MR. PRASANNA KNTILAL MEHTA,PUNE vs. DCIT, CENTRAL CIRCLE-1(1), PUNE, PUNE
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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
PER SATBEER SINGH GODARA, J.M. :
These assessee’s twin appeals, I.T.A.Nos.660 & 661/
PUN./2024, for assessment years 2010-2011 & 2011-2012,
CIT(A), Pune-11, Pune’s Din and Order No.ITBA/APL/S/250/
2023-24/1053322440(1) and 1053322802(1) , dated
30.05.2023, in proceedings u/s.271(1)(c) of the Income Tax
Act, 1961 (in short “the Act”); assessment year-wise,
respectively.
Heard both the parties. Case files perused.
This assessee’s “lead” appeal ITA.No.660/PUN./
2024 raises the following substantive grounds :
2 ITA.Nos.660 & 661/PUN./2024
The following grounds of appeal are taken independently and
without prejudice to one another.
“The Ld. Commissioner of Income Tax (Appeals) has erred
in holding that the penalty proceedings are not invalid and
ab-initio-void.
The penalty proceedings in this case are vitiated, as the
Assessing Officer has failed to specify in the assessment
order the charge/limb of section 271(1)(c) of the Income
Tax Act, for which the penalty has been initiated. The
penalty order accordingly is invalid and ab-initio-void. The
same may be cancelled/quashed.
The penalty proceedings in this case are vitiated, as there
is ambiguity about the charge/limb of section 271(1)(c) of
the Income Tax Act, for which the penalty is initiated. The
Assessing Officer has failed to strike off the
Inappropriate/irrelevant charge/limb of section 271(1)(c) of
the Income Tax Act, for which the notice is issued. The
penalty order is therefore invalid and ab-initio-void. The
same may kindly be cancelled/quashed.
The Ld. Commissioner of Income Tax (Appeals) has erred
in confirming the penalty u/s 271(1)(c) of the Income Tax
Act, on merits, in respect of the addition of Rs.3,00,000/-
made to the income of the assessee on the ground that
3 ITA.Nos.660 & 661/PUN./2024
cash accounting to Rs.3,00,000/- has remained
unexplained.
The Ld. Commissioner of Income Tax (Appeals) has erred
in holding that the penalty is levyable in respect of the
returned income of Rs.13,06,380/- also.
The Ld. Commissioner of Income Tax (Appeals) has failed
to appreciate that the Assessing Officer himself has not
levied the penalty in respect of the returned income of
Rs.13,06,380/-.
Since the Assessing Officer has not levied the penalty in
respect of the returned income of Rs.13,06,380/- as such
the Commissioner of Income Tax (Appeals) has no
power/jurisdiction to enhance the penalty, by holding that
penalty is also levyable in respect of the returned income.
The Ld. Commissioner of Income Tax (Appeals) has erred
in holding that the penalty is levyable in respect of the
returned income of Rs.13,06,380/- also, without issuing
any enhancement notice to the assessee in this regard.
The appellant craves leave to add to or amend/modify or
delete any or all of the above grounds of appeal.”
4 ITA.Nos.660 & 661/PUN./2024
Learned counsel submits very fairly that the
assessee only presses for his 5th to 7th substantive grounds
only regarding section 271(1)(c) penalty on returned income of
Rs.13,06,380/-. We thus reject the assessee’s 1st to 4th
substantive grounds in very terms.
It is next noted that both the learned lower
authorities have invoked section 271(1)(c) penalty in
furtherance to a search action dated 09.06.2010 conducted by
the Central Bureau of Investigation wherein cash of Rs.46.50
lakhs was found in this taxpayer’s lockers. Suffice to say, the
same led to initiation of section 153A proceedings which finally
culminated in the corresponding assessment dated
28.02.2013 as upheld up-to the tribunal. It is in this factual
backdrop that both the learned lower authorities have levied
the impugned sec.271(1)(c) penalty on the ground that the
assessee was found to be in possession of the undisclosed
income and the CIT(A)'s has affirmed Assessing Officer’s
findings to this effect as under:
“12. I have considered this argument of the appellant.
Since, the Hon. ITAT has held that cash amounting to
Rs.3,00,000/- remained unexplained, therefore, the
undersigned cannot presume that the appellant might be
having cash savings of Rs.3,00,000/-. The appellant has
not given any other reason as to why penalty u/s 271(1)(c)
5 ITA.Nos.660 & 661/PUN./2024
should not be levied in this case. It is also noted that no
such explanation was furnished before the Assessing
Officer as well. Therefore, considering the totality of facts
of the case, penalty u/s 271(1)(c) is upheld to the extent of
additions confirmed by the Hon. ITAT. It may also be
mentioned that for A.Y. 2010-11, no return of income was
filed by the appellant although the same should have been
filed by 31/03/2011 (belated return). The return was filed
only on 19/12/2012 and therefore the Assessing officer
held that penalty u/s 271(1)(c) of the Act is also leviable on
the income declared in the said return. The appellant has
not given any explanation as to why penalty is not leviable
on the income of Rs.13,06,380/- declared in the return
filed u/s 153A of the Act. Considering the totality of facts
of the case, I am of the opinion that penalty is leviable on
this income as well and accordingly the Assessing Officer
is directed to re-compute the quantum of penalty on the
income determined after giving effect to the order of Hon.
ITAT dated 28/02/2019. Accordingly, the appeal filed by
the appellant is PARTLY ALLOWED.”
Both the learned representatives reiterated their
respective stands against and in support of the correctness of
the impugned penalty. It emerges during the course of hearing
that the assessee’s returned income of Rs.13,06,380/-
nowhere represents the specified nature of assets i.e., money,
6 ITA.Nos.660 & 661/PUN./2024
bullion or jewellery etc., in sec.271(1)(c) Explanation-5A
applicable in case of a search carried-out on or after
01.06.2007. That being the case, we invoke stricter
interpretation to conclude that both the learned lower
authorities impugned action levying sec.271(1)(c) penalty
regarding the above returned income of Rs. 13,06,380/- is not
sustainable in law. The assessee’s instant 5th to 7th
substantive grounds succeed. It’s former “lead” appeal
ITA.No.660/PUN./2024 is partly allowed in very terms.
Next comes the assessee’s latter appeal ITA.No.661/
PUN./2024 for assessment year 2011-12. Learned counsel
raises his first and foremost legal plea that there exists a
specific provision i.e., sec.271AAA Explanation-(b)(ii) and
therefore, both the learned lower authorities have erred in law
and on facts in invoking sec. 271(1)(c) of the Act. He also place
on record the corresponding “panchanama” dated 29.09.2010
in the case file. This clinching fact has gone un-rebutted from
the department’s side. We conclude in this factual back drop
that the learned lower authorities action initiating section
271(1)(c) penalty proceedings in this “specified” previous year
is not sustainable in law. The same stands quashed
accordingly. This assessee’s latter appeal
ITA.No.661/PUN./2024 is allowed.
7 ITA.Nos.660 & 661/PUN./2024
The assessee’s former appeal I.T.A.No.660/PUN./
2024 is partly allowed and latter appeal ITA.No.661/
PUN./2024 is allowed in above terms. A copy of this common
order be placed in the respective case files.
Order pronounced in the open Court on 27.09.2024.
Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, Dated 27th September, 2024
VBP/-
Copy to
The appellant 2. The respondent 3. The Pr. CIT, Pune concerned 4. D.R. ITAT, “B” Bench, Pune. 5. Guard File.
//By Order//
//True Copy //
Sr. Private Secretary, ITAT, Pune Benches, Pune.
