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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A.L. SAINI, AM
O R D E R
PER SH PAWAN SINGH, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of National Faceless Appeal Centre (in short’ NFAC’)/Ld. CIT(A), dated 16/06/2022 for Assessment Year (AY) 2014-15, which in turn arise against penalty levied under section 271(1)(c) of Income Tax Act [in short “the Act”] by Income –tax Officer, ward-1 Navsari.
The assessee has raised the following grounds: “
1. The Learned CIT(A) erred in passing the order without giving reasonable opportunity to the appellant as requested.
2. On the facts/the circumstances of the case and law, the Learned CIT(A) erred in confirming the penalty of Rs.1,40,707/- u/s 271(1)(c) without considering the judgement of Honourable Gujarat – Tribunals/High Court in our submissions and also other points.
3. The appellant craves leave to amend, alter or delete any of the above grounds of appeals.”
Bhupendra Magnalal Naik (HUF) 3. Brief facts of the cases are that the assessee while filing return of income for AY 2014-15 declared income of Rs.6,71,990/-. The Assesse also included agricultural income of Rs.23,60,030/-, thus declared total income of Rs.30,32,018/-. The Assessing Officer while passing the assessment order under section 143(3), out of total agriculture income of Rs. 23,60,030/- treated Rs.17,78,030/- as non-agricultural and agricultural income was reduced by such figure. On appeal before Ld. Ld. CIT(A) considered the Rs.5,28,030/- as non-agricultural income and remaining one was allowed as agricultural income. The Assessing Officer after receiving order of ld CIT(A) in quantum assessment, issued show cause notice dated 12.2.2020 as to why penalty under section 271(1)(c) should not levied under section 271(1)(c). The Assessing Officer recorded that no reply was filed by assessee. The Assessing Officer held that assessee has furnished inaccurate particulars of income to the extent of Rs.5,28,030/- and levied penalty at the rate of 100% of tax sought to be evaded to. The Assessing Officer worked out the penalty of Rs.1,40,707/- being 100% of amount of tax to be evaded.
On further appeal before the Ld. CIT(A), the assessee filed its detailed written submission. The submission of assessee is duly recorded on page nos. 6 to 14 in para-5 of Ld. CIT(A). The assessee in his submission, submitted that assessee filed its reply before assessing officer on 19.02.2020 but the same was not considered by Assessing Officer before the finalizing the penalty order. The assessee specifically submitted that Ld. CIT(A) in quantum assessment sustained the estimated figure of Rs.5,28,030/- as non-agricultural income and on Bhupendra Magnalal Naik (HUF) estimated addition, no penalty leviable. The figure of Rs.5,25,030/- is estimated basis. Thus, the provision of section 271(1)(c) was not attractive. To support of its submission, the assessee relied on various case laws.
The Ld. CIT(A) after considering the submission of assessee noted that the Ld. CIT(A) during the assessment as well as appellate proceedings, the assessee had deliberately and intentionally not disclosed the true and correct income with the intention to evade tax and upheld the penalty. Further aggrieved, the assessee has filed present appeal before Tribunal.
We have heard the submission of Learned Authorized Representative (Ld. AR) for the assessee and the Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue. The Ld. AR of the assessee submits that addition in the quantum assessment was restricted to Rs.5,82,030/- which was based on estimation basis. It is settled law that no penalty is leviable on addition made on estimation basis. To support such view, the Ld. AR of the assessee relied upon the following case laws: New Sorathia Engg. Co. vs CIT, 2852 ITR 642 (Guj. HC) ITO vs Sukhamrit Singh, 31 taxmann.com 310 (Amristar Trib.) A.M. Shah & Co. vs CIT, 108 taxmann 137 (Guj. HC) HPCL Mittal Energy Ltd. vs ACIT, Circle-Bathinda, 97 taxmann.com 3 (Amritsar Trib.) Abhinav Ajmera vs ACIT, 25 taxmann.com 135 (Delhi Trib.) 7. On the other hand, Ld. Sr. DR for the Revenue supported the order of lower authorities.
Bhupendra Magnalal Naik (HUF) 8. We have considered the submission of both the parties and have gone through the order of lower authorities. We find that in quantum assessment the assessee filed appeal Ld. CIT(A) on 24.01.2017. such appeal was decided by ld CIT(A) Valsad vide order dated 17.12.2018. the ld CIT(A) Valsad in his finding estimated the addition with the following observation; “The AO had added Rs.11,78,030/- out of total agriculture income of balance Rs.17,60,030/- as income from other sources on the ground that the appellant’s claim of agriculture income from sale of mango and chickoo could not be allowed as most of the trees were hardly 5-7 years old. Out of net agriculture income of Rs.9,70,000/-, 60% of the same i.e. Rs.5,82,000/- was treated by the AO as agriculture income and balance 40%, i.e. Rs.3,88,000/- was treated as income from other sources. The appellant had shown agriculture income and balance of Rs. 23,60,030/- out of which Rs. 6 lacs was separately disallowed by the AO as unexplained cash credit. Thus, from the remaining amount of Rs. 17,60,030/- the agriculture income of Rs. 5,82,000/- (worked out @ 60% of Rs. 9,70,000/-) was deducted and Rs.11,78,030/- was added as income from other sources. On the other hand, the appellant contended that it had submitted that clear cut proof of receipt of agriculture income of Rs. 6,50,000/- were pertaining agriculture produce sold in earlier years. The AO has not controverter this submission of the appellant. Considering the fact, I do not find any reason to disallow the appellant’s claim Rs.6,50,000/- received from the agriculture society pertaining to earlier years agriculture produce sold. Accordingly, the addition of income from other sources cannot exceed Rs.5,28,000/- (Rs.11,78,030 – Rs.6,50,000/-).
In view of the above facts and circumstances, I find that the addition of Rs.17,78,030/- can be sustained to the extent of Rs.5,28,000/- only. The appellant gets partial relief."
Aforesaid observation of Ld. CIT(A) in quantum assessment appeal, is not in dispute. Thus, there is no dispute that Ld. CIT(A) while sustaining addition to the extent of Rs.5,82,000/- on estimated basis. It Bhupendra Magnalal Naik (HUF) is settled position in law that no penalty under section 271(1)(c) is leviable on addition made on estimation basis. Similar view was taken by various Benches of Tribunal; therefore, we do not find any justification in levy of penalty of Rs.1,40,707/- under section 271(1)(c). Hence, we direct the Assessing Officer to delete the entire penalty.
In the result, the appeal of the assessee is allowed. Order pronounced in open Court on 13/03/2023.