Pankajkumar Pratapbhai Thakkar, Ahmedabad V. The ACIT, Central Circle-1(1), Ahmedabad

ITA 1731/AHD/2018

AI Insights

The case revolves around a penalty imposed on Pankajkumar Pratapbhai Thakkar under Section 271AAB of the Income Tax Act following a search operation under Section 132. The search, conducted on the D.I. Thakkar Group on 16.01.2014, led to the seizure of a pen drive containing transaction details. The assessee, in his return for A.Y. 2014-15, disclosed an income of Rs. 4,11,908 from these transactions. The Assessing Officer, however, imposed a penalty for alleged concealment of income, which was upheld by the CIT(A). The Tribunal, upon review, found that the income was disclosed and taxed appropriately, and thus, the penalty was not applicable.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300001 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-02-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 31-07-2018
• Other Referred Cases: Sandeep Chandak and Others vs. ACIT, CIT vs. Jai Laxmi Rice Mills
• Laws Referred To: Section 271AAB of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 132; 142(1); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I. T .A . N o .1 73 1 / Ah d/2 0 1 8 ( A s se ss m e nt Y e a r : 20 14- 15 ) Pa n ka j k u m ar P r a ta pb ha i T ha k k a r A- 6 0 1, R e tr ea t, Nr . S h ya ma l Ro w Ho us e, S a te ll ite , A h m eda ba d V s . A C I T C e n tr a l C ir cle -1 (1 ) , A h me da ba d [ P AN N o. A B VP T9 78 2C ] (Appellant) .. (Respondent) Appellant by : Shri M. K. Patel, Adv. Respondent by: Shri Ramesh Kumar, JCIT D a t e of H ea r i ng 02.02.2023 D a t e of P r o no u n ce me nt 24.02.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals)-11, Ahmedabad on 07.05.2018 for A.Y. 2014-15. 2. The grounds of appeal raised by the assessee are as under: “1. The ld. CIT(A) has erred in law and on facts in confirming the penalty of Rs.82,380/- levied by the AO u/s. 271AAB of the Act without proper consideration and appreciation of the facts of the case. In view of facts and submissions filed coupled with legal position in support of non-levy of penalty, more particularly the fact that the income was duly disclosed in the books of account, the provisions of Section 271AAB are not applicable and hence the impugned penalty of Rs.82,380/- requires to be cancelled/deleted. 2. The ld. CIT(A) further erred in not appreciating the fact that the AO having accepted the income offered in the books of account and disclosed in the return of income as assessed income in its entirety and having not brought on record any material/evidences which establishes that the same represent the undisclosed income of the appellant, the penalty cannot be levied u/s 271AAB of the Act. 3. The ld. CIT(A) has erred in not adjudicating or commenting upon the contention of the appellant that the penalty order in dispute is bad in law and is not sustainable since the penalty notice issued by the AO does not specify the charge as to under which clause of Section 271AAB penalty is to be levied as held by the Hon’ble ITAT, Lucknow Bench in the case of Sandeep Chandak and Others vs. ACIT (2017) 55 ITR (Trib.) 209 while relying upon the decision of the Hon’ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills (2015) 379 ITR 521 (SC). In view of the said legal position, the penalty order in dispute should be held as invalid and accordingly cancelled. ITA No. 1731/Ahd/2018 Pankajkumar Pratapbhai Thakkar vs. ACIT Asst.Year–2014-15 - 2 - 4. The ld. CIT(A) has further erred in not appreciating the fact that the appellant along with others of the family had duly disclosed the unaccounted income in the disclosure petition filed before the department. The appellant craves leave to add, amend, alter, modify or delete any of the above grounds as well as to submit additional grounds at the time of hearing of the appeal.” 3. A search action under Section 132 was carried out in D. I. Thakkar Group of cases on 16.01.2014. The assessee filed return of income for A.Y. 2014-15 on 09.10.2015 declaring total income at Rs. 8,60,810/-. The Assessing Officer observed that the assessee has shown income from business and income from other sources. The Assessing Officer vide notice under Section 142(1) dated 12.08.2015 specifically raised a query related to pen drive which was seized during the search in respect of transactions done by the assessee alongwith Shri Dahyalal I. Thakkar, Shri Kalpesh D. Thakkar and Shri Ramesh K. Thakkar. The assessee filed its reply dated 10.03.2016. The assessee submitted before the Assessing Officer that on the basis of the noting found in the said pen drive and considering the other transactions the addition can be made but the Assessing Officer rejected the said claim and made observation and determine the total income at Rs. 8,60,810/-. 4. The Assessing Officer imposed penalty under Section 271AAB of the Act thereby observing that there was a default on part of the assessee for concealment of particulars of its income and 20% on concealed income was imposed as penalty which amounted to Rs. 82,380/-. 5. Being aggrieved by the penalty order under Section 271AAB of the Act the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. ITA No. 1731/Ahd/2018 Pankajkumar Pratapbhai Thakkar vs. ACIT Asst.Year–2014-15 - 3 - 6. There is a delay of 01 day in filing the present appeal before the Tribunal which was explained by the assessee. Hence, the delay is condoned. 7. The Ld. A.R. submitted that a search under Section 132 was carried out in case of Dayabhai Thakkar Group cases on 16.01.2014 and on the date of search proceeding the return of income for A.Y. 2014-15 was not due for filing as the due date for filing the returns were 31.07.2014. The assessee filed its return of income on 09.10.2015 including income of Rs. 4,11,908/- in respect of trading in commodities on the basis of seized material in order to save time and prolong litigation. The seized material did not lead to any inference that the assessee earned any such income. The Ld. A.R. submitted that levying penalty under Section 271AAB at 20% of Rs. 4,11,908/- is not justifiable as there is no concealment of income as such as the assessee has filed the return of income on 09.10.2015. The Ld. A.R. submitted that the provisions of Section 271AAB are not applicable to the income disclosed in the return of income, the same having been recorded in books of accounts and on which tax and interest are paid and which stood accepted by the Assessing Officer. Since such income does not fall within the scope and ambit of the definition of undisclosed income as defined in Section 271AAB of the Act. 8. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 9. Heard both the parties and perused all the relevant material available on record. It is undisputed fact that during the search period the due date ITA No. 1731/Ahd/2018 Pankajkumar Pratapbhai Thakkar vs. ACIT Asst.Year–2014-15 - 4 - for filing return of income for A.Y. 2014-15 was not finalized. When the assessee filed the return of income the assessee has disclosed the income of Rs. 4,11,908/- in respect of trading in commodities and has also explained the component of the income. The basis for imposing penalty under Section 271AAB of the Act is concealment of its income which is contrary to the actual facts of the case as assessee has disclosed the income of Rs. 4,11,908/- in Profit & Loss Account of the assessee. Therefore, the element of concealment does not come in picture in the present assessee’s case. Therefore, the Assessing Officer as well as the CIT(A) was not right to impose penalty under Section 271AAB of the Act. The appeal of the assessee is allowed. 10. In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 24/02/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 24/02/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad