ANAND SATISHKUMAR BHUTADA,LATUR vs. INCOME-TAX OFFICER,

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

related to each other, are emanating out of separate orders of

Commissioner of Income-Tax (A) - 13, Pune dt.06.10.2015 for

assessment years i.e., A.Ys. 2005-06, 2006-07 and 2009-10.

appeals, three appeals of the assessee in ITA No.1633/PUN/2015,

ITA No.1635/PUN/2015 and ITA No.1636/PUN/2015 are against

the separate orders of Commissioner of Income Tax (A)-13, Pune for

different assessment years but since the issues involved in the above

three appeals are identical except for the assessment years and the

amounts in each of the years, his arguments will also be common

and therefore the three appeals can be heard and disposed of

together. He further submitted that the appeals in ITA

Nos.1634/PUN/2015 and ITA No.1637/PUN/2015 though of

different assessees but are also identical and therefore can be

considered together. Ld. D.R. did not object to the aforesaid

submission of Ld.A.R. We therefore for the sake of convenience first

proceed to dispose of the three appeals (ITA No.1633/PUN/2015,

ITA No.1635/PUN/2015 and ITA No.1636/PUN/2015) of the

assessee by proceeding with narrating the facts in ITA

No.1633/PUN/2015 for assessment year 2006-07.

3.1. The relevant facts as culled out from the material on record are

as under :-

Assessee is an individual stated to be having income from

share trading and other sources. A search action u/s 132 of the Act

was carried out on 28.08.2008 in Bhutada Group of cases at Latur.

The residential and business premises of the assessee were also

covered during the search action. Since the case was covered by

search u/s 132 of the Act, notice u/s 153A was issued to assessee

on 13.07.2009 and served on the assessee. In response to notice

u/s 153A, assessee filed return of income on 17.08.2009 declaring

total income of Rs.22,99,957/-. The case was taken up for scrutiny

and thereafter, assessment was framed u/s 153A r.w.s. 143(3) of

the Act vide order dt.31.12.2010 and the total income was

determined at Rs.63,55,120/-. On the additional income declared

by the assessee, AO vide order dt.20.03.2013 levied penalty of

Rs.7,42,260/- u/s 271(1)(c) of the Act. Aggrieved by the penalty

order of AO, assessee carried the matter before Ld.CIT(A), who vide

order dt.06.10.2015 (in appeal No.PN/CIT(A)-13/ITO Central-1,

Nashik/286/2015-16) granted partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before

us and has raised the following ground :

“On the facts and in the circumstances of the case, the learned Hon. Commissioner of Income Tax (Appeal)-13, Pune has erred in confirming penalty on alleged gross profit addition sustained by CIT(A) of Rs.2,68,825/- penalty levied thereon u/s 271(1)(c) by the Assessing Officer.

which reads as under :

“1. The assessee submits that the penalty order passed u/s 271(1)(c) be declared null and void since there is no proper

satisfaction recorded by the AO in the assessment order.

search, bank accounts with Solapur Janata Sahakari Bank in

respect of Arjun Trading Company and Anand Trading Company

and with Solapur Janata Sahakari Bank and HDFC Bank in respect

of Kamal Agro Industries were found. Prior to search, assessee

had not declared income from business under the name of Arjun

Trading Company and Anand Trading Company. From perusal of

the bank statements, it was noticed that the total cash deposits in

these bank accounts were to the extent of Rs.13,00,99,481/-. On

being confronted, assessee submitted that he is not maintaining

books of accounts for these two firms and as such the exact

amount of turnover is unascertainable and that the gross profits in

such type of business was 0.50%. Assessee offered a sum of Rs.10

lacs towards the capital in business and Rs.90 lakhs on account of

profit from the business for which no books of accounts were

maintained. AO noted that assessee’s claim of profit percentage was

not supported by any documentary evidence. He noted that during

the course of search proceedings, assessee had admitted the profit

percentage in business to be at 1.5%. He therefore considered the

profit from the activity to be at 1.5% and on the basis of the total

deposits in the bank in respect of business of Rs.39,03,44,294/-,

worked out the profit at 1.5% i.e., Rs.58,55,164/-. Since assessee

had shown profit of Rs.18 lacs in the return of income, he

considered the balance amount of Rs.40,55,164/- to be the profits

from the business carried in the name of Kamal Agro Industries,

Anand Trading and Arjun Trading. Against the quantum addition

made by AO, assessee carried the matter before Ld.CIT(A), who

reduced the gross profit to 0.53%. Thereafter, the matter was

carried before Tribunal wherein the gross profit was further reduced

to 0.45%. On the addition of Rs.25,68,782/- (that was sustained

by CIT(A)), AO vide penalty order passed on 20.03.2013, levied

penalty of Rs.7,42,260/- u/s 271(1)(c) of the Act. Aggrieved by the

order of AO, assessee carried the matter before ld. CIT(A), who vide

order dated 06.10.2015 granted partial relief to assessee. Aggrieved

by the order of ld. CIT(A), assessee is now in appeal before us.

framed u/s 153A r.w.s. 143(3) of the Act, though AO had recorded

the satisfaction of assessee for filing of inaccurate particulars of

income but in the penalty order, the penalty was levied for

concealment of income and in the notice issued u/s 271(1)(c) of the

Act, AO had given notice for concealing the particulars of income or

furnishing of inaccurate particulars of income. He therefore, relying

on the decision of Hon’ble Bombay High Court in the case of CIT Vs.

Samson Perinchery (ITA No.1154 of 2014 order dt.05.01.2017),

submitted that in the absence of proper show cause notice to

assessee, penalty u/s 271(1)(c) cannot be levied and therefore urged

that penalty levied by AO be deleted. Ld.D.R. on the other hand

supported the order of lower authorities.

on record. The issue in the present case is with respect to levy of

penalty u/s 271(1)(c) of the Act. In the present case, penalty has

been levied at Rs.7,42,260/- on additions / disallowances made by

the AO on account of estimated income of Rs.18 lacs offered by the

assessee, gross profit additions sustained by the Ld.CIT(A) at

Rs.2,68,825/- and on change of head of income at Rs.4,99,957/-.

In the present case, the perusal of assessment order passed u/s

143(3) r.w.s. 153A of the Act reveals that in the assessment order,

AO had recorded satisfaction for levy of penalty on account of

furnishing of inaccurate particulars of income, whereas in the

penalty order passed u/s 271(1)(c) of the Act, AO stated that the

penalty is levied for concealment of income. It is a settled law that

while levying penalty for concealment, the AO has to record

satisfaction and thereafter come to a finding in respect of one of the

limbs, which is specified under section 271(1)(c) of the Act. The first

step is to record satisfaction while completing the assessment as to

whether the assessee had concealed its income or furnished

inaccurate particulars of income. Thereafter, notice u/s 274 read

with Section 271(1)(c) of the Act is to be issued to the assessee. The

Assessing Officer thereafter has to levy penalty under Section

271(1)(c) of the Act for non-satisfaction of either of the limbs. While

completing the assessment, the Assessing Officer has to come to a

finding as to whether the assessee has concealed its income or

furnished inaccurate particulars of income. The Hon’ble Bombay

High Court in CIT Vs. Shri Samson Perinchery in ITA No.1154 of

2014 with other ITA Nos.953 of 2014, 1097 of 2014 and 1226 of

2014, vide judgment dated 05.01.2017 held that where initiation of

penalty is one limb and the levy of penalty is on other limb, then in

the absence of proper show cause notice to the assessee, there is no

merit in levy of penalty.

AO in the assessment order has recorded the case to be of

furnishing of inaccurate particulars of income but in the penalty

order passed u/s 271(1)(c) of the Act he had levied penalty on

account of concealment of income. Considering the aforesaid facts

in the light of the decision of Hon’ble Bombay High Court in the case

of Samson Perinchery (supra), we are of the view that in the present

case, the basic condition for levy of penalty has not been fulfilled and

that the penalty order suffers from non-exercising of jurisdiction

power of AO and therefore penalty order cannot be upheld. We

accordingly set aside the penalty order passed by AO. Thus, the

grounds of assessee are allowed.

No.1633/PUN/2015 is allowed.

cases of assessee i.e., Satish Kumar Vishnudas Bhutada in ITA

Nos.1635/PUN/2015 for A.Y. 2005-06 and ITA No.1636/PUN/2015

for A.Y. 2006-07 and that of the facts of case of assessee i.e., Anand

Satishkumar Bhutada in ITA No.1633/PUN/2015 for A.Y. 2006-07

are identical. We have hereinabove, while deciding the appeal in

case of Anand Satishkumar Bhutada have decided the appeal in

favour of assessee. We for similar reasons set aside the penalty

orders in ITA Nos.1635/PUN/2015 and ITA No.1636/PUN/2015.

Thus, the grounds of the assessee in ITA Nos.1635/PUN/2015 and

ITA No.1636/PUN/2015 are allowed.

1635/PUN/2015 and ITA Nos.1636/PUN/2015 are allowed.

for A.Y. 2009-10 in case of Anand Satishkumar Bhutada.

12.1. Assessee is an individual stated to be having income from

salary and other sources. A search action u/s 132 of the Act was

carried out on 28.08.2008 in Bhutada Group of cases at Latur.

Pursuant to search, assessee filed his return of income on

17.08.2009 declaring total income of Rs.35,36,066/- which

included additional income of Rs.29,12,725/- declared during the

course of search. On the additional income of Rs.29,12,725/-

declared by the assessee, AO vide order dt.06.01.2014 levied

penalty u/s 271AAA of the Act of Rs.2,91,972/-. Aggrieved by the

penalty order of AO, assessee carried the matter before Ld.CIT(A)

who vide order dt.06.10.2015 (in appeal No.PN/CIT(A)-13/ITO

Central-1, Nashik/292/2015-16) confirmed the action of AO.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before

us and has raised the following ground :

“On the facts and circumstances of the case, the learned Hon’ble Commissioner of Income Tax, (Appeal)-13, Pune has erred in confirming in penalty of Rs.2,91,272/- levied u/s 271AAA by the Assessing Officer.”

and Ld.CIT(A). Ld.D.R. on the other hand, supported the order of

AO and Ld.CIT(A) and further submitted that for granting immunity

for penalty u/s 271AAA, three conditions are required to be satisfied

namely, (1) declaration made in the statement recorded u/s 132(4)

of the Act (2) manner of earning of income is disclosed (3) payment

of tax with interest in respect of income disclosed. He submitted

that the assessee in the statement recorded u/s 132(4) of the Act did

not declare the income but declared the additional income before

ADIT, Investigation, Aurangabad in the statement recorded u/s

131(1) of the Act. He therefore submitted that the Ld.CIT(A) has

rightly held that the additional income offered in the statement

recorded u/s 131(1) of the Act cannot qualify for immunity. He thus

supported the order of Ld.CIT(A).

material on record. The issue in the present case is with respect to

levy of penalty u/s 271AAA of the Act. We find that AO while levying

penalty has noted that in the statement recorded u/s 132(4) of the

Act, the income to the extent of Rs.29,12,720/- was admitted by

Shri Ashokkumar Bhutada, father of the assessee but no details in

respect of the same were given. The declaration was made by Ashok

Kumar V. Bhutada wherein a lumpsum declaration of Rs.6 crores

was made without bifurcation of undisclosed income assessee wise

and assessment year wise. Subsequently, in the statement recorded

u/s 131 of the Act on 26.11.2008 assessee made disclosure in the

hands of various business entities and family members. AO

therefore held that assessee had failed to satisfy the conditions

required to be fulfilled to claim immunity u/s 271AAA of the Act.

We further find that ld. CIT(A) has also given a finding that

additional income was offered in the statement recorded u/s 131 of

the Act and not u/s 132 of the Act and that the statement recorded

u/s 131 of the Act cannot qualify for immunity of penalty u/s

271AAA of the Act. Before us, no material has been placed on

record by the assessee to controvert the findings of Ld.CIT(A). In

view of these facts, we do not find any reason to interfere with the

order of Ld.CIT(A) and thus, the ground of the assessee is dismissed.

No.1634/PUN/2015 is dismissed.

in case of Kirtikumar Vishunudas Bhutada.

16.1. Before us both the parties have admitted that the facts of the

cases of assessee i.e., Kritikumar Vishnudas Bhutada in ITA

Nos.1637/PUN/2015 for A.Y. 2009-10 are similar to the facts of

case in case of Anand Satishkumar Bhutada in ITA

No.1634/PUN/2015 for A.Y. 2009-10. We have hereinabove, while

disposing of the appeal in case of Anand Satishkumar Bhutada in

ITA No.1634/PUN/2015 have dismissed the grounds of assessee.

We for similar reasons dismiss the grounds of assessee in ITA

Nos.1637/PUN/2015 also. Thus, the grounds of the assessee in ITA

Nos.1637/PUN/2015 are dismissed.

No.1637/PUN/2015 is dismissed.

No.1633/PUN/2015, ITA No.1635/PUN/2015 and ITA

No.1636/PUN/2015 are allowed and the appeals of assessee in

ITA Nos.1634/PUN/2015 and ITA No.1637/PUN/2015 are

dismissed.

Order pronounced on 16th March, 2018.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 16th March, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT (A)-13, Pune / CIT(A) concerned. 4. DGIT (Inv), Pune / CIT concerned. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “A” Pune; 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER, // TRUE COPY //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune