SHRI PARESH K. SORATHIYA,SURAT vs. THE INCOME TAX OFFICER,WARD-3(2)(3),, SURAT

आयकर अपील�य अ�धकरण, सुरत �यायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA No.342/SRT/2018 (AY 2009-10) (Hearing in Physical Court) Shri Paresh Sorathiya Income Tax Officer 195, Ambica Nagar No.2, Aaykar Bhavan, Majura Vs Opp. Arogya Kendra, Gate, Surat-395001 Katargam Road, Surat PAN : AXBPS 9579 C अपीलाथ�/Appellant ��यथ� /Respondent

�नधा�रती क� ओर से /Assessee by Shri Sapnesh R Sheth, CA राज�व क� ओर से /Revenue by Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/Date of hearing 07.07.2022 उ�घोषणा क� तार�ख/Date of 29.09.2022 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of learned Commissioner of Income tax(Appeals)-3,Valsad [for short to as ‘Ld. CIT(A)’] dated 20.08.2015, which in turn arises against the penalty levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 19.03.2014 for assessment year (AY) 2009-10. The assessee has raised the following grounds of appeal:-

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya “1.On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Assessing Officer in imposing penalty of Rs.6,20,295/- u/s 271(1)(c) of the I.T. Act, 1961. 2. It is therefore prayed that penalty imposed by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted.” 2. On perusal of record, we find that Ld. CIT(A) passed impugned order on 20.08.2015, however, this appeal was filed on 02.05.2018. Thus, there is a delay of 920 days in filing the appeal before Tribunal. The assessee has filed an application for condonation of delay, which is supported by affidavit of assessee. In the application for condonation of delay, the applicant/assessee contended that the order passed by Ld. CIT(A) was received on 26.08.2015. The assessee could not file appeal immediately due to reasons beyond his control. The assessee is handicapped person and also suffering from various ailment like blood pressure and diabetes. Other family members were also suffering from various ailment. His father was suffering heart related issues and wife with inflammatory nasal polyp. The assessee was mentally depressed and disturb and could not take proper step to file appeal in time. The non-filing

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya of appeal in time was neither intentional nor deliberate nor with mala fide intention. The Ld. AR for the assessee submitted similar submissions as pleaded in the application for condonation of delay. The ld AR for the assessee submits that assessee has a good case on merit and is likely to succeeds, if the delay of condoned and the assessee is allowed to contest the appeal on merit. In fact, assessee will not be benefited by filing the appeal belatedly. The assessee has already filed relevant evidence to show the treatment of assessee and his family members. To support his submissions, the ld AR for the assessee relied on the decision of Hon’ble Apex Court in Land Acquisition Collector Vs Mst Katiji & other (167 ITR 471 SC) and decision of Jurisdictional High Court in Dinesh Nagin Dass Shah Vs CIT (273 ITR 229 Gujarat) 3. On the other hand, Ld. Senior Departmental Representative for the Revenue (Sr. DR) opposed the application for condonation of delay. The Ld. Sr-DR for the Revenue submits that assessee has given general explanation in his application for condoning the delay. The assessee should have exercised his right to file

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya appeal in time and the negligent act of assessee in not exercising his right to file appeal may not be condoned in routine way. 4. We have considered the rival submission of both the parties and perused the orders of lower authorities. We find that there is no dispute that the impugned order passed by Ld. CIT(A) on 20.08.2015. the present appeal is filed before Tribunal 02.05.2018, thus, the registry of this Tribunal worked out the delay of 920 days in filing this appeal. The assessee in its application for condonation of delay application fairly accepted that the order passed by ld CIT(A) was received by him in time. The main cause for non-filing of appeal was the mental depression of the assessee due ill health of family members. To support such submissions, the ld AR for the assessee has filed copies of various medical prescription. Hence, we find that the submission of Ld. counsel for the assessee cannot be disbelieved that assessee was under mental depression and could not take step to file appeal in time. came to know about the dismissal of his appeal only that appeal of assessee has been dismissed. The ld. Sr DR for the Revenue objected that the assessee was not vigilant in excessing of his right. 4

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya 5. The Hon’ble Apex Court in Collector of Land Acquisition Vs Mst Katiji (supra), while condoning the delay in filing appeal held that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserve to be preferred, the other side cannot claim to have vested right in injustice being done because of non-deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence or on account of mala fides. The litigant does not stand to benefit by resorting delay, in fact he runs a serious risk. Considering the aforesaid facts and legal position that there was no mala fides on the part of assessee in filing the appeal, rather, the assessee is under serious risk. 6. Further, we find that Hon’ble Gujarat High Court in Dinesh Nagindass Shah Vs CIT (supra), while following the decision in Land Acquisition Vs Mst Katiji (supra), condoned the delay of five years in filing revision also held that held that when the factual aspects in the present case are considered, in the light of the decision of the Apex Court in Collector, Land Acquisition’s case (supra), the CIT was required to prefer the cause of 5

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya substantial justice by taking up the revision petitions on merits. Thus, keeping in view that the assessee has contended that he has good case on merit, therefore, the delay of 920 days in filing the appeal is condoned and appeal is admitted for decision on merits. Now, we will advert to discuss the merit of the appeal. 7. Brief facts of the case are that assessee is an individual, filed his return of income for Ay 2009-10, declaring income of Rs. 1,58,000/-. The case was selected for scrutiny and assessment was completed under section 143(3) on 16.12.2011. The assessing officer while passing the assessment order made addition of Rs. 46,010/- on account of unexplained cash deposit in bank account No. 624401086007 in ICICI Bank. The assessing officer further added Rs. 19,37,590/- on account of deposits in other Bank Account No. 058401500739 in ICICI Bank. Though, the assessee claimed that the deposit of second account was from Association of Person (AOP) “Aysuhsi Investment”. The explanation of assessee was not accepted by the assessing officer and treated the deposit in second bank account as unexplained cash credit. The assessing officer while passing assessment order initiated penalty under section 6

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya 271(1)(c). On appeal before ld CIT(A) in quantum assessment, the appeal of the assessee was dismissed. Thereafter, assessing officer issued show cause notice dated 10.03.2014 under section 274 rws 271(1)(c). The assessing officer recorded that the assessee appeared through his representative and filed reply, no new facts was mentioned in his reply thus, the assessing officer levied penalty under section 271(1)(c) for filing inaccurate particulars of income. The assessing officer levied minimum penalty @100% of tax sought to be evaded. The assessing officer worked out penalty of Rs. 6,20,295/- in his order dated 19.03.2014. 8. Aggrieved by the order of penalty, the assessee filed appeal before ld. CIT(A). Before ld CIT(A), the assessee filed his submissions. The submissions of the assessee is recorded in para-6.4 of order of Ld. CIT(A). The assessee in its submission submitted that assessee has not concealed anything nor furnished inaccurate particulars. The Assessing Officer has to prove that there was concealment of income or assessee furnished inaccurate particulars. The assessee furnished complete details to prove the genuineness of transaction and 7

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya prima facie prove the genuineness of cash credit by filing relevant details during assessment proceedings. Merely the addition was confirmed by Appellate Authority, if does not absolve the Revenue from proving the penalty proceeding by cogent evidence. Mere rejection of explanation of assessee may be sufficient for making addition in the assessment but not for levying penalty under section 271(1)(c). The addition made by Assessing Officer under section 68 was based on deeming provisions and merely additions were confirmed, penalty cannot be levied. The submission of assessee was not accepted by Ld. CIT(A). The Ld. CIT(A) held that it is a clear case of concealment of particulars of income and assessee has not furnished particulars of income related to the source and transaction. The Ld. CIT(A) thus, converted the charge to ‘concealment of income’. Further aggrieved the assessee has present appeal before the Tribunal. 9. We have heard the submission of the Ld. AR of the assessee and the Ld. Sr. DR for the Revenue. The Ld. AR for the assessee submits that Assessing Officer while passing the assessment order basically made two additions (i) on account of cash 8

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya deposits in ICICI Bank of Rs.19,37,950/- and (ii) addition of Rs.46,010/-. Both the additions were upheld by the Ld. CIT(A). The Ld. CIT(A) while upholding the additions held that the assessee could not prove the source of deposits and in absence of evidence, the assessee failed to substantiate his claim. The Ld. AR for the assessee submits that the deposits in second account with ICICI Bank was the contribution of AoP, wherein assessee, Shri Sandeep H Dobariya and Shri Virjibhai C Gajera were persons. The said deposits in the bank was contributed by remaining two persons who have confirmed their respective contributions. However, the lower authorities confirmed by taking view that the story of AoP is nothing but cooked up story. The Ld. AR for the assessee submits that mere confirmation of additions or the additions in the assessment will not if so facto given power to Assessing Officer to levy the penalty. The addition was made due to difference of opinion. The Ld. AR for the assessee ultimate submission, submits that the Assessing Officer while initiating the penalty on the addition has not specified this specific charge. The Assessing Officer simply recorded that penalty action under section 274 r.w.s. 271(1)(c) 9

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya of the Act. Thus, the penalty order is not valid. The assessing officer while passing the assessment order has not specified the charge under which limb of section 271(1)(c), it was initiated. However, while passing the penalty the assessing officer levied it for furnishing inaccurate particulars of income. The ld CIT(A) confirmed the penalty for concealment of income. Thus, both the lower authority acted under the different provisions of law. The ld AR for the assessee submits that in absence of specific charge the order of penalty under section 271(1)(c) is not valid. 10. To support his various submissions, Ld. AR of the assessee relied upon the decisions of Full Bench of Hon'ble Bombay High Court in the case of Mohd. Farhan A. Shaikh vs. DCIT, Central Circle-1 Belgaum [2021] 125 taxmann.com 253 (Bom); decision of Hon'ble jurisdictional High Court in the case of CIT vs. Manu Engineering Works 122 ITR 306 (Guj); Nayan C. Shah vs. ITO 386 ITR 304 (Guj); New Sorathia Engineering Co. vs. CIT 282 ITR 642 (Guj), Allarakhu B. Memon & Bilal B. Memon in ITA Nos.2388-2390/AHD/2016 dated 15.11.2018 and in R.S. Tradelink Pvt. Ltd. vs. ACIT, in ITA No.2130/AHD/2014/SRT dated 04.02.2021. 10

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya 11. On merit the ld AR for the assessee submits that the deposits in second account with ICICI Bank was the contribution of AoP, wherein assessee, Shri Sandeep H Dobariya and Shri Virjibhai C Gajera were persons. The said deposits in the bank was contributed by remaining two persons who have confirmed their respective contributions. However, the lower authorities confirmed by taking view that the story of AoP is nothing but cooked up story. The Ld. AR for the assessee submits that mere confirmation of additions or the additions in the assessment will not if so facto given power to Assessing Officer to levy the penalty. The addition was made due to difference of opinion. 12. On the other hand, Ld. Sr-DR for the Revenue submits that it is a clear case of furnishing inaccurate particulars of income thereby the concealing the real income the Assessing Officer as well as Ld. CIT(A) clearly held that a story of AoP is a cooked up story only to make a false statement. No particulars of AoP like PAN or contract was produced by assessee. The various case law relied by Ld. AR for the assessee are distinguishable on the basis of that there is specific fact. The Ld.Sr-DR for the Revenue

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya submits that it is a fit case for confirming the penalty under section 271(1)(c) of the Act. 13. We have considered the rival submission of both the parties and perused the order of lower authorities carefully. First we take up to consider the legal submission made by Ld. AR for the assessee. The Ld. AR for the assessee in sum and substance submitted that in absence of specific charge at the time of initiation of penalty under section 271(1)(c), specific charge must be mentioned and second contention of Ld. AR for the assessee is that the Assessing Officer while passing the penalty order was not shown whether assessee has concealed the particulars income or furnished inaccurate particulars of income thereof. We find that Hon'ble jurisdictional High Court in the case of Nayan C. Shah (supra), the Hon'ble jurisdictional High Court held that while issuing notice under section 271(1)(c), the Assessing Officer was required to specify as to what was the default on the part of assessee as to whether case was one of furnishing inaccurate particulars, or whether it was case of concealment of income, or both.

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya 14. Further the Hon'ble jurisdictional High Court in the case of Manu Engineering Works (supra) while considering the question of law whether Tribunal was right or holding the order of Inspecting Assisting Commissioner of Income-tax imposing penalty under section 271(1)(c) r.w.s. 274(2) of the Act, was without jurisdiction and illegal in cancelling the same held that while issuing notice as to penalty order, it was held that it is incumbent upon the IAC to come to a positive finding as to whether there was concealment of income or whether any inaccurate particulars of such income. Further in case of New Sorathia Engineering Co. (supra), wherein the Hon'ble jurisdictional High Court also held that where the penalty order and order of Commissioner of Appeal showed that no clear-cut finding had been reached as to whether penalty under section 271(1)(c) was being levied for concealment of particulars of income or whether any inaccurate particulars of income had been furnished, the order of penalty cannot be sustained. 15. We further find that the Hon'ble Bombay High Court in recent Full Bench decision in the case of Mohd. Farhan A. Shaikh (supra) held that whether the Assessing Officer recorded 13

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya satisfaction for imposing penalty one or other or both held that primary burden lies upon the Revenue. Considering the fact that no specific charge while initiating the penalty was mentioned by the assessing officer. The Assessing Officer levied the penalty under section 271(1)(c) for furnishing inaccurate particulars, and thereafter Ld. CIT(A) confirmed the penalty on account of concealment of particulars of income. Thus, the order of lower authorities committed error in levying the penalty under section 271(1)(c). Thus, in our view the penalty order which was modified by Ld. CIT(A) the impugned order is not sustainable. Thus, the assessee succeeds on primary submission. Considering the fact that assessee succeeds on primary submission, therefore adjudication on merit of the case has become academic. 16. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 29/09/2022 and the result was also placed on the Notice Board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद�य/ACCOUNTANT MEMBER] [�याियक सद�य JUDICIAL MEMBER] Surat, Dated: 29/09/2022 Dkp. Out Sourcing Sr.P.S

ITA No.342/SRT/2018 (A.Y 09-10) Sh. Paresh Sorathiya

Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Sr.P.S./Assistant Registrar, ITAT, Surat