PARAS PORWAL (HUF),MUMBAI vs. ACIT CIR 47, MUMBAI

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ITA 5688/MUM/2016Status: DisposedITAT Mumbai22 September 2017AY 2011-124 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue to the CIT(A) for fresh adjudication. The CIT(A) was directed to provide the assessee with an adequate opportunity of being heard and to decide the issue afresh after due verification.

What were the facts?

A search was conducted on a related group, and the assessee filed a revised return declaring additional income. The Assessing Officer initiated penalty proceedings under Section 271AAA for undisclosed income, which was confirmed by the CIT(A).

What were the issues?

Whether penalty under Section 271AAA can be levied when the search was not conducted on the assessee, and whether a proper opportunity of hearing was provided before confirming the penalty.

Which sections of the Income-tax Act were involved?

Section 132,Section 153C,Section 271AAA,Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI

Before: Shri D T Garasia & Shri Manoj Kumar Aggarwal

For Appellant: Shri Darshan Gandhi
For Respondent: Shri Suman Kumar
Hearing: 10.08.2017Pronounced: 22.09.2017

O R D E R Per D T Garasia, Judicial Member:

This appeal has been filed by the assessee against the order of CIT(A)- 50, Mumbai, dated 16.06.2016, relating to assessment year 2011-12.

2.

The only ground raised in this appeal reads as under:

“On the facts and circumstances of the case and law, the Ld.CIT(A) erred in confirming the penalty of `.92,700/- levied by the Ld. Assessing Officer u/s. 271AAA of the Income Tax Act, 1961 without appreciating facts in the appellants case in the right legal perspectives & also without affording real and reasonable opportunity to the appellant.”

3.

The short facts of the case are as under: A search and seizure action u/s. 132 of the Act was carried out in the business premise of Rohan Group to which assessee is related. The assessee filed its return of income u/s. 139 on 26.09.2011 declaring income of `.27,77,530/-. Subsequently, notice u/s. 153C was issued and served on the assessee. In response to the said notice, the assessee filed return on 24.12.2013, declaring total income of ` 36,79,020/- Thus, the assessee offered additional income of ` 9,01,490/- under the head ‘Income from other sources’. However, as the assessee has not offered any explanation regarding the source of expenditure of ` 9,00,000/-, the Assessing Officer initiated penalty proceedings u/s. 271AAA, holding it to be undisclosed income of the assessee. On appeal, the CIT(A) confirmed the penalty order u/s. 271AAA passed by the Assessing Officer.

4.

The learned AR submitted that the assessee is the karta of HUF and he was Director in Om Shanti Group companies. A search and seizure action was conducted on Om Shanti Universal Group companies on 26.05.2011.

During the search certain incriminating material was found relating to the assessee HUF and accordingly notice u/s. 153C was issued on the assessee.

It was further contended that as per section 271AAA penalty can be levied on the search person only. Therefore initiation of action u/s. 271AAA was completely without jurisdiction. The second contention of the assessee is that the Assessing Officer has not clarified whether the penalty is for concealment of income or for filing inaccurate particulars of income. He further contended that before confirming penalty, the assessee was not given opportunity of hearing, which is required as per section 271AAA r.w.s. 274 of the Act and, therefore, the penalty may be deleted. The learned AR further placed his reliance on the order dated 5th February 2016, of the Delhi Bench of this Tribunal in the case of M/s. Sam India Abhimanyu Housing in for A.Y. 2011-12 and submitted that penalty proceedings under section 271AAA can be initiated when the search has been conducted u/s. 132 of the Act. In this case the search had been not been conducted in the case of the assessee and, therefore, the penalty may be deleted.

5.

On the other hand, the learned DR relied on the orders of the authorities below.

6.

We have heard the rival contentions and gone through the orders of the authorities below. We find that it is a case of the assessee that it was never searched, its statement was never recorded and it was not given opportunity of being heard before passing the penalty order. We have gone through the penalty order and we find that notice dated 28.03.2014 and 26.08.2014 were issued before passing the penalty order and, therefore, in the interest of justice and fair play restore this issue to the file of the CIT(A).

Moreover, the assessee has also taken the contention that the assessee was not searched and no statement of the assessee was recorded as a HUF of Paras Porwal. Thus, the CIT(A) has not dealt with the issue in detail. We restore the issue to the file of the CIT(A) with a direction to decide the issue afresh after due verification and in accordance with law. He shall also provide the assessee adequate opportunity of being heard.

7.

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

Order pronounced in the open court on 22nd day of September, 2017.

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