Pawan Satyanarain Jalan, Ahmedabad V. The Assessing Officer, Central Circle-1(3), Ahmedabad

ITA 250/AHD/2022

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The case revolves around a penalty imposed on Pawan Satyanarain Jalan following a search and seizure operation under Section 132 of the Income Tax Act, 1961, at various premises of the Sankalp Group in Ahmedabad. The search led to the discovery of unaccounted cash and valuables, resulting in additions to the assessee's income for the Assessment Year 2019-20. The Assessing Officer imposed a penalty under Section 271AAB, which was upheld by the CIT(A). However, the Tribunal found that the penalty was not warranted, emphasizing the appellant's compliance with tax obligations and the context of the cash found.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124718 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-06-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 23-06-2022
• Other Referred Cases: Chandra Suresh Kothari vs. DCIT, Hindustan Steel Co. Ltd. vs. State of Orissa
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 132; 274; 143(2); 119; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ I. T. A. No . 250/Ahd/20 22 ( नधा रण वष / A ss es sment Year : 2019-20) Paw an Sa t y a n ar a i n Ja l a n C A . As ho kk u ma r S . Gu pt a 20 3/1 , N e w C l ot h Ma r k e t, O / s. R a ip ur G ate , R aip ur , A h me da ba d - 3 8 0 0 0 2 बनाम/ Vs . T h e A s se ss i n g Of f ice r C e ntr a l C ir c le - 1 ( 3 ) , 3 r d F lo o r, A a ya k ar B h a va n, A h m e da b ad थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A A V P J 9 6 1 2 Q (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Chetan Agarwal, AR यथ क ओर से/Respondent by : Shri Mukesh Jain, Sr. D.R. स ु नवाई क तार ख / D a t e o f H e a r i ng 06/06/2023 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 07/07/2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 15.06.2022 passed by the Ld. Commissioner of Income Tax (Appeals)- 11, Ahmedabad arising out of the penalty order dated 10.02.2022 passed by the CIT, Central Circle-1(2), Ahmedabad under Section 271AAB of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2019-20. ITA No. 250/Ahd/2022 (Pawan S. Jain vs. AO) A.Y.– 2019-20 - 2 - 2. The impugned order passed by the Ld. CIT(A)-11, Ahmedabad under Section 271AAB of the Act confirming penalty of Rs.1,50,000/- on addition of Rs.2,50,000/- is under challenge before us. 3. The brief facts leading to the case is this that a search under Section 132 of the Act was conducted in the case of Sankalp Group of Ahmedabad at various premises on 30.10.2018 and subsequent dates. The appellant derived income from business in textile in the name and style of M/s. Basant Fabrics. Apart from that, he had income from salary and income from other sources. Consequently, notice under Section 143(2) of the Act dated 20.02.2020 for the year under consideration was issued and the same was finalized on 26.02.2021 determining total income of Rs.5,30,59,850/- upon making additions to the tune of Rs.39,45,245/- on several counts in the following manner: SR.. No. Addition made in the assessment order Amount of addition [In Rs.] Addition deleted by the CIT(A) [In Rs.) Addition confirmed by the CIT(A) [In Rs.] 1. Addition U/S.69C on account of unaccounted and unexplained cash payments 2,82,00,000 2,82,00,000 0 2. Addition u/s.69A in respect of unaccounted and explained cash receipt 2,00,000 2,00,000 0 3. Addition u/s.69A in respect of gold jewellery etc. weighting 2500 gms 72,50,000 45,70,255 26,79,745 4. Addition u/s.69A in respect of 34 KG of Silver lagdi, silver bars and silver items found from the residence 12,33,500 6,16,750 6,16,750 ITA No. 250/Ahd/2022 (Pawan S. Jain vs. AO) A.Y.– 2019-20 - 3 - 5. Addition u/s.69A in respect of silver articles weighting 1,460 KG and 7.04 KG found from his bank locker no. 119 &118 2,97,500 1,48,750 1,48,750 6. Addition u/s.69A in respect of cash found and seized during the search 37,34,855 32,34,855 5,00,000 Total 4,09,15,855 3,69,70,610 39,45,245 4. Penalty proceeding under Section 271AAB & 271AAC of the Act were initiated separately on addition upon issuing notices on 26.02.2021 under Section 274 r.w.s. 271AAC of the Act on 19.03.2021 upon the appellant and penalty imposed on 10.02.2022 by the Ld. AO. On the other hand, the quantum order passed by the Ld. AO stood confirmed by the Ld. CIT(A) and finally penalty was also imposed on 10.02.2022 on the additions confirmed by the Ld. CIT(A). Subsequently, appeal preferred by the appellant before the Tribunal wherein out of the total addition of Rs.39,45,245/-, Rs.36,95,245/- stood deleted. The addition of Rs.2,50,000/- on account of cash of minor grandson Aveer Ankit Jalan had been confirmed by the Tribunal. Thereafter, in appeal, the Ld. CIT(A) though deleted the penalty made under Section 271AAC, the penalty to the tune of Rs.1,50,000/- on the addition of Rs.2,50,000/- on account of cash of minor grandson has been upheld. Hence, the instant appeal before us. 5. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 6. Upon considering the order passed by the authorities below, we find this particular fact which has also been substantiated by sufficient evidence ITA No. 250/Ahd/2022 (Pawan S. Jain vs. AO) A.Y.– 2019-20 - 4 - before the authorities below that the appellant group was having turnover of more than Rs.300 Crores in the year under consideration and the total tax paid by Group is more than Rs.2 Crores in a year. We note that the explanation rendered by the appellant in regard to cash found and seized during the search to the tune of Rs.2.5 Lakhs received on various occasions and on birthday from close relatives needs to be taken into consideration in its proper perspective taking into consideration of the status of the family of the appellant which the authorities below failed to. Moreso, when the appellant Group is paying tax more than Rs.2 Crores on yearly basis, no element of doubt can be expressed on such a petty amount in the name of minor grandson in order to evade taxes as alleged by the authorities below. 7. In support of the case made out by the assessee to this effect that the penalty is not justifiable in this case and also on the count that penalty under Section 271AAB of the Act is discretionary one and not mandatory, the appellant relied upon the judgment passed by the ITAT, Nagpur Bench in case of Chandra Suresh Kothari vs. DCIT, reported in [2022] 135 taxmann.com 275 (Nagpur – Trib.) and Hon’ble Apex Court in the case of Hindustan Steel Co. Ltd. vs. State of Orissa, reported in 83 ITR 26 which we have duly considered. We need to consider this fact that Penalty proceeding is a quasi- criminal proceeding. Thus, unless the party acts deliberately in defiance of law, guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation, penalty cannot be imposed. It is a discretionary power on the part of the authorities below to impose penalty which should be exercised judicially and on a consideration of all the relevant factors cantering the issue. Refusing to impose the penalty in a case of minimum penalty prescribed can be said to be justified if it is due to any technical or venial ITA No. 250/Ahd/2022 (Pawan S. Jain vs. AO) A.Y.– 2019-20 - 5 - breach of the provisions of law or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute which is applicable to the case in hand which ought to have been considered by the authorities below. Therefore, respectfully relying upon the judgment passed by different High Courts and the Apex Court, we do not find any justification in imposing the impugned penalty of Rs.1,50,000/- under Section 271AAB of the Act. Considering the entire aspect of the matter, we with the above observation delete the penalty. 8. In the result, assessee’s appeal is allowed. This Order pronounced on 07/07/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 07/07/2023 True Copy S. K. SINHA 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. गाड3 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad