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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri N. V. Vasudevan, JM & Shri M. Balaganesh, AM]
Date of hearing: 18.05.2016 Date of pronouncement: 20.05.2016 For the Appellant: Shri V. N. Purohit, FCA For the Respondent: Shri Sallong Yaden, Addl. CIT, Sr. DR ORDER
Per Shri Balaganesh, AM:
This appeal by assessee is arising out of order of CIT(A), Central-1, Kolkata vide Appeal No. 406/CC-VII/CIT(A)/C-1/12-13 dated 27.06.2013. Assessment was framed by DCIT, CC-VII, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2010-11 vide his order dated 28.12.2011. Penalty was imposed by ACIT, C.C.VII, Kolkata u/s. 271AAA of the Act vide his order dated 29.06.2012.
The sole issue to be decided in this appeal of assessee is as to whether the Ld. CIT(A) is justified in directing to levy penalty of Rs.1,36,722/- u/s. 271AAA of the Act in the facts and circumstances of the case.
Brief facts of this issue are that the assessee is a Gynaecologist who has specialized in infertility treatment. A search u/s. 132 of the Act was conducted on 02.12.2009 at the residential and business premises of the assessee wherefrom several books of account and documents were seized. The assessee filed his original return of income u/s. 139(1) of the Act on 30.09.2010 declaring total income of Rs.1,36,16,510/-. The assessee filed another revised return on 22.11.2010 declaring total income of Rs.1,49,55,230/-. Statutory notices were duly served and assessment was completed on 28.12.2011 on a total income of Rs.1,49,83,730/- which consists of addition of Rs.28,516/- being disallowance made u/s. 14A of the Act. Thereafter, the ld. AO initiated penalty proceedings u/s. 271AAA of the Act and imposed penalty @ 10% of Rs.1.5 cr., which was the figure disclosed by the assessee in the disclosure petition filed
2 Dr. Gautam Khastgir AY 2010-11 before the ADIT(Inv.), which comes to Rs.15 lacs. Aggrieved, assessee preferred appeal before Ld. CIT(A), who held that the penalty in the facts and circumstances of the instant case could be restricted only to Rs.1,36,722/- worked out at 10% of Rs.13,67,220/-, being the difference between the assessed income of Rs.1,49,83,730/- and original return of income of Rs.1,36,16,510/-. Aggrieved, assessee is in appeal before us on the following ground:
“1. That on the facts and under the circumstances of the case the CIT(A)-C-1 has erred in holding that condition as laid down in clause (1) of sub-section (2) of sec. 271AAA is not satisfied in assessee’s case and hence immunity as provided under sub-section (2) of sec. 271AAA is not available to assessee.
2. That without prejudice to above ground, the order passed u/s. 271AAA is bad in law and on the facts and under the circumstance the case and CIT(A)-C-1 has erred directing to levy penalty on Rs.13,38,723/-.”
The Ld. AR, at the outset, argued that the provisions of section 271AAA of the Act cannot be invoked in the facts of the present case as admittedly the return of income was filed by the assessee u/s. 139(1) of the Act and assessment was completed u/s. 143(3) of the Act and hence, it falls within the ambit of regular assessment for which penalty proceedings u/s. 271AAA of the Act could not be initiated. In response to this, Ld. DR argued that penalty u/s. 271AAA of the Act is levied @ 10% of undisclosed income of the ‘specified previous year’ and the term ‘specified previous year’ has defined in explanation (b) as follows: “specified previous year” means the previous year – (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before said date; or (ii) in which search was conducted.”
Accordingly, as per the mandate provided in the statute assessment could be completed only u/s. 143(3) of the Act for the year of search and hence, penalty levied u/s. 271AAA of the Act for the year of search is very much valid. We are in agreement with the arguments advanced by the Ld. DR in this regard and accordingly, dismiss the first line of argument of the Ld. AR.
The second line of argument advanced by the Ld. AR is that, at most, the penalty, if any, leviable u/s. 271AAA of the Act could be restricted only to the extent of 3 Dr. Gautam Khastgir AY 2010-11 difference in income between the assessed income and the revised return of income which is hardly Rs.28,500/- and penalty, if any, could be levied only to the extent of maximum of Rs.2,850/- thereon. He also argued that the said difference in income was attributed due to the difference on disallowance u/s. 14A of the Act which is mainly notional disallowance and no concealment could be attributed for the same. In response to this, the Ld. DR vehemently relied on the order of the AO.
We have heard rival submissions and perused the material available on record. We find lot of force in the arguments of the Ld. AR that the penalty u/s. 271ÀAA of the Act should be restricted only to the extent of addition made in the assessment i.e. Rs.28,500/- being the difference between assessed income of Rs.1,49,83,730/- and revised return of income of Rs.1,49,55,230/-. Accordingly, the ground raised
by the assessee is partly allowed.
8. In the result, appeal of assessee is partly allowed.
9. Order is pronounced in the open court on 20.05.2016 Sd/- sd/- (N. V. Vasudevan) (M. Balaganesh) Judicial Member Accountant Member Dated : 20th May, 2016 Jd.(Sr.P.S.) Copy of the order forwarded to: APPELLANT – Dr. Gautam Khastgir, C/o, V. N. Purohit & Co.
1. Chartered Accountants, Diamond Chambers, Unit-III, 4th floor, suit No. 4G, 4, Chowringhee Lane, Kolkata-700 016. Respondent –ACIT, Central Circle-VII, Kolkata. 2 The CIT(A), Kolkata 3.
4. CIT , Kolkata
5. DR, Kolkata Benches, Kolkata