Gaurav Kumar Goenka, CHENNAI V. DCIT Corporate Circle 4(2), CHENNAI

ITA 3375/CHNY/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7150 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 147; 148; 271(1)(c); 69C; 273B; 143(3); 2(22)(e); 250

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member आयकर अपील सं./I.T.A. No.3375/Chny/2018 िनधाŊरण वषŊ/Assessment Year: 2010-11 Shri Gaurav Kumar Goenka, No. 14/3B, 3F-2, 1 st Street, East Abhiramapuram, Mylapore, Chennai 600 004. [PAN:AHRPK3539J] Vs. The Deputy Commissioner of Income Tax, Corporate Circle 4(2), Chennai 600 034. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri N. Arjunraj, C.A. & Shri S. Sridhar, Advocate ŮȑथŎ की ओर से/Respondent by : Shri P. Sajit Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 07.03.2022 घोषणा की तारीख /Date of Pronouncement : 10.03.2022 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 8, Chennai dated 19.09.2018 relevant to the assessment year 2011-11. The assessee has raised the following concise grounds: “1. The CIT (Appeals) erred in levying penalty u/s 271(1)(c) of the Act on the presumption of enhancement of income in terms of Section 250 of the Act without assigning proper reasons and justification and further ought to have appreciated that the restriction of the addition made by the Assessing Officer would not amount to enhancement within the ambit of Section 250 of the Act. 2. The CIT (Appeals) failed to appreciate that in any event the levy of I.T.A. No.33752/Chny/18 2 penalty to the factual matrix of the case was wholly unjustified and not sustainable in law and further ought to have appreciated that the mere rejection of explanation offered by the Appellant would not tantamount to presumption of concealment of income or furnishing of inaccurate particulars of income in terms of Section 271(1)(c) r.w.s 273B of the Act. 2. Brief facts of the case are that the assessee has filed his return of income for the assessment year 2010-11 on 31.01.2011 admitting an income of ₹.55,20,260/-. The case was selected under the category “Non Filer and as per the information available with the Department, the assessee has made credit card expenses to the tune of ₹.30,75,430/-. Hence, the case was reopened under section 147 of the Income Tax Act, 1961 [“Act” in short] and issued notice under section 148 of the Act. After following due procedure, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 29.12.2017 assessing the total income of the assessee at ₹.85,95,690/- by treating the credit card expenses of ₹.30,75,430/- as unexplained expenses under section 69C of the Act. On appeal, the ld. CIT(A) confirmed the additions besides, initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty of ₹.2 lakhs. 3. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that against the quantum addition under section 69C of the Act of ₹.30,75,430/-, the ld. CIT(A) I.T.A. No.33752/Chny/18 3 confirmed the addition to the extent of ₹.4,09,190/- and deleted ₹.26,66,240/-. Against the confirmation of addition of ₹.4,09,190/-, the ld. CIT(A) has initiated penalty proceedings and levied penalty of ₹.2 lakhs under section 271(1)(c) of the Act without any basis or new material evidences and prayed for deleting the penalty levied by the ld. CIT(A). 4. On the other hand, the ld. DR strongly supported the order passed by the ld. CIT(A). 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act by making addition of ₹.30,75,430/- being unexplained credit card expenses. On appeal, after considering the submissions of the assessee, the ld. CIT(A) deleted the addition to the extent of ₹.26,66,240/- and confirmed the balance addition of ₹.4,09,190/- against which penalty was levied at ₹.2 lakhs. In the penalty order, the ld. CIT(A) has observed that the expenditure of ₹.4,09,190/- claimed was personal in nature pertaining to the assessee Directors. Therefore, the ld. CIT(A) levied penalty of ₹.2 lakhs under section 271(1)(c) of the Act. I.T.A. No.33752/Chny/18 4 6. During the course of appellate proceedings, the ld. CIT(A) confirmed this addition of ₹.4,09,190/- against the quantum addition of ₹.30,75,430/- for the reason that the assessee has not been able to prove that the amount was incurred for business purposes and not for the personal purposes of the assessee Director family and held that the amount of ₹.4,09,190/- is liable for taxation under section 2(22)(e) of the Act. For the same reasoning, as was stated for confirming the part of quantum addition, the ld. CIT(A) levied penalty under section 271(1)(c) of the Act appears to be not in order. 7. In this case, we find that the ld. CIT(A) has not established anywhere in the penalty order that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. Just because the ld. CIT(A) confirmed the addition of ₹.4,09,190/- out of the addition made in the assessment order of ₹.30,75,430/-, with the same reasoning, penalty proceedings cannot be initiated and penalty could be levied under section 271(1)(c) of the Act in a mechanical manner. 8. In the case of CIT v. Reliance Petro Products Pvt. Ltd. 322 ITR 158, the Hon’ble Supreme Court has observed that “a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing of I.T.A. No.33752/Chny/18 5 inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars”. Confirmation of part of assessment, by itself, would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry conducted by the authorities which has been resulted in quantum addition, and if not, it would have escaped from tax net. What material evidence having acquired by the ld. CIT(A) leading to initiating penalty proceedings, was not emanating from the penalty order passed by the ld. CIT(A). Accordingly, by respectfully following the above decision of the Hon’ble Supreme Court in the case of CIT v. Reliance Petro Products Pvt. Ltd. (supra), the penalty of ₹.2 lakhs levied under section 271(1)(c) of the Act is deleted. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced on 10 th March, 2022 at Chennai. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 10.03.2022 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.