PANKAJKUMAR CHIMANLAL LODHIYA,RAJKOT vs. THE ACIT, CENTRAL CIRCLE-2, RAJKOT, RAJKOT

ITA 79/RJT/2022Status: DisposedITAT Rajkot30 April 2025AY 2011-1227 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeals. For the issue concerning the addition of Rs. 23,20,000/- (related to advances from unaccounted business income), the Tribunal deleted the addition, relying on the decision in PCIT vs. Prabodhchandra Jayantilal Patel (Gujarat High Court). The Tribunal found that the seized documents were 'dumb documents' without specific information and lacked corroborative material. Consequently, the Tribunal held that since the addition itself was deleted, there was no basis for levying penalty under section 271(1)(c) of the Act. The Tribunal applied the legal maxim 'Sublato fundamento cadit opus' (foundation being removed, the structure falls), stating that if the initial action of the revenue is not in consonance with the law, subsequent consequential proceedings would also fall through. Therefore, the penalty imposed and confirmed by the lower authorities was deleted. The appeals concerning penalties under section 271AAB(1)(c) were also allowed in consequence.

What were the facts?

The assessee, Shri Pankaj Chimanlal Lodhiya, filed six appeals before the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, challenging penalty orders passed by the Assessing Officer (AO) under sections 271(1)(c) and 271AAB(1)(c) of the Income Tax Act, 1961. These penalties arose from assessment orders for Assessment Years (AYs) 2008-09 to 2012-13 and AY 2014-15. The appeals were directed against orders of the Commissioner of Income Tax (Appeals) [CIT(A)]. The original assessment for AY 2008-09, after a search and seizure action, resulted in a significant increase in total income from Rs. 2,66,40,980/- to Rs. 642,49,62,439/- due to various additions, including income from undisclosed foreign bank accounts and deemed rental income. Subsequent rectification and appellate orders led to confirmed additions on which penalties were levied.

What were the issues?

1. Whether the penalty levied under section 271(1)(c) of the Act on the income earned from undisclosed foreign accounts amounting to Rs. 1,04,61,096/- is justified, considering the assessee's contention that the addition was not disclosed in the original or revised return of income. The assessee argued for deletion, while the revenue contended for confirmation. 2. Whether the penalty levied under section 271(1)(c) of the Act on deemed rental income of Rs. 1,80,000/- is justified. The assessee argued for deletion, while the revenue supported the lower authorities' findings. 3. Whether the penalty levied under section 271(1)(c) of the Act on the disallowance of commission paid to Rajesh Bhatt amounting to Rs. 3,00,000/- under section 40(a)(ia) is justified. The assessee argued for deletion, while the revenue relied on the lower authorities' findings. 4. (Implicitly addressed in the decision regarding additions) Whether additions made by the AO, and subsequently confirmed or modified by the CIT(A), form a valid basis for levying penalties under sections 271(1)(c) and 271AAB(1)(c) of the Act.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 271AAB(1)(c),Section 250,Section 139(1),Section 153A,Section 143(3),Section 69A,Section 40(a)(ia),Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: DR. ARJUN LAL SAINI

For Respondent: Shri Sanjay Punglia, CIT-DR

Assessing Officer

The order continues below.

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