NANAK CHAND BANSAL,FARIDABAD vs. DCIT, CENTRAL CIRCLE- II, FARIDABAD

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ITA 1694/DEL/2019Status: HeardITAT Delhi11 January 2022AY 2013-144 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 additions made by the AO, which formed the basis for the penalty, had been deleted in the quantum appeal. Consequently, the penalty levied under Section 271AAA was no longer sustainable.

What were the facts?

The Assessing Officer (AO) levied a penalty under Section 271AAA on the assessee for unexplained jewellery and cash. The assessee appealed the penalty order, arguing that the additions made by the AO were deleted by the Tribunal in the quantum appeal.

What were the issues?

Whether a penalty under Section 271AAA can be sustained when the underlying additions to income have been deleted in the quantum appeal.

Which sections of the Income-tax Act were involved?

Section 271AAA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI

Before: SHRI VIJAY PAL RAO & SHRI ANADEE NATH MISSHRA

For Appellant: Shri Rakesh Gupta, Adv, Shri Somil Agarwal, Adv
For Respondent: Ms. Sarita Kumari, CIT(DR)
Hearing: 11.01.2022

This appeal filed by the assessee is directed against the order dated 29.12.2018 passed by the Ld. CIT (A)-3, Gurgaon arising from penalty order passed u/s 271AAA of the Income Tax Act for the assessment year 2013-14. The assessee has raised following grounds :-

“1) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. of assuming jurisdiction to impose penalty u/s 271AAA of Rs. 1,07,244/-.

2) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the imposition of penalty u/s 271 AAA amounted to Rs. 1,07,244/- is bad in law and against the facts and circumstances of case..

3) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in passing the impugned order without giving adequate opportunity of being heard and by not observing the principles of natural justice.

4) That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other. “

2.

We have heard the Ld. AR as well as Ld. CIT-DR and considered the material on record. The AO has levied the penalty u/s 271AAA vide order dated 22nd February 2018 in respect of the two additions of Rs. 10,22,435/- on account of unexplained jewellery and Rs. 50,000/- on account of unexplained cash respectively made while framing the assessment u/s 153A of the Income Tax Act. The assessee has challenged the levy of penalty before the Ld. CIT(A) but could not succeed. At the outset the Ld. 2 AR of the assessee has pointed out that this Tribunal has deleted the additions made by the AO in the quantum appeal vide order dated 3rd July, 2019 in and, therefore, the penalty would not survive. Ld. DR has not disputed the fact that this Tribunal in quantum appeal has deleted the additions made by the AO.

3.

Having considered the rival submissions as well as record at the outset we note that this Tribunal has deleted the additions made by the AO in the quantum appeal vide order dated 3rd July, 2019 in as under :-

“7. We have heard both the parties and perused all the relevant material available on record. From the perusal of the records it can be seen that the jewellery belongs to wife of the assessee and not belong to the assessee. Thus, the said jewellery cannot be added in the income of the assessee. The CIT(A) was not justified in confirming this addition to the extent of 200 gms jewellery in the hands of the assessee, because the entire jewellery belong to the wife of the assessee as per the statement of the son of the asseseee. Therefore, Ground Nos. 1 and 2 are allowed. As regards Ground No. 3, it is pertinent to note that the assesee and his wife are senior citizens who required medical attention at any instance and therefore the cash is required at home for emergency situations. Therefore Ground No. 3 is allowed.”

4.

Thus in view of the order of this Tribunal in quantum appeal the additions against which the AO levied penalty u/s 271AAA are no more in existence and consequently the penalty levied u/s 271AAA is liable to be deleted.

5.

In the result the appeal of the assessee is allowed.

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