Unicare Developer & Infrastructure Pvt Ltd, New Delhi V. ITO Ward 27(1), New Delhi

ITA 2303/DEL/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5701 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Assessment Year: 2014-2015
• Appeal Filed On: 14-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; TDS
• Section: 271(1)(c); 143(3); 274; 271B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC-1 : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA No.2303/Del/2019 Assessment Year: 2014-15 Unicare Developer & Infrastructure Pvt. Ltd., 71/7A, FF, Rama Road, New Delhi. PAN: AABCU3616N Vs. ITO, Ward-27(1), New Delhi. (Appellant) (Respondent) Assessee by : Shri K.R. Manjani, Advocate Revenue by : Shri Om Parkash, Sr. DR Date of Hearing : 16.11.2021 Date of Pronouncement : 23.12.2021 ORDER This appeal filed by the assessee is directed against the order dated 7 th January, 2019 of the CIT(A)-28, New Delhi, relating to Assessment Year 2014- 15. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the CIT(A) in sustaining the penalty of Rs.10,88,922/- levied by the AO u/s 271(1)(c) of the IT Act. 2.1 Facts of the case, in brief, are that the assessee is a company engaged in the business of acquiring agricultural land and converting the same into land use, plotting the same into residential and commercial by giving various offers and ITA No.2303/Del/2019 2 advertisements in the newspapers. It filed its return of income on 19 th January, 2016 declaring the loss of Rs.2,07,08,859/-. The case of the assessee was selected for scrutiny through CASS. In response to the statutory notices issued by the AO, the AR of the assessee appeared from time to time and filed the requisite documents. The AO completed the assessment u/s 143(3) of the Act determining the total income of the assessee at Rs.14,38,690/- wherein he made the following additions:- i) Disallowance out of advertisement expenses of Rs.1,58,20,489 Rs.47,46,146/- ii) Addition on account of unexplained investment Rs.33,41,000/- iii) Addition on account of unexplained commission expenses Rs.10,00,000/- iv) Addition on account of unexplained advances received from parties Rs.1,00,00,000/- v) Addition of undeclared income of FD interest Rs.1,83,020/- 3. Subsequently, the AO initiated penalty proceedings u/s 271(1)(c). Rejecting the various explanations given by the assessee, the AO levied penalty of Rs.10,88,922/- being 100% of the tax sought to be evaded on the addition of Rs.33,41,000/- added by him on account of unexplained investment and Rs.1,83,020/- added on account of undeclared interest income. 3.1 In appeal, the ld.CIT(A) confirmed the penalty levied by the AO. 4. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- “On facts and circumstances of the case the Learned A.O. as well as , the Ld. CIT(A) have erred in imposing and upholding of penalty, even though purchase of property of Rs. 33,41,000/- is from Books of Accounts, duly ITA No.2303/Del/2019 3 reflected in cash Book, Ledger & Balance Sheet. Similarly imposition of penalty on Rs. 1,83,020/- Interest of swift account which was not credited in passbook till 31.03.2014 & Assessee was not aware of this nor was TDS certificate for this intt. supplied to the Appellant. There is thus no Question of concealment especially when this bank Account in which this Intt. Is credited in next year could not be concealed, it being in the Balance Sheet & knowledge of Department. Dismissal of appeal by CIT(A) is arbitrary, without application of mind & bad in Law even thought complete facts were duly brought to knowledge of CIT(A) (which was not new evidence) and the Ld. CIT(A) should bad decided appeal on fact though non furnishing of reply to the A.O. could be due to its counsel, staff, etc. It is prayed that penalty levied may be cancelled.” 5. The ld. Counsel for the assessee, at the outset, drew the attention of the Bench to the copy of the notice issued u/s 274 r.w.s. 271 of the Act dated 29 th December, 2016 and submitted that the AO has not struck off the inappropriate words in the said notice and the notice is vague and incomplete and, therefore, the penalty proceedings have to be quashed. Referring to the copy of the assessment order, he submitted that here also the AO has not mentioned anything regarding the penalty and at the last para of the assessment order, the AO has simply mentioned: “penalty proceedings u/s 271(1)(c), 271B and 271F of the IT Act have been initiated separately.” He accordingly submitted that in view of the decision of the Hon’ble Delhi High Court in the case of PCIT vs Sahara India Life Insurance Company Ltd. vide ITA No.426/2019, order dated 02.08.2019 the penalty levied by the AO and sustained by the CIT(A) being not in accordance with the law has to be deleted. ITA No.2303/Del/2019 4 6. So far as the merit of the case is concerned, the ld. Counsel for the assessee submitted that all the details are recorded in the books of account and, therefore, the ld.CIT(A) was not justified in sustaining the penalty levied by the AO. 7. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). 8. I have heard the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find, the AO, in the instant case, levied penalty of Rs.10,88,922/- u/s 271(1)(c) of the IT Act, 1961 on account of the concealed income of Rs.35,24,020/- which comprises of two parts, namely, unexplained investment of Rs.33,41,000/- and undeclared interest income of Rs.1,83,020/-. I find, the ld.CIT(A) sustained the penalty levied by the AO on the ground that the assessee failed to offer any explanation in respect of investment in property during the assessment and penalty proceedings and also could not give the reasons for not showing the interest income. It is the submission of the ld. Counsel for the assessee that the entries relating to investment in property are already recorded in the books of account. So far as the interest on FD is concerned, it is his submission that due to non-intimation by the bank regarding the accrual of interest and in absence of any TDS on such interest income, the assessee was not aware of any accrual of interest for which it could not declare the interest income. It is also his submission that there is no specific charge against the assessee in the penalty notice since the inappropriate words have not been struck off and even in the assessment order also there is no specific ITA No.2303/Del/2019 5 charge against the assessee for concealment of income or furnishing of inaccurate particulars. Thus, according to the assessee, in absence of any proper charge by the AO in the notice issued u/s 274 r.w.s. 271(1) of the IT Act, the penalty proceedings not being in accordance with the law have to be quashed. 9. I find some force in the arguments of the ld. Counsel for the assessee regarding the validity of the penalty proceedings in the instant case. A perusal of the notice issued u/s 274 r.w.s 271 of the IT Act, 1961 issued by the AO on 29 th December, 2016 shows that the inappropriate words in the said notice have not been struck off. For ready reference, the notice so issued by the AO is reproduced as under:- ITA No.2303/Del/2019 6 10. I find, the Hon’ble Delhi High Court in the case of PCIT vs Sahara India Life Insurance Company Ltd. (supra) held that the notice issued by the Assessing Officer is bad in law since it did not specify under which limb of section 271(1)(c) of the Act, the penalty proceedings have been initiated i.e. whether for concealment of income or for furnishing of inaccurate particular of income. Since, the AO in the instant case has not struck off the inappropriate words in the notice issued u/s 274 r.w.s. 271 of the Act dated 29 th December, 2016 and the notice does not indicate the proper charge, i.e., under which limb of section 271(1)(c) of the IT Act the penalty proceedings have been initiated, therefore, respectfully following the decision of the Hon’ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Company Ltd. (supra), I hold that the penalty proceedings are not in accordance with the law. The penalty levied by the AO and confirmed by the CIT(A) is accordingly directed to be deleted. 11. In the result, the appeal filed by the assessee is allowed. The decision was pronounced in the open court on 23.12.2021. Sd/- (R.K. PANDA) ACCOUNTANT MEMBER Dated: 23 rd December, 2021 dk ITA No.2303/Del/2019 7 Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi