ABHISHEK SINGHI, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1, UDAIPUR

ITA 389/JODH/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 2198 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA RAJVANSHI JAIN
• Assessee Lawyers: SAKAR SHARMA
• Keywords: Question of law; Corroborative evidences; Bogus
• Section: 143(3); 142(1); 143(2); 143(1); 271(1)(c); 251; 132; 153A; 139; 272(1)(c); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 Abhishek Singhi 15, Vinod Nagar, Beawar [PAN: AHIPS 7762 A] (Appellant) Vs. Assistant Commissioner of Income Tax, Central Circle-1, Udaipur (Respondent) Appellant by Sh. Sakar Sharma, CA Respondent by Smt. Alka Rajvanshi Jain, CIT-DR Date of Hearing 30.01.2024 Date of Pronouncement 04.03.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the Commissioner of Income Tax (Appeal), Udaipur-2 dated 06.09.2023 [here in after ‘CIT(A)’ ] for assessment year 2012-13 which in turn arise from the order dated 12.06.2019 passed under section 271(1)(c) of the Income Tax Act, by DCIT, Central Circle-01, Udaipur. 2. In this appeal, the assessee has raised following grounds: - I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 2 “1. The Ld. CIT(A) erred on facts and in law in upholding assessment order passed u/s 153A r.w.s 143(3) of the Act making addition to the returned income without appreciating that assessment under reference was a completed assessment and there was no incriminating material found in the course of search qua assessment year under reference. No addition ought to have made in absence of any incriminating material as held and affirmed by Hon’ble Supreme Court in PCIT vs. Abhisar Buildwell P Ltd. (2023) 454 ITR 212 (SC), consequently no penalty u/s 271(1)(c) was to be levied. 2. The ld. CIT(A) erred on facts and in law in upholding the penalty order without appreciating that penalty order was passed for PAN to be as AGFPA6016K which is not PAN of the appellant. 3. The Ld. CIT(A) erred on facts and in law in upholding levy of penalty of Rs. 1,50,000/- u/s 271(1)(c) for alleged inaccurate furnishing of particulars of income without appreciating explanations and submissions of the appellant.” 3. Succinctly, the fact as culled out from the records is that search and seizure proceedings were carried out at the premises of the assessee on 16.09.2016 as per warrant of authorization issued by Director General of Income-tax (Inv.). Jaipur. On receiving the intimation about the search from Jt. DIT (Inv.). Udaipur. notice U/s 153A was issued in this case on 20.09.2018 and served upon the assessee requiring the assessee to prepare a true and correct return of total income including undisclosed income in respect of which he is assessable for A.Y. 2012-13 in the prescribed form and deliver it in within 15 days of service of the notice duly verified and signed in accordance with provisions of section 140 of I.T. Act, 1961. In response to notice U/s 153A, a return of income declaring total income of Rs. I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 3 7,58,400/- was filed on 22.10.2018. Original return declaring total income of Rs. 7.58,400/- was filed on 31.03.2013. 3.1 Subsequently, during the course of assessment proceedings, notices u/s. 143(2) and u/s. 142(1) of the Act were also issued to the assessee on requiring him to produce/explain/furnish various information as specified therein and placed on record by the ld. AO. Based on the information placed on record ld. AO completed assessment u/s 15A r.w.s. 143(3) on 10-12-2018 wherein vide Para 5 of the assessment order, He has noted that assessee incurred loss of Rs. 4,80,615/- in Future & Option trading out of which loss of Rs. 2,42,152/- was set-off against incomes earned during the year and balance of Rs. 2,38.463/ which was carried forward was also disallowed vide para 8 for want of supporting documents/ evidences. During the course of assessment proceedings, the assessee argued that as per the scheme of taxation in case of search and seizure as per provisions of section 132 res 153A, the theory of abatement is applicable in respect of four A.Y. 2011-12 to 2014-15 which speaks beyond all doubts that in the year when the time limit to issue notice u/s 143(2) has been expired, no action u's: 153A is required to be taken for all these four assessment years. Even the original assessment of income for all these years have been completed I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 4 us. 143(1) of the Act. The ld. AO, accordingly, determined total income at Rs. 10,00,550/- against returned income of Rs. 7,58,400/-. AO initiated penalty proceedings u/s 271(1)(c) on disallowance of set off of loss of Rs. 2,42,152/- for furnishing inaccurate particulars of income. No appeal against the assessment order was preferred by the assessee before the CIT(A). Thereafter, AO passed order u/s 271(1)(c) on 12-06- 2019 levying penalty of Rs. 1,50,000/- for alleged inaccurate furnishing particulars of income on loss of Rs. 4,80,615/- vide para 4 & 5. 4. Aggrieved from the above order of the ld. AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised by the assessee, the relevant finding of the ld. CIT(A) is reiterated here in below: 4.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this case, the AO noted that the appellant claimed loss of Rs. 4,80,615/- on account of future and option trading for which no evidence submitted by him. Even working of loss has not been submitted. Even details of purchase and sale not submitted. According to the AO Low balance in ICICI Bank Account does not justify the loss. Argument of the appellant that assessee has misplaced the relevant document is not reliable. Assessee failed to justify that there was no malafide intention for this act of claiming loss which is not correct in absence of evidences. Therefore, it is very clear that assessee had furnished inaccurate particulars of income on this issue with malafide intention for which he has nothing to substantiate. Therefore, the appellant was held guilty of furnishing inaccurate particulars of income to the extent of Rs. 4,80,615/- by the AO. Accordingly, a penalty u/s 271(1)(c) of the I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 5 I.T. Act of Rs. 1,50,000/- was imposed by the AO for the default committed by the appellant after providing him due and reasonable opportunities of being heard. Per contra the appellant stated that in absence of incriminating material found in search proceedings whatever income of appellant, the same was to be assessed at returned income. Therefore, additions made are contrary to the settled position of law consistently explained by the Hon’ble Courts including jurisdictional High Court. The position of law is now further settled by the Hon’ble Supreme Court in the case of PCIT vs Abhisar Buildwell P. Ltd reported at (2023) 454 ITR 212 (SC) vide judgment dated 24-04-2023. The appellant accepted that though assessment for the year under consideration is an abated assessment yet same principles would govern due to no change in the circumstances when compared to the earlier assessment years and also on account of law explained by the Courts referred in subsequent part of this submission. The appellant has raised issues which are actually against the quantum addition. The appellant has not challenged the quantum addition. The issues raised by the appellant are therefore not found to be acceptable. Without prejudice to the above, the issue raised by the appellant is discussed. The appellant has relied upon the judgement of Hon’ble Supreme Court in which decision of Delhi High Court in the case of Commissioner of Income Tax, Central-III v. Kabul Chawla, (2015) 61 taxmann.com 412 (Delhi) dated 28.08.2015 is upheld. In this case it was held that as per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. The appellant has accepted that assessment for the year under consideration is an abated assessment. Therefore, the AO was having power to assess the total income of the appellant as per law. Since, in the case of the appellant the assessment was an abated assessment, the judgment relied upon by the appellant where the assessment was unabated are not found to be applicable on the facts of the appellant. The appellant further stated that during penalty proceedings, appellant duly submitted copy of Saving Bank Account No. 001201556228 with ICICI Bank Limited from which amount of loss incurred on Future & Option was recovered during the F.Y. 2011-12. However, he was failed to furnish required documents on account of the fact that relevant documents were misplaced because of the time lag of about eight years, and the alternative source of obtaining the relevant documents by the appellant was not available with him on account of closure of business of Broker long ago, and where about of the Broker was not available with business circle. Therefore, under the above prevailing circumstances beyond the control of appellant, there was a kind of lacuna on the part of appellant of not furnishing relevant documents, like-Broker Notes, Confirmation etc., and without incriminating material found in search proceeding and without basis, the impugned addition was made by the Ld. AO on account of failure of the appellant in submitting relevant documents. The appellant accepted in its reply that he is unable to furnish supporting evidences in support of loss of Rs. 4,80,615/- on account of future and option trading for which no I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 6 evidence submitted by him. Even working of loss has not been submitted. Even details of purchase and sale not submitted. Therefore, the conclusion of the AO that low balance in ICICI Bank Account does not justify the loss found to be justified. The appellant has furnished some claim in the return of income which is not supported by documentary evidences. In the absence of these evidences, the AO was justified in concluding that the appellant furnished inaccurate particulars of Income. The reasons of not furnishing supporting documents are vague and without any valid evidence. Misplacing of documents cannot be accepted as reasonable cause for not furnishing documentary evidences. The real reason can be that there was no loss earned by the appellant and only to reduce his taxable income the loss has been shown. The appellant has not furnished any evidence which can prove that this loss claimed by him was correct. As noted by the AO, there is no working of purchase and sale by the appellant. Therefore, the conclusion drawn by the AO that the appellant has furnished inaccurate particulars of income is found to be sustainable and the arguments of the appellant are found to be not acceptable. The appellant further argued that from the provisions of Section 271(1)(c), it is crystal clear that provisions of the Section can be invoked only when the assessee gives an explanation which is unproved but not disproved, then it cannot be said that the assessee concealed the particulars of the income and furnished inaccurate particulars of such income in spite of the additions made by the AO. The appellant in this argument wants to say that his claim with regard to loss is unproved because of lack of evidences but the claim is not disproved by the AO. The appellant has made a claim in the return of income and he fails to furnish evidences in support of his claim. Therefore the appellant fails to discharge the primary onus casted upon him. The onus would have shifted on the AO if the claim was supported by some evidences. But, in this case, as noted by the AO, the appellant has not even furnished the detail of purchase and sale. Therefore, there is no material brought on record which could have been examined and could have been disproved by the AO. The AO cannot be expected to the impossible thing as to prove the transactions done by the appellant without any details and then disprove the transactions. Therefore, the argument of the appellant is not found to be acceptable. The appellant has relied upon the judgment in the case of CIT vs. USHA MARKETING (P) LTD.- (2011) 332 ITR 0334-(Del HC). In this case it was held that as per Expln. 1 to s. 271(1)(c), penalty is leviable only in a case where (a) such person fails to offer an explanation; or (b) offers an explanation which is found to be false or (c) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him. In the present case, it is seen that the assessee has offered an explanation. The same is substantiated also. The explanation offered by the assessee is not found to be false by the AO. When the explanation was offered, the assessee filed all the relevant details of the transaction in sale of shares and debentures and when the claim was made, the same was bona fide as all the facts relating to such loss and material to the computation have been disclosed by him. I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 7 In this case the appellant is not able to substantiate the explanation with supporting documents and fails to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him. In the present case, it is seen that the appellant has offered a vague explanation. The explanation is not substantiated with supporting evidences. The explanation offered by the assessee is not found to be supported by any evidence. The appellant has not filed all the relevant details of the transaction in purchase and sale of shares. Therefore it can be said that when the claim was made, the same was not bona fide as all the facts relating to such loss and material to the computation have not been proved with supporting evidence by him. Therefore, the facts of the appellant are contrary to the facts of the decision relied upon by the appellant. This decision relied upon by the appellant is therefore not found applicable on the facts of the appellant. The appellant has relied upon the judgment in the case of SHIV LAL TAK vs. COMMISSIONER OF INCOME TAX 251 ITR 0373,(2002)(Raj. HC) It was held that in the present case, there was neither addition of any amount nor disallowance of any deduction but there was substitution of altogether a new estimated sum in place of returned income—Therefore, penalty could not be levied under s. 271(1)(c) r/w Expln. 1. In the present case of the appellant there was disallowance of loss claimed by the appellant and there was no estimated addition as in the case of decision relied upon by the appellant. This decision relied upon by the appellant is therefore not found applicable on the facts of the appellant. The appellant has relied upon the judgment in the case of Commissioner of Income Tax V/s Reliance Petroproducts (P) Ltd. (2010) 36 DTR (SC) 449, the Hon’ble Supreme Court has held that – “Penalty under S.271(1)(c) – Concealment- Disallowance of claim for deduction-In order to attract the provisions of s.271(1)(c),there has to be concealment of income or furnishing of inaccurate particulars of his income by the assessee-In the instant case, assessee claimed deduction of interest on loans taken by it for purchase of shares-AO disallowed such interest-Admittedly, no information given in the return was found to be incorrect or inaccurate- Hence, the assessee cannot be held guilty of furnishing inaccurate particulars-Making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars-Merely because the assessee claimed deduction which has not been accepted by the Revenue, penalty under s.271(1)(c) is not attracted- If the contention of the Revenue is accepted, the assessee would be liable for penalty under s.271(1)(c) in every case where the claim made by the assessee is not accepted by the AO for any reason-That is clearly not the intendment of the legislature.” The appellant claimed that facts of the case is fully applicable to the facts of his case, as there was genuine business loss on account of shares & futures & options and Page disallowance of the same was made only on the basis that the assessee could not able to produce Brokers Notes during the course of assessment proceedings does not tantamount to furnishing of inaccurate particulars and concealment of the income. In the decision relied upon by the appellant assessee claimed deduction of interest on loans taken by it for purchase of shares. AO disallowed such interest. It was held that I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 8 no information given in the return was found to be incorrect or inaccurate. In other words the Hon’ble apex court held that the amount of interest claimed by the appellant was not found to be incorrect by the AO. Hence, the assessee cannot be held guilty of furnishing inaccurate particulars. Based on these facts it was held that making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. Merely because the assessee claimed deduction which has not been accepted by the Revenue, penalty under section 271(1)(c) is not attracted. However, in the case of the appellant the amount of loss claimed in the transaction of shares is not proved to be correct by the appellant with the help of documentary evidences. The appellant even failed to furnish detail of purchase and sale of shares. Therefore, the facts of the decision relied upon by the appellant are not found to be applicable on the facts of the case of the appellant. The appellant has relied upon the judgment in the case of Commissioner of Income Tax V/s Usha Marketing (P) Ltd.,(2008) 76 CCH 1178 Del HC, has held as under: “Even though Tribunal sustained addition in quantum proceedings it was justified in deleting penalty under section 271(1)(c ) on finding as a fact that transactions were genuine, hence no substantial question of law arose. In this case relied upon by the appellant Hon’ble High Court of Delhi, held on the basis of finding of the Tribunal that there was genuine transfer of shares took place and money their against was actually passing. However, in the case of the appellant transfer of shares i.e. purchase and sale of shares is not proved to be genuine. Therefore, this decision is not found to be applicable on the facts of the case of the appellant. The bank statement is not proving any such transaction as claimed by the appellant. The appellant has relied upon the judgment in the case of COMMISSIONER OF INCOME TAX vs. ESCORTS FINANCE LTD (2009) 226 CTR (Del) 105, the Honourable High Court has held that – When the facts are clearly disclosed in the return of income, penalty cannot be levied and merely because an amount is not allowed or taxed to income, it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. Further, conscious concealment is necessary. Even if some deduction or benefit is claimed by the assessee wrongly but bona fide and no mala fide can be attributed, the penalty would not be levied. A fortiorari, if there is a deliberate concealment and false/inaccurate return was filed, which was revised after the assessee was exposed of the falsehood, it would be treated as concealment of income in the original return and would attract penalty even if revised return was filed before the assessment is completed. Likewise, where claim made in the return appears to be ex facie bogus, it would be treated as case of concealment or inaccurate particulars and penalty proceedings would be justified. In the case of the appellant the AO has correctly held that bogus claim of loss from transaction of shares is claimed by the appellant in the return of income which could not be proved with supporting evidences. The decision relied upon by the appellant in fact supports the case of the AO. I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 9 The appellant has relied upon the judgment in the case of Union Of India vs. Rajasthan Spinning & Weaving Mills (2009) 224 CTR 0001, to argue that there was no conscious or deliberate wrong doing. It is correctly held by the AO that the appellant failed to prove this claim that there was no malafide intention. The appellant failed to prove that he was having any evidences in support of the loss claimed in the return of income. The appellant has also relied upon other judgments where the facts are different from the facts of the appellant. Therefore, these decisions are not found to be applicable on the facts of the case. In this regard the decision of Hon’ble HIGH COURT OF DELHI in the case of Commissioner of Income-tax -III v. Arcotech Ltd. [2014] 42 taxmann.com 20 (Delhi)/[2013] 262 CTR 278 (Delhi)[12-09-2013] is relevant. Hon’ble court held as under – “15. Mensrea is not required and necessary to impose penalty for concealment. In Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277/174 Taxman 571, the Supreme Court examined Section 271(1)(c) of the Act and other provisions for imposition of penalty in different statutory enactments. It was held that penalty in such cases imposed for tax delinquency is a civil obligation, remedial and coercive in nature and is far different from penalty for crime or a fine or forfeiture as stipulated in criminal or penal laws. It refers to blameworthy conduct for contravention of the Act and it equally applies to tax delinquency cases. Mensrea or willful failure or conduct is not required to be proved and established. Mensrea is essential or sine-qua-non for criminal offences but is not an essential element for imposing penalty for breach of civil obligations or liabilities. It was accordingly observed as under: "The Explanations appended to Section 272(1)(c) of the Income Tax Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroff's case [2007] 8 Scale 304 (SC) (3) has not considered the effect and relevance of Section 276C of the Income Tax Act. The object behind the enactment of Section 271(1)(c) read with the Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276C of the Income Tax Act." 16. Thus, penalty under Section 271(1)(c) is imposed when an assessee conceals his income or furnishes incorrect particulars. In terms of explanation I, we have to examine whether the case in question falls within the two limbs viz. clause (A) and (B) i.e. which of the two limbs and effect thereof. Clause (A) applies when an assessee fails to furnish explanation or when an explanation is found to be false. Clause (B) applies to cases where explanation is offered but the assessee is not able to substantiate the explanation. In such cases, we have to examine two conditions: (1) Whether the assessee has been able to show that his explanation was bonafide; (2) whether the assessee had furnished and disclosed facts and material relating to computation of his income. Onus of establishing that the assessee satisfies the two conditions is on the assessee. Both the conditions have to be satisfied. In case the assessee satisfies the twin condition, penalty should not be imposed.” I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 10 When the case of the appellant is examined as to whether the case in question falls within the two limbs of the section 271(1)(c). Clause (A) applies when an assessee fails to furnish explanation or when an explanation is found to be false. Clause (B) applies to cases where explanation is offered but the assessee is not able to substantiate the explanation. The case of the appellant falls in clause (B) of the section as the appellant has not furnished supporting evidences to substantiate his explanation. Therefore, two conditions needs to be examined (1) Whether the assessee has been able to show that his explanation was bonafide; The appellant has not able to show that explanation was bonafide as no evidence in support of loss claimed and basis of calculation of loss is furnished. (2) Whether the assessee had furnished and disclosed facts and material relating to computation of his income. The appellant has not furnished and disclosed facts and material relating to computation of his income. The onus of establishing that the appellant satisfies the two conditions is on the appellant. Both the conditions have to be satisfied, however in this case the appellant has not satisfied any of the conditions laid down. In view of the above discussion, the order of the AO levying penalty u/s 271(1)(c) is found to be justified and upheld. 5. As the assessee did not find any favour from the appeal so filed before the ld. CIT(A), the present appeal is filed by the assessee on the grounds as stated herein above, challenging the levy of penalty. The ld.AR of the assessee vehemently argued that the assessee filed the original return u/s 139 on 31-03-2013 on which no notice u/s 143(2) was issued and time period to issue notice u/s 143(2) expired on 30-09-2014. Thereafter, on account of search and seizure action u/s 132 which took place on 16-09-2016 and as on the date of search no proceedings were pending in the case of assessee. Therefore, assessment year under reference was a completed assessment and on account of search now addition/ disallowance in assessment u/s 153A was permissible only if any undisclosed income or incorrect claim is noticed. There is no finding of the ld. AO that there is material existed about the claim made by the I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 11 assessee which is evident from the assessment order wherein there is no reference of any seized material qua disallowance of loss made by the AO. Therefore, the ld. AR of the assessee submitted that assessment framed u/s 153A making disallowance of loss of Rs. 2,42,152/- itself is contrary to the decision of Hon’ble Supreme Court in the case of PCIT vs Abhisar Buidwell P Ltd (2023) 454 ITR 212 (SC). Thus, merely because assessee opted not to prefer further appeal against the assessment order considering the low tax implication and higher cost of litigation, assessee cannot further be burdened with penalty on the strength of the assessment order which itself framed contrary to the decision cited. As the assessment proceedings and penalty proceedings being separate and distinct though the legality of the assessment is not challenged but at the time of penalty proceeding and after the decision of the Abhisar Builweel (supra) the said order cannot be used to levy the penalty u/s 271(1)(c) and thus, the principle to be applied in the penalty proceeding are different from those applied for making addition. Not only that on merits the ld. AR of the assessee submitted that no inquiries of whatsoever were carried out by the AO with the Stock exchange qua transactions of futures & operation executed by the assessee. Merely because due to passage of time, assessee could not furnish supporting documents, it would not automatically lead to a addition and ultimately to I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 12 a conclusion that assessee furnished inaccurate particulars of income. Based on these arguments the ld. AR of the assessee submitted that order confirming levy of penalty needs to be reversed. 6. The ld. CIT-DR is heard who has relied on the findings of the lower authorities. She further submitted that despite giving opportunity, the assessee could not prove genuineness of loss claimed in the return of income and therefore, AO has rightly disallowed loss and levied penalty thereon for furnishing inaccurate particulars of income which has also been rightly confirmed by the ld. CIT (A). 7. We have heard the rival contentions and perused the material placed on record. The bench noted that assessee had furnished original return on 31-03-2013 on which no notice u/s 143(2) was issued by the AO within the permissible time limit and no reopening was made till the date of search which took place on 16-09-2016 by issuing notice u/s 148. Therefore, assessment year under reference is a case of completed/ unabated assessment. Thus, when the assessment is completed assessment now upon the search action the ld. AO is permitted to make addition based on the incriminating material found as held by the apex court in the case of Abhisar Buildwell. Since, the assessment year under I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 13 reference was a completed assessment and on account of search now addition/ disallowance in assessment u/s 153A was permissible only if any undisclosed income or incorrect claim is noticed. There is no finding of the ld. AO that there is material existed about the claim made by the assessee which is evident from the assessment order wherein there is no reference of any seized material qua disallowance of loss made by the AO. Therefore, in the order passed u/s 153A thereby making disallowance of loss of Rs. 2,42,152/- itself is contrary to the decision of Hon’ble Supreme Court in the case of PCIT vs Abhisar Buidwell P Ltd (2023) 454 ITR 212 (SC). Thus, merely because assessee opted not to prefer further appeal against the assessment order considering the low tax implication and higher cost of litigation, assessee cannot further be burdened with penalty on the strength of the assessment order which itself framed contrary to the decision of Abhisar Buildwell(Supra). As the assessment proceedings and penalty proceedings being separate and distinct though the legality of the assessment is not challenged but at the time of penalty proceeding and after the decision of the Abhisar Builweel (supra) the said order cannot be used against the levy of the penalty u/s 271(1)(c). Thus, the principle to be applied in the penalty proceeding are different from those applied for making addition. Not only that no inquiries of whatsoever were carried out by the AO with the Stock I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 14 exchange qua transactions of futures & operation executed by the assessee. Merely because assessee could not furnish supporting documents, it would not automatically lead to a addition and ultimately to a conclusion that assessee furnished inaccurate particulars of income. Had assessee disputed the validity of assessment made u/s 153A, the same would have been quashed in view of decision of the apex court in the case of PCIT v Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC). 7.1 The apex court in Anantharam Veerasinghaiah & Co. Vs CIT (1980) 123 ITR 457 (SC) has held that assessment proceedings and penalty proceedings are separate and distinct and therefore, findings in the assessment proceedings cannot be regarded as conclusive for the penalty proceedings. We find that lower authorities have not brought any material on record that the assessee was not engaged in F & O Activity or claimed bogus loss in F & O Trading. Based on the finding so recorded herein above we are of the considered view that penalty levied by the Assessing Officer on the facts and circumstances of the case is not justified and liable to be deleted. Our view is fortified by the judgment of Hon’ble Supreme Court in CIT Vs. Reliance Petro Products 322 ITR 158 (SC) wherein it has been held that no penalty be imposed merely because claim of the assessee not accepted and disallowance was I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 15 made in assessment as the ld.. AO has not brought any material to substantiate that the claim made in the return of income was incorrect and without any basis. Ergo, we direct the ld. AO to delete the penalty of Rs. 1,50,000/-. 8. In the result, the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member Ganesh Kumar, PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order I.T.A. No. 389/Jodh/2023 Assessment Year: 2012-13 16 Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order