Popular Foundations Pvt Ltd, Chennai V. ACIT, Central Circle 3(4), Chennai

ITA 3019/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9481 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 24-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 139(4)

Judgement Text

आयकर अपील य अ धकरण,‘सी’’ यायपीठ, चे नई IN THE INCOME TAX APPELLATE TRIBUNAL , ‘C’ BENCH, CHENNAI ी वी . द ु गा राव, या यक सद य एवं ी जी. मंज ु नाथ, लेखा सद य के सम% BEFORE SHRI V.DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं./I . T. A. No. 3 0 1 9/ Chn y/ 2 0 1 9 ( नधा रणवष / A ss e ss m en t Ye a r : 2 014 - 15) M/s. Popular Foundations Pvt.Ltd. 32/1, Kamatchi Apartments 10 th Avenue, Ashok Nagar Chennai-600 0083. V s Assistant Commissioner of Income Tax, Central Circle-3(4), Chennai. P AN: A AB CP 6 4 3 3 G (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओरसे/ Appellant by : Mr. R.Sivaraman, Advocate यथ क ओरसे/Respondentby : Mr. M. Rajan, CIT स ु नवाईक तार ख/D a t e o f h e a r i n g : 11.01.2022 घोषणाक तार ख /D a t e o f P r o n o u n c e m e n t : 31.01.2022 आदेश / O R D E R PER G.MANJUNATHA, AM: This appeal filed by the assessee is directed against order passed by the learned Commissioner of Income Tax (Appeals)- 19, Chennai, dated 31.07.2019 and pertains to assessment year 2014-15. 2. The assessee has raised following grounds of appeal:- “ 1. The order of the Ld. CIT(Appeals) in ITA.No.6/2018-19 dated 31.07.2019 for the impugned AY 2014-15 is contrary to the circumstances of the case and is opposed to the principles of equity, justice and fair play. 2. The Ld. CIT(Appeals) erred in law in levying penalty addition of Rs.10,00,000/- u/s. 271AAB(1)(b). 2 ITA No. 3019/Chny/2019 3. The 14. CIT (Appeals) erred in law in treating the amount of Rs.50,00,000/- as an undisclosed income even though the same amount is recorded in the books of accounts of the appellant. 4. The Ld. CIT (Appeals) erred in law erred in treating the income declared by the Appellant in the regular return of Income u/s 41(1) as unexplained cash credit u/s 68 of the Income Tax Act. 5. The Ld.CIT (Appeals) ought to have appreciated the ROC record submitted by the appellant which proves the existence of creditor company. 6. Ld.CIT(Appeals) was not justified while assessing the income in both the Assessment Years that is in the year of receipt (A.Y.2011-12) and the year in which the income was offered by the Appellant (A.Y.2014-15) and paid tax. Levying penalty twice apart from taxing the same income twice is erroneous untenable and bad in law. 7. The Ld.CIT(Appeals) failed to appreciate that the notice issued by Assessing Officer for initiating the penalty u/s.271AAB of the I.T. Act, 1961 is not in accordance with law without specifically pointing out the relevant clause under which the Assessing Officer sought to impose penalty u/s.271AAB.” 3. Brief facts of the case are that the assessee company is engaged in the business of construction of building to various educational institutions filed its return of income for the assessment year 2014-15 on 08.10.2014 admitting total income of Rs.2,18,15,790/-. A search and seizure action u/s.132 of the Income Tax Act, 1961, was conducted in the case of the assessee on 17.07.2014. As a consequence, notice u/s.153A of the Income Tax Act, 1961, was issued for 3 ITA No. 3019/Chny/2019 which the assessee has filed letter dated 09.03.2015 and requested to treat return filed on 08.10.2014 be treated as return filed in response to notice issued u/s.153A of the Act. The case was taken up for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the assessee has treated a sum of Rs.50 lakhs claimed to have taken unsecured loan from M/s. Park Field Developers & Builders P.Ltd. as cessation of liability u/s.41(1) of the Income Tax Act, 1961, and treated as income. The Assessing Officer assessed unsecured loan claimed to have received from M/s. Park Field Developers & Builders P.Ltd. for assessment year 2013-14 on the ground that the assessee has failed to prove unsecured loan with necessary evidences. However, levied penalty u/s.271AAB of the Income Tax Act, 1961, for assessment year 2014-15 on the ground that the assessee has admitted undisclosed income and paid taxes and thus, as per provisions of section 271AAB of the Income Tax Act, 1961, penalty shall be leviable, in case undisclosed income is admitted during the course of search in the statement recorded u/s.132(4) and further paid taxes towards undisclosed income by filing return of income. The assessee carried the matter in 4 ITA No. 3019/Chny/2019 appeal before first appellate authority, but could not succeed. The learned CIT(A) for the reasons stated in his appellate order dated 31.07.2019 confirmed penalty levied by the Assessing Officer. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 4. The learned A.R for the assessee submitted that penalty levied by the Assessing Officer u/s.271AAB of the Act cannot survive, because addition on which penalty levied by the Assessing Officer has been deleted by the Tribunal in ITA No. 66 to 69/Chny/2018 dated 08.12.2021, where it was held that unsecured loan taken from M/s. Park Field Developers & Builders P.Ltd. is genuine in nature, which cannot be treated as unexplained cash credit u/s.68 of the Income Tax Act, 1961. The learned A.R further submitted that even otherwise, penalty levied by the Assessing Officer u/s.271AAB of the Act cannot survive, because the Assessing Officer has failed to prove additions made towards cessation of liability u/s.41(1) of the Act as undisclosed income, which warrants levy of penalty under said section. 5 ITA No. 3019/Chny/2019 5. The learned DR, on the other hand, supporting order of the learned CIT(A) submitted that arguments of the assessee that additions made by the Assessing Officer towards unsecured loan u/s.68 of the Act, was deleted by the Tribunal for the assessment year 2013-14 and thus, penalty levied for impugned assessment year cannot survive under law is not correct, because the Assessing Officer has levied penalty u/s.271AAB of the Act, in respect of assessment of income being cessation of liability u/s.41(1) of the Act, for impugned assessment year which warrants levy of penalty in terms of provisions of section 271AAB of the Act. The learned DR further referring to provisions of section 271AAB of the Act, submitted that as per said provision, it is mandatory to levy penalty once there is addition towards undisclosed income consequent to search. In this case, the assessee has admitted undisclosed income after date of search, though same was disclosed in the regular return filed for relevant assessment year. Therefore, it is incorrect on the part of the learned A.R for the assessee to argue that addition made by the Assessing Officer on which penalty levied u/s.271AAB of the Act, has been 6 ITA No. 3019/Chny/2019 deleted and thus, penalty levied by the Assessing Officer cannot survive under law. 6. We have heard both the parties, perused material available on record and gone through orders of the authorities below. Admittedly, additions made by the Assessing Officer towards unsecured loan received from M/s. Park Field Developers & Builders P.Ltd. for the assessment year 2013-14 has been deleted by the Tribunal in ITA No.66 to 69/Chny/2018 dated 08.12.2021, where it was very categorically held that unsecured loan received from M/s. Park Field Developers & Builders P. Ltd. is genuine transaction, which is supported by necessary evidences and thus, same cannot be treated as unexplained cash credit u/s.68 of the Act. Therefore, on this ground itself penalty levied by the Assessing Officer on said undisclosed income u/s.271AAB of the Act, cannot survive. Be that as it may, but fact remains that the Assessing Officer has levied penalty u/s.271AAB of the Act, for impugned assessment year in respect of income offered by the assessee in regular return of income filed u/s.139(1) of the Income Tax Act, 1961, on cessation of liability u/s.41(1) of the Act, being unsecured loan taken from M/s. Park Field Developers & Builders P.Ltd. 7 ITA No. 3019/Chny/2019 The only ground on which the Assessing Officer levied penalty u/s.271AAB of the Act, was that although the assessee has treated unsecured loan as cessation of liability and included in the regular return filed for regular assessment year, but said return was filed after the date of search. Therefore, he was of the opinion that unless search took place, the assessee would not have come forward to declare undisclosed income being unsecured loan taken from M/s. Park Field Developers & Builders P.Ltd. 7. We have gone through reasons given by the Assessing Officer in light of arguments of the learned AR for the assessee and we ourselves do not subscribe to the reasons given by the Assessing Officer for simple reason that as per provisions of section 271AAB of the Act, penalty shall be levied, if the assessee admits undisclosed income in the statement recorded u/s.132(4) of the Act, and paid relevant taxes in return of income filed consequent to search. In this case, except fact that regular return of income was filed after the date of search there was no adverse finding from the Assessing Officer regarding income offered by the assessee being cessation of 8 ITA No. 3019/Chny/2019 liability u/s.41(1) of the Act, that said income is in nature of undisclosed income which was disclosed consequent to search. Moreover, cessation of liability treated by the assessee towards unsecured loan taken from M/s. Park Field Developers & Builders P.Ltd. was not part of disclosure made in the statement recorded under section 132(4) of the Income Tax Act, 1961, nor it was case of the Assessing Officer that said income was disclosed in return of income filed in response to notice issued u/s.153A of the Act as a consequence of search. Therefore, we are of the considered view that penalty cannot be levied u/s.271AAB of the Act, in respect of income disclosed in regular return of income filed by the assessee for relevant assessment year, even though said return has been filed subsequent to date of search, so long as return filed by the assessee was within due date prescribed u/s.139(1) / 139(4) of the Income Tax Act, 1961. Since the assessee has filed regular return for impugned assessment year within extended due date prescribed u/s.139(4) of the Act, the Assessing Officer cannot levy penalty u/s.271AAB of the Act. The learned CIT(A) without appreciating facts has simply confirmed additions made by the 9 ITA No. 3019/Chny/2019 Assessing Officer. Hence, we direct the Assessing Officer to delete penalty levied u/s.271AAB of the Act. 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 31 st January, 2022 Sd/- Sd/- (वी. द ु गा राव) (जी. मंज ु नाथ) (V.Durga Rao) (G.Manjunatha) #या यक सद&य /Judicial Member लेखा सद&य / Accountant Member चे#नई/Chennai, )दनांक/Dated 31 st January, 2022. DS आदेश क त+ल,प अ-े,षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आय ु .त (अपील)/CIT(A) 4. आयकर आय ु .त/CIT 5. ,वभागीय त न2ध/DR 6. गाड फाईल/GF.