IMTIYAZ AHMED BADRUDDIN KHAN,DOMBIVALI vs. ITO WD 1(2), KALYAN

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ITA 4680/MUM/2015Status: DisposedITAT Mumbai18 May 2017AY 2008-093 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the addition of Rs. 30 lakhs, which formed the basis for the penalty, had already been deleted by the Tribunal in a previous quantum appeal. Therefore, the penalty had no basis to stand.

What were the facts?

The assessee appealed against a penalty imposed under Section 271(1)(c) of the Income Tax Act. The penalty was related to an addition of Rs. 30 lakhs made on account of cash creditors.

What were the issues?

The primary issue was whether a penalty under Section 271(1)(c) could be sustained when the underlying addition on which it was based had been deleted.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM

For Appellant: Shri N.A.Kulkarni
For Respondent: Shri M.C.Omi Ningshen
Hearing: 18/05/2017Pronounced: 18/05/2017

आदेश / O R D E R PER R.C.SHARMA (A.M):

1.

This is an appeal filed by the assessee against the order of CIT(A)- 2, Thane dated 30/06/2015 for the A.Y. 2008-09 in the matter of imposition of penalty u/s.271(1)(c) of the IT Act.

2.

In this appeal, assessee is aggrieved for penalty imposed with respect to addition of Rs.30 lakhs on account cash creditors.

3.

At the outset learned AR placed on record the order of the Tribunal dated 28/06/2016 in wherein addition of Rs. 30 lakhs was deleted by Tribunal in quantum appeal. The precise observation by Tribunal was as under:-

Mr. Imtiyaj Ahmed Badruddin Khan 4. After going through rival submissions and material on record. We find that assessee and his family members were running the business of power looms at Bhiwandi. As stated above, department have taken the action u/s. 133A of Act and assessee made a declaration of income at Rs. 80,00,000/- over and above their regular income. The alleged addition has been made on the basis of loose paper, diaries etc., which was not provided to assessee. The stand of assessee has been that after survey, assessee filed affidavit before the Assessing Officer modifying his declaration restricted to Rs. 50,00,000/- inspite of Rs.80,00,000/-. It is undisputed fact that assessee has honored his disclosure of Rs.50,00,000/- out of Rs.80,00,000/- and tax thereon has been paid. Assessee has tried to modify his statement declaring not retract the same. 4.1 Regarding addition of Rs.18,88,182/- out of Rs.30,00,000/-, cheques had not been deposited in bank. Assessing Officer had option to call upon the concerned person and record the statement of them that no cash had been given to assessee, assessee declined such cash payment received from them. Regarding its assertion of assessee has not been looked in the light of his deposit and partial retraction which is not justified. 4.2 Regarding addition of Rs.11,65,500/-, the stand of assessee has been that there was agreement for purchases of plot and shed. Assessee purchased the said plot on behalf of those persons and build up the shed through him or through builder for them and money being supplied from those parties for the purpose to build up power loom. Such money being supplied by them being nearest relative of them for their future activity. In this situation, addition in hand of assessee was not justified. Clarification as deposed by assessee in its affidavit, which is not in dispute. The contents of affidavit should not be rejected without confronting the content of same to deponent which has not been done in this case. It is also not in dispute that assessee has honoured his declaration to the extent of Rs.50,00,000/- and paid tax thereon. Assessee has clarified its stand with regards to retraction as discussed above. It is settled law that assessee can retract from declaration partially or completely by given cogent reasoning for same. Cogent reasoning for partial retraction has been approved by us. Taking all facts and circumstances into consideration including owner of Rs.50,00,000/- out of Rs.80,00,000/- disclosure, addition of Rs.30,00,000/- is directed to be deleted as discussed above.

4.

We had carefully gone through the order of the Tribunal and found that quantum addition of Rs.30 lakhs with respect to which penalty was imposed has been deleted by the Tribunal vide its order dated

Mr. Imtiyaj Ahmed Badruddin Khan 28/06/2016. As the addition itself is deleted the penalty has no legs to stand, accordingly, we direct the AO to delete the penalty so imposed. 5. In the result, appeal of the assessee is allowed.

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