DCIT CC- 2(3), MUMBAI, MUMBAI vs. AVINASH NIVRUTTI BHOSALE, PUNE

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ITA 446/MUM/2024Status: DisposedITAT Mumbai22 May 20244 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 271(1)(c) of the Act is unsustainable because the primary addition of Rs. 7,99,04,500/- on which the penalty was based, was deleted by the ITAT in its order dated 10.07.2023. The Tribunal reasoned that if the quantum addition itself is deleted, the penalty levied on that addition cannot stand. Regarding the second ground for penalty, which was the difference of Rs. 45,44,444/- between the income declared under Section 139(1) and Section 153A, the Tribunal found no merit. It was held that once a return is filed under Section 153A, the original return under Section 139 abates. Therefore, the assessment of concealment should be based on the Section 153A return. Since the returned income under Section 153A was accepted and no incriminating material was found in connection with the additional income, there was no concealment of income on this ground. Consequently, the penalty levied on this ground was also deleted. The Tribunal found no reason to interfere with the findings of the Ld. CIT(A).

What were the facts?

The Revenue has appealed against an order dated 30.11.2023 passed by the learned Commissioner of Income-Tax (Appeals) - 48, Mumbai, for Assessment Year 2010-11. The appeal challenges the deletion of a penalty of Rs. 2,60,94,724/- levied under Section 271(1)(c) of the Income-tax Act, 1961. The penalty was initiated based on an addition of Rs. 7,99,04,500/- made by the Assessing Officer under Section 69C for unaccounted cash transactions, which increased the assessee's returned income from Rs. 12,31,20,230/- to Rs. 20,30,24,730/-. The quantum addition of Rs. 7,99,04,500/- was subsequently deleted by the Income Tax Appellate Tribunal (ITAT) in ITA No. 531/MUM/2021. A further addition of Rs. 45,44,444/- was made on account of the difference between income declared under Section 139(1) and income declared in a return filed under Section 153A.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty levied under Section 271(1)(c) of the IT Act of Rs. 2,60,94,724/-, when the quantum of addition made in the assessment proceedings was confirmed by the Ld. CIT(A)? 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in appreciating that the decision of the Hon'ble ITAT, on which the Ld. CIT(A) deleted the penalty, was not accepted by the Revenue, and a further appeal was filed under Section 260A of the Act before the Hon'ble High Court against the deletion of the quantum addition? Assessee's Contentions: The assessee argued that since the quantum addition of Rs. 7,99,04,500/- was deleted by the ITAT, the penalty levied on this addition has no basis. Regarding the addition of Rs. 45,44,444/-, the assessee contended that the return filed under Section 153A abates the original return filed under Section 139, and since the income declared in the Section 153A return was accepted and no incriminating material was found, no concealment occurred. Revenue's Contentions: The Revenue argued that the Ld. CIT(A) erred in deleting the penalty, particularly as the quantum addition was confirmed by the Ld. CIT(A) (though the judgment later clarifies the quantum addition was deleted by the ITAT). The Revenue also contended that the Ld. CIT(A) failed to appreciate that their decision to delete the penalty was based on an ITAT order which the Revenue had challenged by filing an appeal before the Hon'ble High Court.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 69C,Section 143(3),Section 153A,Section 139(1),Section 260A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLE

For Appellant: Shri Vijay Mehta
For Respondent: Shri Mirza Azhar Beig

O R D E R PER NARENDRA KUMAR BILLAIYA (AM)

1.

This appeal by the revenue is preferred against order of the Learned Commissioner of Income-Tax (Appeals) – 48, Mumbai [hereinafter in short “Ld. CIT(A)”] dated 30.11.2023 pertaining to A.Y.2010-11. (A.Y: 2010-11) AVINASH NIVRUTTI BHOSALE 2. The grievance of the revenue read as under: - “1. Whether, on the facts and in the circumstances of the case and in law, The Ld.CIT (4) has erred in deleting Penalty levied us 271(1)(c) of the IT Act of Rs.2,60,94,724/- wherein the quantum of addition made in the assessment proceedings was confirm by the Ld.CIT(4).

2.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in appreciating the fact that decision of the Hon'ble ITAT on which the Ld.CIT (A) deleted the penalty was not accepted by the Revenue and further appeal was filed u/s 260A of the Act, before Hon'ble High Court, against the deletion of quantum addition.”

3.

The roots for the levy of Penalty lie in the assessment order dated 29.05.2019 framed under section 143(3) of Income-tax Act, 1961 (in short “Act”) by which the returned income of the assessee at ₹.12,31,20,230/- was assessed at ₹.20,30,24,730/- after making addition on unaccounted cash transactions under section 69C of the Act amounting to ₹.7,99,04,500/-. The quantum addition travelled up to the Tribunal and this Tribunal in has deleted the addition of ₹.7,99,04,500/- vide order dated 10.07.2023. Since the quantum addition has been deleted the impugned Penalty has no legs to stand.

4.

The other addition on which the Penalty has been levied is the difference of income of ₹.45,44,444/- being returned income under Page No. 2 (A.Y: 2010-11) AVINASH NIVRUTTI BHOSALE section 139(1) of the Act and the income declared in the return filed under section 153A of the Act.

5.

We do not find any merit in this part of the Penalty for a simple reason that the assessee has been assessed as per the return of income filed pursuant to the notice under section 153A of the Act and the returned income has been assessed after making the addition under section 69C of the Act which has been deleted by this Tribunal (supra). It appears that the Assessing Officer has levied the Penalty on the additional income offered by the assessee in its return of income filed under section 153A of the Act invoking Explanation 5A to section 271(1)(c) of the Act. In our understanding of the law, once the return of income is filed under section 153A of the Act the original return filed under section 139 of the Act abates and becomes non-est. Therefore, for the purpose of levying Penalty under section 271(1)(c) of the Act all that has to be seen is whether there was any concealment in return filed by the assessee under section 153A of the Act and not with the return filed under section 139 of the Act. Since the returned income under section 153A of the Act has been accepted there was no concealment of income by the assessee on this issue, moreover, no incriminating material found in connection with the additional income. Therefore, we

Page No. 3 (A.Y: 2010-11) AVINASH NIVRUTTI BHOSALE do not find any reason to interfere with the findings of the Ld. CIT(A). the Penalty levied on this ground also stands deleted.

6.

In the result, appeal filed by the revenue is dismissed.

Order pronounced in the open court on 22nd May, 2024.

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