QAMRUDDIN A. KAZI,MUMBAI vs. ITO 23(3)(2), MUMBAI

O R D E R

PER RAJESH KUMAR, AM

is with respect to confirmation of penalty of Rs.9,59,736/- as imposed by the AO under section 271(1)( c ) of the 2 Act. The issue raised in ground no.2 is against the violation of principle of natural justice.

3. Facts of the case are that the assessee filed his return of income on 4.9.2009 declaring income of Rs.11,72,862/-. The assessment was completed u/s 143(3) vide order dated 21.12.2011 assessing the total income at Rs.40,90,260/- as against the returned income of Rs.11,72,862/- by making an addition of Rs.28,23,582/- on account of capital introduced which as per the AO the assessee could not furnish any documents supporting /evidencing the introduction of capital. The assessee submitted before the AO that the said amount was received on sale of agricultural land situated in the native place of the assessee and the assessee’s share came to Rs.28,23,582/- The necessary documents proving the sale of land could not be furnished by the assessee as there was a dispute between the parties who were shareholders in the ancestral land and did not co-operate. Ultimately, the assessee agreed for addition of Rs.28,23,582/- in order to buy peace of mind and the assessment was framed accordingly. During the course of penalty proceedings, the assessee submitted that he has not furnished any inaccurate particulars of income or concealed any such income which was fully disclosed in the income tax return filed with the department. However, the AO not finding the reply of the assessee convincing imposed penalty of Rs.9,59,756/- 100% of the tax sought to be evaded vide order dated 22.6.2012 passed under section 271(1)( c) of the Act. Before, the 3 FAA, the ld. CIT(A) also dismissed the appeal of the assessee by holding that the surrender of the concealed income which were in the guise of capital introduced by not giving correct facts and thus filed inaccurate particulars of income.

4. We have heard the rival contentions and perused the material placed before us including the orders of authorities below. We find that the assessee has shown the capital introduced to the tune of Rs.28,23,582/- in the capital account which was stated to be received on account of sale of agricultural land in the native place of the assessee. The share of the assessee was shown as capital introduced in the balancesheet. We also find that the assessee could not produce any documentary evidence of the sale of ancestral land and the share of the assessee was to the tune of Rs.28,23,582/- which was disclosed in the balance sheet filed before the authorities below. Before us, the ld. AR vehemently submitted that he has fully disclosed all the facts of the income in the income tax return filed by the assessee however could not produce the documents or evidences to support his contention with regard to the sale of land due to family dispute as the party in possession of the sale document of the property did not co-operate and accordingly, the documents could not be produced. Now, before us, the ld. AR vehemently argued that he is willing to produce all the relevant documents before the authorities below and requested for restoration of the matter to the file of the AO. We find that in the penalty proceedings, unless and until the concealment or furnishing of inaccurate 4 particulars of income is established, the penalty proceedings u/s 271(1)(c) could not be invoked. The stand of the assessee in verbatim before us as it were before the lower authorities but for want of documentary evidence could not be verified. We, therefore, are of the considered view that ends of justice would be met if the assessee is given one more opportunity to furnish the document to prove his case. Accordingly, we restore the matter back to the file of the AO with a direction to decide the issue afresh after verification of facts as to sale of ancestral land of the assessee and assessee is also directed to produce necessary documents before the AO to decide the issue as per law and facts as narrated before us. The appeal filed by the assessee stands allowed for statistical purposes.