BALASINGAM SOMASUNDARAM,COIMBATORE vs. ACIT,CENTRAL CIRCLE 1, COIMBATORE, COIMBATORE

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ITA 1211/CHNY/2023Status: DisposedITAT Chennai05 June 2024AY 2013-14Bench: SHRI ABY T. VARKEY (Judicial Member), SHRI AMITABH SHUKLA (Accountant Member)4 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 held that the penalty under Section 271(1)(c) could not be sustained. This was due to the absence of satisfaction recorded by the AO in the assessment order and the fact that the addition was purely on an estimated basis.

What were the facts?

During a survey, undisclosed bank accounts were found, leading to a reopened assessment. The Assessing Officer (AO) made additions based on estimated undisclosed gross receipts. Subsequently, penalty proceedings were initiated.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the AO has not recorded satisfaction and the additions are based on estimation.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 133A,Section 148,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA

For Respondent: Shri P. Sajit Kumar, JCIT
Hearing: 22.05.2024Pronounced: 05.06.2024

आदेश / O R D E R

PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-20, (hereinafter ‘the Ld.CIT(A)’), Chennai, dated 26.09.2023 for the Assessment Year (hereinafter ‘AY’) 2013-14.

(AY 2013-14) Shri Balasingam Somasundaram :: 2 ::

2.

The main grievance of the assessee is against action of the Ld.CIT(A) confirming the penalty levied by the AO u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter in short "the Act"). The brief facts are that the assessee, an individual is involved in Real estate business and has filed his return of income for ΑΥ 2013-14 on 23.03.2015 disclosing Rs.39,00,000/- as total income. A survey u/s.133A of the Act was conducted in the business premises of the assessee on 13.08.2018.

1.

During course of survey, some bank accounts containing business transactions which were not disclosed in return of Income filed for the relevant year were found. Consequently, the case was reopened by issuing notice u/s.148 of the Act on 31.03.2021. In response, the assessee filed his return of income on 16.04.2021 admitting income of Rs.36,30,130/- which the AO noted was lesser than income admitted in original return. And thereafter, assessment for AY 2013-14 in the assessee’s case was completed u/s.143(3) r.w.s 147 of the Act on 19.03.2022 by estimating income of assessee at 8% of undisclosed gross receipts Rs.10,21,34,917/- which worked out to Rs.81,70,793/- and therby AO, made an addition of Rs.45,20,661/- to the income returned.

Penalty proceedings u/s.271(1)(c) of the Act was initiated for furnishing inaccurate particulars of income and penalty of Rs.13,96,884/- was levied u/s.271(1)(c) of the Act.

(AY 2013-14) Shri Balasingam Somasundaram :: 3 ::

3.

Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who partly allowed the appeal by restricting the penalty at Rs.9,13,610/-.

Aggrieved, the assessee is in appeal before this Tribunal.

4.

We have heard both the parties and perused the material available on record. The facts discussed supra are not repeated for the sake of brevity. The Ld.CIT(A) has noted that assessee has shown only gross receipts of Rs.9,07,14,781/-, whereas, it was found that there was a suppression of gross receipts of Rs.1,14,20,136/-. The Ld.CIT(A) had confirmed the penalty, but we note that penalty u/s 271(1)(c) cannot be sustained because there is no satisfaction recorded by AO in the assessment order dated 19.03.2022 as required u/s 271 (1) of the Act as well as bearing in mind the fact that quantum addition was purely on estimated basis with inherent subjectivity involved, penalty be deleted.

Therefore, we direct the deletion of the penalty confirmed by the Ld.CIT(A) at Rs.9,13,610/-.

5.

In the result, appeal filed by the assessee allowed.

Order pronounced on the 05th day of June, 2024, in Chennai.

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