PARAG M. SANGHVI,MUMBAI vs DCIT CEN CIR 38, MUMBAI

Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI

Before: Shri Joginder Singh, & Shri Ashwani Taneja

For Appellant: Shri J.P. Bairagra

For Respondent: Shri O.P. Meena-DR

Hearing: 17/11/2015

Per Joginder Singh (Judicial Member) All these appeals are by the assessee for assessment years 2003-04, 2005-06 to 2007-08 confirming imposition of penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act) against the impugned orders dated 15/12/2011 of the Ld. first Appellate Authority, Mumbai.

2 Parag M. Shanghvi to 1235/Mum/2012 2. During hearing of these appeals, the ld. counsel for the assessee, Shri J. P. Bairagra, contended that identical issues arose in the case of Smt. Sarla M. Sanghvi which is borne out from identical facts (ITA No.1230 & 1231/Mum/2012) order dated 01/09/2015. This factual matrix was not controverted by Shri O.P. Meena, ld. DR.

2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal dated 01/09/2015 for ready reference and analysis:-

“These two appeals by the assessee in respect of A.Y.rs 2002-03 and 2007-08 are directed against the common order of the Ld. CIT(A)-37, Mumbai dt. 15.12.2011.

The common grievance in both these years is that the Ld. CIT(A) erred in confirming the penalty levied u/s. 271(1)(c) of the Act.

Briefly stated the facts of the case are that a search action u/s. 132 of the Act was initiated in the case of M/s. K. Sera Sera Production Ltd on 12.9.2007. The assessee’s son Shri Parag Sanghavi was on the Board of the company in earlier years and therefore assessee and her family members were also covered in the search proceedings.

3.1. Pursuant to search, notice u/s. 153A was issued on 24.9.2008 calling for return of income. Return of income was 3 Parag M. Shanghvi to 1235/Mum/2012 filed on 22.7.2009 returning total income at Rs. 2,68,197/- for A.Y. 2003-04 and Rs. 3,57,520/- for A.Y. 2007-08. The assessment was made u/s. 143(3) r.w. Sec. 153A by order dt. 22.12.2009 wherein the returned income of the assessee was accepted as the assessed income.

3.2. The Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act for not filing the return of income under the normal provisions of the Act. The assessee was asked to show reasons why penalty u/s. 271(1)(c) should not be levied for concealing income within the meaning of Explanation 5A of 271(1)(c) of the Act. On receiving no plausible reply, the AO levied penalty in both the years under consideration.

The assessee carried the matter before the Ld. CIT(A) but without any success.

Before us, the Ld. Counsel for the assessee stated that the assessed income is same as the returned income, there is no addition made by the AO which could justify the levy of penalty. The Ld. Counsel heavily relied upon the decision of the Tribunal Pune Bench in the case of Smt. Pramila D. Ashtekar Vs ITO 154 TTJ 46, Tribunal Jodhpur Bench in the case of Devidas Sukhani Vs DCIT 158 TTJ 42 and Tribunal Nagpur Bench in the case of DCIT Vs Purti Sakhar Karkhana 153 TTJ 12.

Per contra, the Ld. Departmental Representative strongly supported the findings of the lower authorities but could not bring any distinguished decision.

4 Parag M. Shanghvi to 1235/Mum/2012 7. We have carefully perused the orders of the authorities below and the decisions brought to our notice. The undisputed fact is that the returned income of the assessee has been accepted by the AO while making the impugned assessment order. A perusal of the assessment order shows that none of the income relates to any incriminating documents found during the course of the search proceedings, where there is any addition over and above income declared by the assessee in the return of income filed, in response to notice u/s. 153A, no penalty u/s. 271(1)(c)can be imposed on the assessee. We draw support from the decision of the Tribunal Pune Bench (supra.)

7.1. Moreover, there is no finding recorded by the AO that amounts on which penalty u/s. 271(1)(c) was levied were not disclosed in the return filed by the assessee u/s. 153A of the Act. In our considered opinion, impugned penalty order has to be set aside. We draw support from the decision of the Tribunal Jodhpur Bench (supra).

7.2. The returned income filed u/s. 153A is accepted by the AO and there is no variation in assessed income and returned income, therefore penalty u/s. 271(1)(c) cannot be imposed. For this proposition, support is drawn from the decision from Nagpur Bench (supra). Considering the facts in totality, in the light of the judicial decisions discussed hereinabove, we set aside the order of the Ld. CIT(A) and direct the AO to delete the penalty levied u/s. 271(1)(c) of the Act in respect of both the years under appeal.

5 Parag M. Shanghvi to 1235/Mum/2012

In the result, both the appeals filed by the assessee are allowed.”

2.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, conclusion drawn in the aforesaid order of the Tribunal and the assertions made by the ld. respective counsels, if kept in juxtaposition and analyzed, we note that the returned income filed u/s 153A of the Act was accepted by the Assessing Officer and there was no variation in the assessed income vis-à-vis returned income, therefore, following the aforesaid case of the Tribunal dated 01/09/2015, who is the relative of the assessee, as claimed by ld. AR and considering the decision of the Jodhpur Bench in Devidas Sukhani vs DCIT 158 TTJ 42 and Nagpur Bench in DCIT vs Purti Sakhar Karkhana 153 TTJ 12, Pune Bench in Smt. Pramila D. Asthekar vs ITO (154 TTJ 46) (Pune Trib.) ; 61 SOT 113 (Pune), we find merit in the argument of the assessee and allow the appeal of the assessee on the ground that no addition was made in order u/s 143(3) r.w.s. 153A of the Act for A.Y. 2003-04, 2005-06 and 2006-07. The ld. Assessing Officer is directed to delete the penalty.

2.3. So far as, A.Y. 2007-08 is concerned, we note that the original return was filed on 31/03/2008, wherein, the total income was declared at Rs.15,03,615/-. In the return filed u/s 153A of the Act, the income declared was 6 Parag M. Shanghvi to 1235/Mum/2012 Rs.17,21,560/- meaning thereby additional income of Rs.2,17,945/- was made and consequently addition of Rs.1,40,000/- was made in order u/s 143(3) r.w.s. 153A. The difference of tax payable comes to Rs.1,20,482/- between the original return and return made u/s 153A of the Act. However, the ld. counsel for the assessee explained that the return of income filed on 24/08/2009 was accepted by the ld. DCIT while passing order u/s 143(3) of the Act dated 23/12/2009 and only addition retained was to the tune of Rs.1,40,000/- on account of unsecured loans taken from Vidya Sing on the plea that the assessee did not furnish loan confirmation. Fact remains that the loan was taken by account payee demand draft and reflected in the books of accounts. In view of this fact, it may be a case of upholding quantum but automatically does not justify imposition of penalty u/s 271(1)(c) by taking recourse to Explanation-1 below section 271(1)(c) of the Act, therefore, we direct the Assessing Officer to delete the penalty for this assessment year also.

Finally, the appeals of the assessee are allowed.

This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 17/11/2015.

PARAG M. SANGHVI,MUMBAI vs. DCIT CEN CIR 38, MUMBAI