COMMISSIONER OF INCOME TAX - V. M/S ATITHYA COMPLEX & MOTELS PVT LTD

TAX APPEAL No. 303 of 2010

AI Insights

The case revolves around the penalty imposed on M/s Atithya Complex & Motels Pvt Ltd by the Assessing Officer under section 271(1)(c) of the Income Tax Act, following the addition of Rs. 41,00,000 to the assessee's income, which was alleged 'on money' received from a land sale. The Assessing Officer's addition was initially reduced by the CIT (Appeals) and further by the Appellate Tribunal, which ultimately led to the deletion of the penalty. The Department challenged the Tribunal's decision in the High Court, questioning the legality of the penalty deletion. The High Court, after reviewing the case, agreed with the Tribunal's reasoning and dismissed the appeal, emphasizing that the penalty was not justifiable given the estimative nature of the 'on money' transactions.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 368935 (HC-GUJARAT)
• Appeal Type: High Court cases
• Pronouncement Date: 10-05-2011
• Appeal Filed By: Department
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: MAUNA BHATT
• Keywords: Appeal; Assessment; Income Tax; On-money; Penalty; Tribunal
• Section: 271(1)(c); 132; 273(1)(c)

Judgement Text

"TAXAP/303/2010 1/4 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 303 of 2010 ========================================================= COMMISSIONER OF INCOME TAX - Appellant(s) Versus M/S ATITHYA COMPLEX & MOTELS PVT LTD., - Opponent(s) ========================================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 10/05/2011 ORAL ORDER (Per : HONOURABLE MS JUSTICE SONIA GOKANI) 1. The issue which is proposed for the Court is as follows : “Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT (A) in deleting the penalty levied u/s.271 (1)(c) of the Act amounting to Rs.4,60,000/- ?” 2. Assessee-respondent filed return of income declaring total income of Rs.27,731/-. On scrutiny, Assessing officer added Rs.41,00,000/- on account of 'on money' hands of the assessee which was on account of sale of land by the assessee to M/s. Siddharth Enterprise for Downloaded on : Thu Jun 05 13:39:42 IST 2025 Uploaded by BINA SHAH(HC00353) on Thu May 26 2011 2011:GUJHC:14167-DB NEUTRAL CITATION TAXAP/303/2010 2/4 ORDER construction of a building project. It was revealed during the search u/s. 132 of the Income Tax Act that 'on money' payment of Rs. 47,00,000/- was made to the Director of the assessee-respondent and on the basis thereof, such an addition was made by the Assessing Officer. 3. Being aggrieved by this Order of the Assessing Officer, the same was challenged before the CIT (Appeals) which had added the sum of Rs.26,00,000/-. 4. This was challenged by both the assessee- respondent and Department where the Appellate Tribunal restricted the addition to the tune of Rs.10,00,000/-. 5. Penalty proceedings initiated by the Assessing Officer u/s. 273(1)(c) got confirmed by him and the same was turned down by the CIT (Appeals) and the Appellate Tribunal concurred with the findings of the CIT (Appeals) on the issue of penalty. 6. The impugned order of the Tribunal dated 7th August, 2009 has been challenged by the Department in the present appeal, raising the aforementioned question of law before this Court. Downloaded on : Thu Jun 05 13:39:42 IST 2025 Uploaded by BINA SHAH(HC00353) on Thu May 26 2011 2011:GUJHC:14167-DB NEUTRAL CITATION TAXAP/303/2010 3/4 ORDER 7. On hearing, learned counsel Mrs. Mona Bhatt and examining the material placed before this Court, the issue that needs to be adjudicated is as to whether deletion of the amount of penalty by both the authorities concurrently by the CIT (Appeals) and Appellate Tribunal is sustainable under the law. 8. From the discussion of the Tribunal what gets culled out is that the Assessing Officer was directed to restrict the addition of 'on money' to the extent of Rs.10,00,000/- in the hands of the assessee-company which is engaged in the business of construction of building and motels. 9. The Tribunal had discussed the receding graph of addition of 'on money' transaction in the orders of all the adjudicating authorities. The amount was originally added by the Assessing Officer was though Rs. 47,00,000/-, the CIT (Appeals) reduced it to Rs.26,00,000/-and the Tribunal further reduced the same by Rs.10,00,000/-. With this uncertainly of the exact amount of the 'on money' receivable in the hands of assessee–respondent, the Tribunal opined to delete the penalty. It further gave findings that nowever in the order of Tribunal, it was held that the assessee–respondent received its 'on money'. It was by way of estimation of the Downloaded on : Thu Jun 05 13:39:42 IST 2025 Uploaded by BINA SHAH(HC00353) on Thu May 26 2011 2011:GUJHC:14167-DB NEUTRAL CITATION TAXAP/303/2010 4/4 ORDER prevailing 'on money' payment in the line of trade in which assessee – respondent is engaged, that such an addition had been made by the Tribunal. 10. In the said premise, it concluded that there was neither any concealment on the part of assessee –respondent nor was the question of furnishing inaccurate particulars and therefore, imposition of the penalty had been deleted. 11. These reasonings of the Tribunal cannot be found fault with. As rightly pointed out by the Tribunal, the adjudicating authorities themselves, appears to be having divergent views and 'on money' transaction amount, which has been added, is on the basis of estimation. In such circumstances as justifiably held by the Tribunal, the assessee cannot be said to have furnished inaccurate particulars, attracting the penalty. 12. Resultantly, this Appeal deserves to be dismissed with no question of law to be determined. Accordingly, Tax Appeal stands dismissed with no order as to costs. {Akil Kureshi, J.} {Ms.Sonia Gokani,J.} bina* Downloaded on : Thu Jun 05 13:39:42 IST 2025 Uploaded by BINA SHAH(HC00353) on Thu May 26 2011 2011:GUJHC:14167-DB NEUTRAL CITATION "