MEENA NAYYAR,DELHI vs. DCIT, CENTRAL CIRCLE-20, NEW DELHI

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ITA 2369/DEL/2023Status: DisposedITAT Delhi21 December 2023AY 2017-18Bench: BEFORE, SHRI M. BALAGANESH (Accountant Member), SHRI YOGESH KUMAR US (Judicial Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that for penalty under Section 271AAB to be applicable, there must be undisclosed income found during a search. Since the rental income was regularly offered to tax and the AO did not provide any basis for the differential amount, the penalty was not sustainable.

What were the facts?

During a search operation, the AO proposed an addition for rental income. The assessee contended that the rental income was already offered in the return, and the AO did not provide the basis for the higher figure. The AO proceeded with the addition and levied penalty under Section 271AAB.

What were the issues?

Whether penalty under Section 271AAB is leviable when the addition is based on an unsubstantiated figure and the income was already offered to tax.

Which sections of the Income-tax Act were involved?

Section 271AAB,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI

Hearing: 19.12.2023Pronounced: 21.12.2023

This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-27, New Delhi, [hereinafter referred to as ‘Ld. CIT(A)’, in short] in Appeal No.CIT(A), Delhi-27/11127/2016-17, Assessment Year 2017-18, dated 17.07.2023 against the order of assessment passed u/s 271AAB(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 16.03.2022 by the DCIT/ACIT, Central Circle-20, New Delhi (hereinafter referred to as ‘Ld. AO’).

2.

The only effective issue to be decided in this appeal is as to whether the ld.CIT(A) was justified in confirming the levy of penalty u/s 271AAB of the Act in the facts and circumstances of the instant case.

3.

We have heard the rival submissions and perused the materials available on record. A search and seizure operation u/s 132 of the Act was carried out 18.11.2016 in Nayyar group of cases where residential premises of the assessee was also covered. The year under consideration, being the year of search, the assessee filed her return of income declaring total income of Rs 5,12,210/- on 26.3.2018. The ld. AO during the course of assessment proceedings show caused the assessee as to why the rental income of Rs 1,08,900/- be not brought to tax in the hands of the assessee. In response to the same, the assessee replied that she had already offered the rental income derived from UG-9, UGF, Vaibhabh Khand, Indrapuram, Ghaziabad amounting to Rs 90,000/- in her return of income filed for the Asst Year 2017-18 and that it is not known from where the figure of Rs 1,08,900/- was considered by the ld. AO. The assessee also asked the ld. AO to provide the details from where the figure of Rs 1,08,900/- was arrived at.

Without furnishing such detail, the ld. AO directly proceeded to make the addition for the alleged differential amount of rent and completed the assessment after making other additions. This action of the ld. AO was upheld by the ld. CIT(A). Penalty proceedings u/s 271AAB of the Act were initiated by the ld. AO for the said addition and penalty of Rs 11,340/- vide order u/s 271AAB of the Act dated 16.3.2022. This penalty was upheld by the ld. CIT(A).

4. The Bench directed the ld. AR to file the income tax returns of Asst Year 2016-17 together ith the computation of total income of the assessee, which was duly furnished. From the perusal of the income tax return of Asst Year 2016-17 together with the computation thereon, it was noticed that the assessee had offered the rental income of Rs 90,000/- from the very same property itself. Now for the purpose of levying penalty u/s 271AAB of the Act, there should be some undisclosed income found during the course of search. This rental income is the regular income derived by the assessee and being regularly offered to tax by the assessee.

It is a fact on record that the lower authorities had not furnished the details of alleged rent figure of Rs 1,08,900/- disclosing the source from where the said figure was arrived at by them, despite specific request made by the assessee in that regard. No seized document reference was also made by the ld. AO in his quantum assessment order while making the addition towards alleged rental income difference. Hence it goes to prove beyond doubt that there was no seized material for making such addition and that the differential figure of Rs 18,900/- is merely a figure on the air without any basis, on which penalty u/s 271AAB of the Act cannot be made applicable. Accordingly, the grounds raised by the assessee are allowed.

4.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 21st December, 2023.

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