ACIT, CIRCLE-1(1), RAJKOT, RAJKOT vs. KAMRUDINBHAI R. MAKHANI, RAJKOT

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ITA 342/RJT/2023Status: DisposedITAT Rajkot20 January 2025AY 2013-143 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the order of the Learned CIT(A) was set aside and the order of the Assessing Officer was affirmed. The reasoning was based on the fact that the additions on which the penalty was levied had been deleted by the Tribunal itself in a prior appeal (IT(SS)A No. 420 & 440/Rjt/2017). Although the Revenue had challenged this deletion before the Hon'ble High Court of Gujarat, the Tribunal's decision to set aside the CIT(A)'s order and affirm the AO's order implies that the penalty, which was consequential to the additions, should stand. The operative direction was that the appeal of the Revenue is allowed. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Kamrudinbhai R. Makhani, an individual engaged in money transfer, faced additions to his income following a search/survey action. The Assessing Officer (AO) treated cash deposited in HDFC Bank as unexplained. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed 30% of these additions, estimating profit. The AO then initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, levying a penalty of Rs. 1,25,67,335/-. The assessee appealed the penalty order to the CIT(A), who deleted the penalty. The Revenue then filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the CIT(A)'s order deleting the penalty. The ITAT noted that the additions on which the penalty was levied had been deleted by the Tribunal itself in a prior appeal (IT(SS)A No. 420 & 440/Rjt/2017), which the Revenue had challenged before the Gujarat High Court.

What were the issues?

1. Whether the Learned CIT(A) has erred in law and on facts in deleting the penalty of Rs. 1,25,67,335/- levied under Section 271(1)(c) of the Income Tax Act, 1961, when the Revenue's appeal against the order of the Hon'ble High Court of Gujarat is pending. Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the assessee had committed a default of concealment of income, justifying the penalty of Rs. 1,25,67,335/- levied by the Income Tax Officer. The Revenue also submitted that an addition was made in the assessment, duly confirmed by the CIT(A), and upon appeal before the Tribunal, the additions were deleted by the Tribunal vide order dated 04.06.2020. The Revenue stated that they had challenged the validity of this order by filing an appeal before the Hon'ble High Court of Gujarat, which was pending adjudication.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: DR. ARJUN LAL SAINI, AM. &

For Appellant: Shri Abhimanyu Singh Yadav, Ld. Sr. DR
Hearing: 18/12Pronounced: 20/01

(�नधा�रण वष� / Assessment Year: (2013-14) (Hybrid Hearing) Assistant Commissioner Of Income Vs. Kamrudinbhai R. Makhani Tax, Circle – 1(1), 104, Vruj Bhumi Apartment, Room No. 502, Aayakar Bhavan, Marutinagar Race Course Ring Road, Rajkot, Rajkot – 360001 Gujarat Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ALWPM7994A (Appellant) (Respondent) Appellant by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR Respondent by : None Date of Hearing : 18 /12 /2024 Date of Pronouncement : 20 /01 /2025 आदेश / O R D E R PER DINESH MOHAN SINHA, JM: Captioned appeal filed by the assessee is directed against the order passed by the National Faceless Appeal Centre [(in short “NFAC/Ld. CIT(A)”] vide order dated 16.08.2023, which in turn assessment order passed by Assessment Unit, Income Tax Department / Assessing Officer under section 154 of the Income Tax Act, 1961 (in short “the Act”).

2.

Grounds of appeal raised by the Revenue are as followed: 1) The Learned CIT(A) has erred in law and on facts in deleting the penalty of Rs. 1,25,67,335/- levied u/s. 271(1)(C) of the I. T. Act when department appeal against the order of the Hon’ble High Court of Gujarat.

Assessment Year: 2013-14 ACIT v. Kamrudinbhai R. Makhani 3. Facts of the case are that the appellant is an individual engaged in the business of money transfer on commission basis. Consequent to the search/survey action at the residential/business premises of the appellant, additions were made to the total income of the appellant on account of cash deposited in HDFC Bank treating. It as unexplained cash in all the three years under consideration. In first appeal, the Ld. CIT(A) confirmed 30% of the addition made by the AO, estimating the profit of the appellant. On this addition confirmed by the Ld. CIT(A). The Ld. AO initiated penalty proceeding u/s. 271(1)(C) of the Act, while levying the penalty Ld. AO observed that looing to the nature of the Ld. CIT(A) considering to the nature of defeat by the assessee. I am Satisfied that it is a fit case for levy of penalty on the assessee.

4.

The assessee filed an appeal before the Ld. CIT(A) against the order of penalty dated 04.03.2019. The Ld. CIT(A) has decided the appeal in favour of the assessee and deleting the penalty. “When the very addition on which penalty has been leived u/s. 271(1)(C) has been deleted, the penalty levied u/s. 271(1)(C) also does not survive. Therefore, the penalty levied u/s. 271(1)(C) of the Act of Rs. 1,25,67,335/- is directed to be deleted. The grounds of appeal are therefore, allowed.”

5.

That the revenue has filed an appeal before us.

6.

The case was fixed for hearing on 18.12.2024. no-one is attended on behalf of the assessee. However, the Ld. DR has submitted that assessee has committed default of concealment of income, therefore penalty of Rs. 1,25,67,335/- levied by Ld. ITO.

7.

We have heard the Ld. DR and perused the matter and available on record. We note that the case was fixed for hearing on 09.05.2024, 04.07.2024, 30.09.2024 and 29.10.2024. However, In the interest of justice, the Bench has granted final opportunity for hearing on 18.12.2024 to the assessee. That notice has been sent through Registered Post and through Ld. DR on 30.11.2024 & 04.10.2024. served notice on the assessee through Jurisdictional Assessing Officer (ACIT Circle – 1,

8.

Ld. Sr. DR has submitted that an addition was made in the Assessment and was duly confirmed by Ld. CIT(A) and upon appeal before this Tribunal against the order of the appeal were registered in IT(SS)A No. 420 & 440/Rjt/2017 by this Tribunal, that addition in total income was deleted by this Tribunal vide order dtd: 04.06.2020, that Revenue has challenged the validity of order by filing an appeal against the order of this Tribunal before the Hon’ble High Court of Gujarat in the same is pending for adjudication.

In view of the above facts and circumstances, we are of the view that the order of that Ld. CIT(A) is hereby set aside and the order of the Ld. AO is affirmed.

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

Order pronounced in the open court on 20-01-2025

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