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Facts
For A.Y. 2013-14, the assessment included additions for excess stock/cash and under Section 68, leading to a total income higher than returned. A penalty of Rs. 97,335/- was levied under Section 271(1)(c) on an addition of Rs. 3 lakhs, which was an amount offered as additional income by the company's Director during a survey, and this penalty was confirmed by the CIT(A). The assessee argued the penalty should be on the Director, not the company.
Held
The Tribunal held that the Rs. 3 lakhs was offered by the Director in his individual capacity during the survey and, considering other major additions were deleted, it cannot be treated as concealed income of the assessee company. Consequently, the levy of penalty in the hands of the company was found to be without merit.
Key Issues
Whether the penalty under Section 271(1)(c) is justified on the assessee company when an amount was offered as additional income by its director during a survey, contending it was in his individual capacity.
Sections Cited
Section 271(1)(c) of the Income-tax Act, 1961, Section 68 of the Income-tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘H’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS ASTHA CHANDRA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the ld. CIT(A) -5, New Delhi dated 18.04.2019 pertaining to A.Y. 2013-14.
The solitary grievance of the assessee is that the ld. CIT(A) erred in confirming the penalty of Rs. 97,335/- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [the Act, for short].
Briefly stated, the facts of the case are that assessment in this case was completed on 31.03.2016 at a total income of Rs. 4,07,05,450/- against the returned income of Rs. 2,36,08,810/-.
Addition of Rs. 1,08,30,642/- was made towards excess stock and cash found during the survey and further addition of Rs. 62,66,000/- was made u/s 68 of the Act.
Assessment was challenged before the ld. CIT(A) and the ld. CIT(A) confirmed the addition of Rs. 3 lakhs on which separate penalty proceedings were initiated and penalty was levied at Rs. 97,335/-.
Before the ld. CIT(A), it was strongly contended that Rs. 3 lakhs was offered by the Director of the assessee company during the survey as additional income. The said income was added in hands of the company on which penalty has been levied. It was contended that since the offer was made by the Director, penalty should have been levied in his hands.
The contention of the assessee did not find any favour with the ld. CIT(A) who confirmed the levy of penalty u/s 271(1)(c) of the Act.
7, Before us, the ld. counsel for the assessee reiterated what has been stated before the ld. CIT(A).
Per contra, the ld. DR strongly supported the findings of the Assessing Officer.
We have carefully perused the orders of the authorities below. It is an undisputed fact that during the survey proceedings, the director of the assessee company offered Rs. 3 lakhs as additional income. It is true that addition has been made in the hands of the company and the assessee did not prefer any appeal, but the fact remains that survey proceedings were conducted in the premises of the assessee and the director of the assessee offered Rs. 3 lakhs as income.
The other additions made in the assessment of the assessee company around 1.70 crores have been deleted. In our considered opinion, contention of the assessee that income was offered by the director in his individual capacity cannot be brushed aside lightly and cannot be considered as concealed income of the assessee. Therefore, we do not find any merit in the levy of penalty in the hands of the company. The Assessing Officer is directed to delete the same.
In the result, the appeal of the assessee in is allowed.
The order is pronounced in the open court on .02.2024.
[ASTHA CHANDRA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: FEBRUARY, 2024.
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