Ummaid Mal Singhvi, Jodhpur V. ACIT, Central Circle-2, Jodhpur

ITA 14/JODH/2020

AI Insights

This case involves an appeal by Shri Ummaid Mal Singhvi against the penalty imposed under section 271AAA of the Income Tax Act by the Assistant Commissioner of Income Tax, following a search operation. The penalty was contested on various grounds, including the validity of the search and the correctness of the income assessment. The Tribunal focused on the legal issue of the notice's validity under section 271AAA, which was not addressed by the CIT(A). The Tribunal's decision to remand this issue for further consideration led to the dismissal of other grounds as academic.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122765 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2020
• Other Referred Cases: National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Set aside
• Section: 132; 143(3); 153A; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA No.14/JODH/2020 Assessment Year : 2008-09 Shri. Ummaid Mal Singhvi, C/o Rajendra Jain Advocate, 106 Akshay Deep Complex, 5 th B Road, Sardarpura, Jodhpur PAN: ABPPS7429D Vs ACIT, Central Circle-2, Jodhpur Appellant / Assessee Respondent / Revenue Assessee by Shri Rajendra Jain, Advocate Revenue by Ms. Nidhi Nair, JCIT-DR Date of hearing 07.08.2023 Date of pronouncement 07.08.2023 ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-2, Udaipur dated 30 th September, 2019 for assessment year 2008-09 emanating from the penalty order under section 271AAA of the Income Tax Act passed by Assistant Commissioner of Income Tax, Circle-2, Jodhpur. The Assessee has raised the following grounds of appeal : ITA No.14/JODH/2020 Ummaid Mal Singhvi 2 “1] That on the facts and in the circumstances of the case, the order passed by Id. A.O. imposing penalty u/s 271AAA for 4,06,620/- is bad in law and bad in facts. 2] That on the facts and in the circumstances of the case, the Id. A.O. erred in imposing penalty u/s 271AAA without recording any finding on the objection of the assessee that no valid search was conducted against the assessee. The fact recorded in the penalty order that the Hon'ble Tribunal uphold the validity of search against the assessee is not a correct fact as on merits the tribunal did not deal with the issue as the ground of appeal was not pressed by the assessee at the time of hearing of appeal. Further the penalty proceeding are independent proceeding and the legality of the assessment can be challenged at any stage. 3] That on the facts and in the circumstances of the case, the ld. A.O. erred in imposing penalty u/s 271AAA on the undisclosed income of 28,54,307/- as: a) The finding recorded by the Ld. AO that the assessee declared a loss of 12,87,327 vide return u/s 139(1) dated 30/09/2008 is perverse and without verification of the records. The original return of income was filed on 31/07/2008 vide acknowledgement no 38031599 showing total income of 12,87,3271- therefore the imposition of penalty on 2574654/- ( 12,87,327/-+12,87,327/-) is patently erroneous and speaks about arbitrary approach of the Ld. AO in the matter of imposition of penalty. 4] Without prejudice to above and in the alternative: a) That as per provisions of sub section (2) of section 271AAA, no penalty is ITA No.14/JODH/2020 Ummaid Mal Singhvi 3 imposable under sub section (1) if the assessee disclosed the income and pay taxes with interest on the same. b) That the immunity from the penalty as per provisions of sub section (2) cannot be taken away merely because the income was declared over and above then disclosed in the return filed u/s 139(1). 5] That on the facts and in the circumstances of the case, the ld. A.O. erred in imposing penalty u/s 271AAA on 1,42,000/- being addition in long term capital gain declared by the assessee by invoking the provisions of section 50C. The imposition of penalty on addition of 1,42,000/- is erroneous as: a) The finding recorded by the Ld. AO that the Hon'ble Tribunal confirmed the addition of 142000/- is patently erroneous as the Hon'ble Tribunal only confirmed the direction of the Ld. CIT(A) in making reference u/s 50C in respect of land actually transferred by registered sale deed. b) The addition of 1,42,000/- computed on the basis of valuation report obtained as per direction of worthy CIT(A) is erroneous as no order giving effect to the order of Hon'ble Tribunal or revising the order giving appeal effect of order of worthy CIT(A). Thus the imposition of penalty without making the addition in the income is erroneous and without authority of law. c) That penalty u/s 271AAA can be imposed on the undisclosed income and the term undisclosed income for the purpose of section 271AAA is defined in explanation to section 271AAA. As per the provision and the explanation no penalty can imposed on the addition on the basis of deeming provisions of section 50C. ITA No.14/JODH/2020 Ummaid Mal Singhvi 4 6] Without prejudice to above and in the alternative; a) The valuation of the land on the basis of DLC rates adopted by the registering authority is itself erroneous and defeats the vary purpose of the reference to the valuation officer as the valuation was referred to the valuation officer to determine the fair market value of the land on submission of the assessee that the value adopted by the stamp valuation authority exceeds the fair market value of the property. b) The valuation of the land by the valuation officer is without considering the objections of assessee and is based on incorrect facts by treating the land in question as irrigated land, particularly when the land was totally un-irrigated. 7] That on the facts and in the circumstances of the case, the Ld. AO erred in imposing penalty on the addition sustained on account of gold and silver ornaments without considering the bonafide explanation about the nature and source of acquisition of Gold and Silver ornaments. 8] That the petitioner may kindly be permitted to raise any additional or alternative ground at or before the time of hearing. 9] The petitioner prays for justice & relief. Basic Facts 2. In this case, there was a search under section 132 of the Act on 25.03.2008. The Assessing Officer passed an assessment order under section 143(3) r.w.s. 153A of the Act. The Assessing Officer initiated penalty proceedings under section 271AAA for ITA No.14/JODH/2020 Ummaid Mal Singhvi 5 concealing the particulars of income. The Assessing Officer levied penalty under section 271AAA after giving opportunity to the assessee vide order dated 31.08.2012. Submission of Ld. AR 3. At the outset, learned AR raised a legal issue that the notice under section 271AAA issued by the Assessing Officer is invalid as it is not in the proper format. The learned AR submitted copy of the notice under section 271AAA dated 21.12.2009 and explained that the Assessing Officer has merely erased under section 271(1)(c) and wrote 271AAA in the notice. Learned AR, therefore, pleaded that this notice is not valid notice. The learned AR also submitted that assessee had raised this issue before learned CIT(A) however, Ld. CIT(A) has not adjudicated on this issue. Submission of Ld. DR 4. The learned DR relied on the order of Ld. CIT(A) and AO. The Ld. DR also stated that assessee has not raised this before Ld. CIT(A). Ld. DR also submitted that the format of notice under section 271AAA is ITNS i.e. Income Tax Non Statutory format. Therefore, Ld. DR stated that there is no specified format for the notice and AO can issue the notice in the format which AO has done. ITA No.14/JODH/2020 Ummaid Mal Singhvi 6 5. We have heard both the parties and perused the records. 6. It is observed that assessee has raised a legal ground before us regarding validity of the notice. Ld. AR pleaded that the first ground of appeal in Form No. 35 filed before the Ld. CIT(A) is as under:- “1. That on the facts and in the circumstances of the case, the order passed by Ld. A.O. imposing penalty u/s 271AAA for Rs. 4,06,620/- is bad in law and bad in facts.” 7. Ld. AR stated that this includes the legal ground now raised by Ld. AR before the Bench. We have perused the Ld. CIT(Appeal’s) order and it is observed that Ld. CIT(A) has not discussed anything about the validity of the notice under section 271AAA. It means that Ld. CIT(A) has not adjudicated the legal ground raised by the assessee. The ground raised by assessee is a legal ground and assessee can raise the said ground afresh before this Tribunal as held by Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC). Therefore, we admit the legal ground raised by the assessee. However, since the said legal ground has not been adjudicated by the Ld. CIT(A). We set aside the order of Ld. CIT(A) to the Ld. CIT(A) with a direction to adjudicate the legal ground raised by ITA No.14/JODH/2020 Ummaid Mal Singhvi 7 the assessee. Accordingly, legal ground raised by the assessee is allowed for statistical purpose. 8. Since we have decided only the legal ground and it goes to the root of the case in our opinion, the other grounds raised by the assessee regarding merits of the penalty becomes academic in nature therefore, we do not intend to adjudicate these grounds. Accordingly, ground nos. 2 to 9 are dismissed as academic in nature. Order pronounced on 07 th August, 2023. Sd/- Sd/- (PAVAN KUMAR GADALE) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07/08/2023 Sh. Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) Asstt. Registrar 5. The DR 6. Guard File Jodhpur Bench