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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI I.C. SUDHIR & SHRI L.P. SAHU
ORDER PER I.C. SUDHIR, JM
The assessee has questioned the validity of penalty levied u/s 271(1)(c) of the Act at Rs. 2,50,082 sustained by the ld. CIT(A).
We have heard and considered the arguments advanced by the parties in view of the orders of the authorities below, material available on record and the decisions relied upon.
Assessment year 2001-02 3. The facts in brief are that the Assessing Officer observed that the assessee, along with three other family members, had made investment of Rs. 15 lakh and share of the assessee was Rs.3,75,000/- in agriculture land at Narela. On further inquiry, the Assessing Officer found that the assessee had acquired a farmhouse with boundary walls. The Assessing Officer concluded that the cost of land has been undervalued and he estimated the cost at Rs. 91,65,000 as against Rs.15,00,000/- disclosed by the assessee. He accordingly made addition of Rs.76,65,000 and 1/4th share of the assessee therein resulted into an addition of Rs.19,16,250 in the hands of the assessee. Ld. CIT(A) reduced the addition to Rs.4,66,250.
The Assessing Officer also made addition of Rs.22,94,326/- by adopting GP rate of 15%. Ld. CIT(A) found it reasonable to apply GP rate at 12% and, thus, addition to the extent of Rs.2,69,025/- was sustained. We thus find that in total, the addition of Rs. 7,35,275/- was sustained by the ld. CIT(A). The Assessing Officer initiated the penalty proceedings u/s 271(1)(c) of the Act and levied penalty of Rs.3,87,123/- @150% of the tax sought to be evaded. Ld. CIT(A) has reduced the same to Rs.2,58,082 by applying the rate of 100% of the tax sought to be evaded.
In support of the ground, ld. AR submitted that there was no concealment of particulars of income or furnishing inaccurate particulars thereof on the part of assessee towards the additions. Both the additions i.e. the addition on Assessment year 2001-02 account of trading result and the addition on account of value of investment in property are based on estimation. He further submitted that books were produced before the Assessing Officer, only bills could not be produced and, thus, addition on account of trading result was made on estimate basis. The value of property has also not been estimated by an expert but by Assessing Officer himself. He contended further that the penalty in question is also not maintainable since the proceedings were initiated on the allegation of inaccurate particulars furnished by the assessee whereas it has been levied on the allegation of concealment of particulars of income.
Ld. DR, on the other hand, tried to justify the order of the authorities below.
Considering the above submissions, we find substance in the contention of the assessee that both the additions i.e. addition made on account of under valuation of the property where assessee along with other family members had made investment and the trading addition have been made on estimation basis and thus, penalty us/. 271(1)(c) of the Act on such estimated additions cannot be levied. We hold that being penal in nature, the provisions u/s 271(1)(c) can be invoked only when it has been established beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee towards the addition on which penalty is proposed to be levied. Unfortunately, such is not the case before us as Assessment year 2001-02 admittedly both the additions have been made on estimation basis and the Assessing Officer himself is not sure as to whether it is a case of concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee as he had initiated the penalty proceedings with the allegation that the assessee had furnished inaccurate particulars of income but he has levied penalty on the basis of concealment of particulars of income on the part of the assessee towards the additions. We, thus, while setting aside the orders of the authorities below, direct the Assessing Officer to delete the penalty levied u/s 271(1)(c) of the Act at Rs.2,58,082/-. The grounds involving the issue are thus allowed.
In the result, the appeal is allowed.
Order pronounced in the open court on 11.12.2015.