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Income Tax Appellate Tribunal, DELHI BENCH - ‘SMC’ NEW DELHI
Before: SHRI BHAVNESH SAINI
This appeal by assessee has been directed against the order of Ld. CIT(A) Ghaziabad dated 5.10.2016 for assessment year 2012-13, challenging the penalty u/s 271(1)(C) of I.T. Act.
Briefly the facts of the case are that assessee filed return of income declaring income of Rs. 3,81,410/-. The assessee is engaged in the business of purchasing and selling of residential plots. The regular assessment u/s 143(3) of the I.T. Act was completed on 27.2.2015 on an income of Rs. 13,16,600/-. The Assessing Officer made addition of Rs. 3,85,193/- on account of disallowance of interest. The perusal of profit and loss account shows that assessee has claimed interest on Page 1 of 4 housing loan at Rs. 9,25,965/- out of which interest of Rs. 7,90,386/- has been claimed on the property No. 118-Shakti Khand, Indirapuram, Chaziabad which is owned by the assessee in joint name Smt. Deepika Garg. Since assessee has ½ share in the property only. Therefore ½ interest was to be allowed in the hands of the assessee. Assessing Officer therefore disallowed the interest of Rs. 3,85,193/- and addition was accordingly made.
2.1 Further the balance sheet of the assessee revealed that assessee has shown unsecured loan of Rs. 46,15,240/- as on 31.3.2012. Out of these unsecured loan accounts, confirmations of most of the unsecured loan alongwith particulars were furnished. However the assessee has failed to furnish confirmation of unsecured loan of Rs. 5 lacs shown from friends / relatives. The assessee agreed to surrender this amount to avoid further litigation. Assessing Officer therefore added 5 lacs.
2.2 Assessing Officer on verification of bills and vouchers found that bills and vouchers are unverifiable in nature. Assessee agreed for adhoc addition of Rs. 50,000/- on account of unverifiable expenses. Rs. 50,000/- was added.
The Assessing Officer on these additions initiated the penalty proceedings u/s 271 (1)(c) of the I.T. Act for concealing the particulars of income. Ld. CIT(A) confirmed the penalty order and dismissed the appeal of assessee.
I have heard both the parties and perused the material on record.
Ld. Counsel for assessee contended that assessee has agreed for addition to avoid litigation and therefore penalty need not to be levied.
The contention of Ld. Counsel for assessee has no merit. The Assessing Officer has taken up the scrutiny assessment and issued various queries to the assessee. The Assessing Officer after examining the details by issuing show cause notice to the assessee found that assessee has excessively claimed deduction of interest in respect of the property for which he was not owner. Further assessee claimed cash credit of Rs. 5 lacs, however no confirmation or any details have been furnished.
Therefore the Assessing Officer detected all these items at the assessment stage after scrutiny. Therefore even if assessee surrendered these amounts for addition, assessee would not be absolve from explaining the addition even at the penalty stage. Had the scrutiny proceedings would not have been taken up, the assessee would not have agreed for these additions. Hon'ble Supreme Court in the case of Mak Data Pvt. Ltd. 358 ITR 593 held that there is no concept of voluntary surrender, the penalty shall have to be levied. Merely because assessee agreed for addition is no ground to cancel the penalty in the matter. The assessee has failed to explain both the above items of additions of Rs. 3,85,193/- on account of disallowance of interest and cash credit of Rs. 5 lacs. The assessee therefore is liable for levy of the penalty. I therefore confirm the levy of penalty on both these additions and dismiss the appeal of the assessee.
However as regards disallowance of Rs. 50,000/- on account of unverifiable expenses, Assessing Officer has not pointed out as to which bills and vouchers are not verifiable. The assessee agreed for adhoc addition, therefore it would not make out a case of concealment of particulars of income. The orders of authorities below to that extent are set aside and penalty is canceled on addition of Rs. 50,000/-
Assessing Officer is directed to recalculate the penalty in view of the above findings.
In the result appeal of the assessee is partly allowed.
Pronounced in the Open Court.