(A) does not require and disturbances.

material. It is clear from the above that the assessee voluntarily

admitted Rs. 10 lakhs income out of his agricultural income.

Therefore, the assessment made by the AO and sustained by the Ld.

CIT(A) is on sound footing and hence the corresponding grounds of

the assessee appeal are dismissed.

AR submitted that in the letter dated 04.12.2018, the assessee has

submitted that on account of his admission penalty proceedings should

not be initiated. Further, when the Assessing Officer required the

assessee to showcause for the levy of penalty, the assessee submitted

that in order to cooperate with the department, the assessee

:-4-: ITA Nos. 2348 & 2349/Chny/2019 voluntarily offered additional income on the condition that no penalty

proceedings would be initiated. Further, the assessee submitted that

he has furnished confirmation letters from the purchaser of Casurina

has given the bank details in which the sale proceeds are deposited,

all the receipts are through cheque only and therefore, the assessee

pleaded that penalty proceedings should be dropped. In spite of it,

the Assessing Officer levied the penalty and the Ld. CIT(A) without

appreciating the facts and circumstances of the case sustained the

penalty. In this regard, the Ld. AR submitted that the penalty

proceedings are separate from the assessment proceedings. During

the penalty proceedings, when the assessee has submitted the

confirmation letters, certificates from Village Administrative Officer and

bank particulars and explained the transaction, the levy of penalty cant

be made without recording a finding that the explanation offered by

the assessee is false. Therefore, the Ld. AR pleaded to delete the

impugned penalty. Per contra, the Ld. DR supported the orders of the

lower authorities.

material. It is clear from the above that the assessee has furnished

confirmation letters from the purchasers of Casurina and necessary

:-5-: ITA Nos. 2348 & 2349/Chny/2019 certificates from the Village Administrative Officer to prove that the

assessee is owner of the land and he has grown a Casurina Plant etc.

The assessee has also explained that the transactions were

undertaken through his bank accounts and receipts are through

banking channels. Thus, the assessee has clearly explained that he

was in receipt of the impugned sum from the sale of Casurina plant.

It is also seen from the orders of the lower authorities that the AO

issued summons to the purchaser, Shri. Chandrakesavan and levied

penalty for non-compliance of the purchaser and compelled the

assessee to appear u/s. 131. Therefore, the assessee agreed to admit

additional income on a condition that penalty proceedings should not

be initiated. However, when the AO has initiated penalty proceedings

and sought for explanation, the assessee explained his transactions

and brought to the notice of the AO that the impugned transactions

were undertaken through banking channel. Therefore, the assessee

prima facie, placed relevant materials and explained the transaction.

The penalty proceedings being a separate proceeding, if at all, the AO

intends to levy penalty, then the AO is bound to record the satisfaction

that the explanation offered by the assessee is false. In this case,

since the AO has not recorded such findings, we are of the opinion

:-6-: ITA Nos. 2348 & 2349/Chny/2019 that the penalty levied is un-sustainable and hence it is deleted. The

corresponding grounds of the assessee are allowed.

is dismissed and its appeal in ITA No. 2349/Chny/2019 is allowed.

Order pronounced on Wednesday, 04th March, 2020 at Chennai.

Sd/- Sd/- (जॉज�माथन) (एसजयरामन) (GEORGE MATHAN) (S. JAYARAMAN) लेखासद!य/Accountant Member या�यकसद!य/Judicial Member

चे�नई/Chennai, 1दनांक/Dated: 04th March, 2020 JPV आदेशक)&�त3ल4पअ5े4षत/Copy to: 1. अपीलाथ(/Appellant 2. &'यथ(/Respondent 3. आयकरआयु6त ) अपील(/CIT(A) 4. आयकरआयु6त/CIT 5. 4वभागीय&�त�न�ध/DR 6. गाड�फाईल/GF