SUMER BUILDERS,MUMBAI vs. DCIT CEN CIR 36, MUMBAI

PER RAM LAL NEGI, JM

in law in confirming the penalty levied of Rs. 8,35,090/- u/s 271 (1)(c) by the A.O.". 2.1 Brief facts of the case are that the assessee is engaged in the business of real estate development. A search was conducted u/s 132 of the Income Tax Act (in short ‘the Act’) on 06/11/2006. During search some documents containing entries regarding allotment of flats were found at the premises of the assessee which revealed that the assessee had received @ Rs. 12,100/- per sq. ft. for two flats having total area of 1462 sq, ft. The assessee received Rs 1700/- per sq, ft. in cash and the remaining amount was received through cheques. Since the assessee had not reflected the amount received in cash in its books of account, AO added Rs. 24,85,400/-(Rs. 1700x1462sq.ft=24,85,400/-) to the income of the assessee. Accordingly, penalty proceedings were initiated and the assessee was levied a penalty of Rs. 8,35,094/- u/s 271(1)(c) of the Act. 2.2. The assessee challenged the penalty order by filing first appeal before the CIT(A). The CIT(A) after hearing the assessee dismissed the appeal of the assessee and confirmed the findings of the AO holding that the explanation given by the assessee is not plausible. 2.3 Aggrieved by the impugned order passed by the Ld. CIT(A), confirming the penalty levied by the AO, the assessee is in appeal before the Tribunal. 2.4 Since the appellant has moved an application for condonation of delay of 265 days in filing the present appeal, at the very outset, the Ld. counsel for the assessee submitted that the delay in filing appeal was neither intentional nor willful but it has happened due to the negligence of staff of assessee’s consultant as mentioned in the application and the person concerned has sworn affidavit to this effect, therefore, the delay may be condoned in the interest of justice. The Ld. counsel further submitted that the Hon’ble jurisdictional High Court has condoned the delay of 515 days in Prima Papers & Engineering (P) Ltd v. Commissioner of Income Tax (2014)221 Taxman 209 Bom., on the identical ground. After hearing the Ld. DR we allowed the application for condonation of delay in the interest of justice and allowed the Ld. Counsel to argue the case on merits. 2.5 The Ld. Counsel submitted that the CIT(A) has wrongly confirmed the penalty of Rs. 8,35,090/- imposed by the AO u/s 271(1) (c) of the Act. The case of the assessee does not come within the purview of concealment of particulars of income within a meaning of section 271 (1)(c) of the Act. As a matter of practice the assessee rubbed the initial selling price quoted in pencil and made entries in ink after finalization of the deals with the buyers. Therefore, the assessee has neither concealed the income nor made any incorrect particulars in respect of the income for the relevant year. Moreover, the assessee has made voluntarily declaration vide statement dated 06/11/2006 u/s 132(4) of the Act, during the course of search and offered the income to the tax, therefore, the explanation 5 to section 271(1)(c) of the Act does apply to the assessee’s case. The Ld. Counsel relying on the law laid down by Hon’ble Supreme Court in the case of Gebilal Kanhaialal, HUF vs. ACIT 2012 348 ITR 561 (SC) , submitted that in view of the ratio laid down by the Hon’ble Supreme Court in the said case, the impugned order is liable to be set aside. 2.6 On the other hand Ld DR relying upon the order passed by the Ld. CIT (A) submitted that there is no infirmity in the impugned order. The case law relied upon by the assessee is not applicable to the facts of the present case. Hence, there is no merit in the appeal of the assessee.

3.1 So far as the contention of the assessee that the Ld. CIT has simply relied on the findings of the assessing officer without appraising the evidence brought before him including the assessment order for the subsequent year is concerned, the material on record reveal that the assessee did not challenge the assessment order before the appropriate appellate authority. Since the assessment order had become absolute after the expiry of limitation period, the Ld. CIT(A) had no option but to confirm the penalty imposed by the AO under section 271(1)(c) of the Act. Hence, in our considered opinion, the impugned order does not suffer from any legal infirmity to interfere with. We therefore, uphold order dated 26.2.2002 passed by the Ld. CIT (A) and dismiss the appeal of the assessee being devoid of any merit.