ACIT CC 39, MUMBAI vs. SANDESH LAND P.LTD, NAVI MUMBAI

This appeal by the Revenue is directed against the order of the CIT(Appeals)-39, Mumbai dated 25/10/2013 deleting the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) for the assessment year 2008-09.

2.1 A search and seizure operation u/s. 132 of the act was carried out at the premises of Jai Corp. Group and its associates who were in the process of acquiring lands, one of whom was the assessee in the case on hand. The search revealed that huge tracts of land were being acquired, for which the purchase consideration was paid partly by cheque and partly by cash. Shri Dilip Dheria, Director in certain companies of this group, in his statement recorded under section 132(4) of the Act admitted that the figures mentioned in the seized documents reflected cash paid over and above the cheque payments recorded in the books of accounts. This statement was subsequently retracted. Assessing Officer, however, rejected the retraction and on the basis of the statement of Shri Dilip Dheria recorded under section 132(4) of the Act, made additions amounting to Rs.43.46 crores as unexplained expenditure under section 69C of the Act, which was proportionately distributed to all the group companies who had purchased land at various places in the ratio of cost of land purchased by each company. In the case on hand, the Assessing Officer added Rs.49,38,000/- as unexplained expenditure under section 69C of the Act. While completing the order of assessment for assessment year 2008-09 in the case on hand, the Assessing Officer simultaneously initiated penalty proceedings under section 271(1)(c) of the Act. After considering the objections and explanations of the assessee, the Assessing Officer rejected them and vide order dated 12/2/2013, proceeded to levy penalty of Rs.15,25,842/- under section 271(1)(c) of the Act on the for the assessment year 2008-09; being 100% of the tax sought to be evaded.

2.2 On appeal, the CIT(Appeals)-39, Mumbai vide order dated 25/10/2013 cancelled the aforesaid penalty of Rs.15,25,842/- levied u/s. 271(1)(c) of the Act. In doing so, the CIT(Appeals) follow the decision of Co-ordinate bench of this Tribunal in assessee’s own case in dated 22//3/2013, wherein the quantum additions under section 69C of the Act was not sustained. The operative portion of the impugned order of the Ld. CIT(A) at Para-6 thereof is extracted hereunder:-

“It was submitted by the appellant before me that the addition made under s. 69C has been deleted by the Hon’ble ITAT vide its order dated 22/3/2013. A copy of the said order in files dated 22.03.2013 has been furnished and is placed on record. The Hon’ble ITAT had held that the seized documents have not conclusively proved the payments in cash; according to the Tribunal there is not a single document/evidence of parties involved in the sale of land at different villages brought on record to show that an amount other than the payment of consideration has exchanged hands. The addition under s. 69C has not been sustained. In the said circumstances, the penalty levied under s. 27(1)(c) based on the addition under s. 69C, does not survive. For the said reason, the appeal is allowed in favour of the appellant, and the penalty as imposed is hereby cancelled.” 3.1 Aggrieved by the order of the Ld. CIT(A)-39, Mumbai dated 25/10/2013 for assessment year 2008-09 cancelling the penalty of Rs.15,25,842/- levied under section 271(1)(c) of the Act, the Revenue has preferred this appeal raising the following grounds:-

1. “ Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting penalty levied u/s.271(1)(c) stating that the addition under section 69C of the IT Act, 1969 has been deleted by the Hon’ble ITAT, Mumbai without appreciating the fact that department has preferred an appeal against the order of the Hon’ble ITAT, Mumbai before the Hon’ble Bombay High Court and the issues have not attained finality.” The appellant prays that the order of Commissioner of Income-tax(Appeal) on the above grounds be set aside and that the ITO/AC/DC be restored. The appellant craves leave to amend or alter any grounds or add new ground which may be necessary.”

3.2 We have heard the rival contentions of both the Ld. Departmental Representative appearing for the Revenue in support of the grounds raised (supra) and that of the Ld. Representative for the assessee in support of the impugned order of the Ld. CIT(A) cancelling the penalty of Rs.15,25,842/- levied under section 271(1)(c) of the Act for first year 2008-09. We find that a Co-ordinate bench of this Tribunal in its decision in the assessee’s own case for assessment years 2009-10 & 2008-09 in & 8254/Mum/2011 dated 22/03/2013 has held that the seized documents have not conclusively proved the payments in cash. According to the Co-ordinate bench, there is not a single document/evidence of parties involved in the sale of land at different villages brought on record to establish that an amount other than the stated payment of consideration in the AGREEMENTS has exchanged hands. In this view of the matter, the Co- ordinate bench deleted the additions made u/s. 69C of the Act. In our view, in these circumstances, since the quantum addition under section 69C of the Act is deleted by the Tribunal, the penalty of Rs.15,25,824/- consequently levied under section 271(1)(c) of the Act based on the said quantum addition under section 69C of the Act, would not now survive. We, therefore, uphold the impugned order of the Ld.CIT(A) deleting the penalty of Rs.15,25,824/- levied under section 271(1)(c) of the Act for assessment year 2008-09. Consequently, the grounds raised by Revenue are dismissed.

Order pronounced in the open court on 08/01/2016