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Facts
The assessee appealed against penalties levied under Section 271(1)(c) of the Income Tax Act for AYs 2012-13 to 2014-15. The penalties, totaling Rs. 1,42,975/-, Rs. 55,913/-, and Rs. 64,161/-, were imposed on grounds of concealing estimated rental receipts and disallowance of cost of acquisition, following a search action on M/s SRM group. The assessee did not appear and was proceeded ex parte.
Held
The Tribunal held that the penalties were wrongly levied under Section 271(1)(c) instead of Section 271AAB, and were not based on seized material. Citing the Supreme Court decision in CIT v. Reliance Petroproducts Pvt. Ltd., it found no reason to sustain the penalties as quantum and penalty proceedings are parallel. Consequently, all three impugned penalties were deleted.
Key Issues
Whether penalties levied under Section 271(1)(c) for concealment of income, based on estimated rental receipts and disallowance of acquisition cost, could be sustained when not linked to seized material from a search.
Sections Cited
Section 271(1)(c) of the Income-tax Act, 1961, Section 271AAB of the Income-tax Act
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI SATBEER SINGH GODARA
O R D E R PER SATBEER SINGH GODARA, JM:
These assessee’s three appeals in to 202/Del/2024 for assessment years 2012-13 to 2014-15 arise against learned CIT(Appeals)-29, Delhi’s as many orders; all dated 29.11.2023; in appeal nos. CIT(A), Delhi- 29/10002/2019-20; CIT(A), Delhi-29/10010/2019-20; and CIT(A), Delhi- 29/10012/2019-20 respectively, in proceedings u/s 271(1)(c) of the Income-tax Act, 1961, hereinafter referred to as the “Act”.
Cases called twice. None appears at the assessee’s behest. He is accordingly proceeded ex parte. and Revenue’s vehement contentions that both the learned lower authorities have levied the impugned section 271(1)(c) penalties of Rs. 1,42,975/-, Rs. 55,913/-; and Rs. 64,161/-; assessment year wise respectively, on the ground that the assessee had concealed and furnished inaccurate particulars of income representing estimated rental receipts with cost of acquisition (in the first and foremost year followed by similar heads, after department’s search action conducted on M/s SRM group of cases on 15.10.2013.
The Revenue’s vehement contention is that all the impugned penalties represent the assessee’s undisclosed income and therefore, they deserve to be upheld.
I have considered the relevant facts in the case files as well as rival pleas and find no reason to sustain the impugned penalties qua quantum additions of estimated rental income and disallowance of cost of acquisition, as the case may be. It is made clear that Section 271AAB of the Act is special provision dealing with such a penalty arising from detection of undisclosed income in the course of search action on or after 1.7.2012 but before 2016. It is an admitted factual position that both the learned lower authorities have levied penalty in assessee’s hands u/s 271(1)(c) of the Act only and, therefore, the same is not based on any seized material in the course of search. That being the case and going by their lordships landmark decision in CIT v. Reliance Petroproducts Pvt. Ltd. 2010) 322 ITR 158 (SC) that quantum and penalty proceedings are parallel proceedings wherein each and every addition/disallowance made in the course of former does not ipso facto attract the latter penalty provision, I delete all the three impugned penalties in the impugned as many assessment years forming subject matter of adjudication. The assessee succeeds in identical substantive grounds in the instant appeals therefore.
Ordered accordingly.
These assessee’s three appeals in to 202/Del/2024 are allowed.
A copy of this common order be placed in respective case file.
Order pronounced in open court on 14.11.2024.