SHRIKANT SHARMA, DHAMDHA,DURG vs. INCOME TAX OFFICER, WARD-2(1), BHILAI, DURG

This appeal preferred by the assessee emanates from the order passed by the Ld.CIT(Appeals)/NFAC, Delhi dated 14.02.2025 confirming penalty imposed by the A.O u/s.271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) for A.Y. 2013-14 as per the grounds of appeal on record.

The Ld. Sr. Departmental Representative has fairly conceded to the contentions advanced by the Ld. Counsel for the assessee.

I have heard the parties herein and perused the material available on record as well as considered the order of the quantum appeal dated 17.04.2025. On a perusal of the order of the quantum appeal dated 17.04.2025, it is observed that the same has been restored to the file of the Ld. CIT(Appeals)/NFAC observing as follows: “6. In the course of proceedings before the revenue authorities, it has been pointed out by the assessee that he is an agriculturist/farmer and having agricultural income and the source of the cash deposits is from such agriculture proceeds. However, the fact remains that the assessee has neither filed return of income originally nor filed return of income in compliance to notice u/s.148 of the Act. Therefore, it was not possible for the department to determine and investigate regarding the source of such cash deposits in the bank account of the assessee. It is also the fact that during the appellate proceedings before the Ld.CIT(Appeals)/NFAC, a remand report was called for wherein the assessee made submissions before the A.O that the assessee has done transaction of shares with a SEBI registered broker and therefore, in the remand report the A.O has mentioned that there arises a doubt whether the cash deposits are from agricultural income or from income received through transaction of shares.

At the time of hearing, the Ld. Counsel for the assessee submitted that the earlier counsel who was dealing with the matter has wrongly reported before the A.O at the time of remand proceedings by submitting that the assessee dealt with shares through registered broker of SEBI, but the fact remains as has been disclosed in the sworn in affidavit filed by the assessee before the bench that the assessee has never ever made any transaction through any broker of SEBI. Rather, the assessee is only having agricultural income. These facts were also accepted by the Ld. Sr. DR. The Ld. Sr. DR could not provide any evidence refuting these facts or could not show that the assessee did transact in shares.

In view of the aforesaid facts and circumstances, I am of the considered view that since the quantum appeal has been restored to the file of the Ld. CIT(Appeals)/NFAC for denovo adjudication, therefore, the present appeal on penalty should also meet the same fate for the sake of completeness regarding adjudication on issues. My aforesaid view in restoring the penalty to the Ld. CIT(Appeals)/NFAC is fortified by the judgment of the Hon’ble Supreme Court in the case of Mohd. Mohatram Farooqui vs. CIT (SC) 2010-TIOL-23-SC-IT wherein it has been held that if addition is restored to the A.O, then penalty should also be restored. Also, the Hon’ble High Court of Delhi in the case of Sanjay Gupta Vs. CIT (2014) 366 ITR 18 (Del) has also held that where the quantum has been remanded to the A.O, the question of penalty on account of the said amount being treated as undisclosed income, should also be remanded to the A.O. In the present case the concerned authority shall be Ld. CIT(Appeals)/NFAC since the quantum has been remanded back to its file for denovo adjudication.

Accordingly, I set aside the impugned order and restore the matter to the file of the Ld. CIT(Appeals)/NFAC for determining the question of penalty after adjudication on the quantum.

In the result, appeal of the assessee is allowed for statistical purposes.