Sunil Kumar, New Delhi V. ACIT, Central circle-26, New Delhi

ITA 7704/DEL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1481 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 04-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Search and seizure
• Section: 271(1)(c); 153A; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F+SMC, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEM BER ITA NO. 7704/DEL./2018 A.Y. : 2013-14 MR. SUNIL KUMAR 14, ASHOKA AVENUE ROAD, DLF FARMS, CHATTARPUR, NEW DELHI PAN : AIAPK9773A (APPELLANT) VS. ACIT, CENTRAL CIRCLE-26 NEW DELHI (RESPONDENT) REVENUE BY SH . S.L.ANURAGI, SR. DR ASSESSEE BY SH. RAJESH MALHOTRA, CA ORDER PER AMIT SHUKLA, JUDICIAL MEMBER : THE FORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAI NST IMPUGNED ORDER DATED 30.10.2018 PASSED BY LD. CIT ( APPEALS)-26, NEW DELHI IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE IS AGGRIEVED BY LEVY OF PENALTY OF RS. 5,78,509/- ON ACCOUNT OF ADDITION ON ACCOUNT OF ALV OF THE PRO PERTY OF RS. 13,52,828/-. DATE OF HEARING 25 .0 7 .201 9 DATE OF PRONOUNCEMENT 21 .1 0 .201 9 ITA NO. 7704/DEL./2018 2 3. THE FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 11.09.2013 AND 17.09.2013 IN THE CAS E OF A K N GROUP. THE ASSESSEE WAS ALSO COVERED IN THE SAME SE ARCH. ACCORDINGLY, NOTICE U/S 153A WAS ISSUED TO THE ASSE SSEE ON 30.06.2014, IN RESPONSE TO WHICH, ASSESSEE HAS FILED RETURN OF INCOME ON 30.03.2015 DECLARING INCOME OF RS. 24,37, 540/- WHICH ALSO INCLUDED THE ALV OF CERTAIN PROPERTY, BUT ALV OF ONE PROPERTY WAS NOT SHOWN BECAUSE ACCORDING TO THE ASSESSEE IT WA S NOT HABITABLE. THE AOS FIRSTLY, OBSERVED THAT, SINCE N O RETURN OF INCOME WAS FILED BY THE ASSESSEE U/S 139 AND HAS BEEN FILED AFTER THE DATE OF SEARCH THAT TO BE IN RESPONSE TO NOTICE U/S 153A , THEREFORE, PENALTY IS LEVIABLE ON SUCH ALV OF THE PROPERTY. AS SESSING OFFICER HAS FINALLY LEVIED PENALTY U/S 271(C) ON ONE OF THE PROPERTY WHOSE ALV WAS NOT DECLARED. 3. THE LD. CIT (A) HAS CONFIRMED THE PENALTY AF TER OBSERVING HELD AS UNDER:- C. I HAVE CONSIDERED THE FACTUAL; ASPECTS OF THE C ASE. THE AO WAS REQUIRED TO SUBMIT REMAND REPORT IN THIS REGARD PER LETTERS DATED 23.08.2018 AND THEN ON 24.09.2018 ALLOWING FINAL OP PORTUNITY. THE AO HAS NOT SUBMITTED HIS REPORT. PENALTY IS LEV IED FOR ACTS OF TAX EVASION BY THE TAX PAYER AND THE MACHINERY IS L AID DOWN IN THE INCOME TAX ACT, 1961. THE PROVISIONS OF STATUTE COVER THE SITUATIONS IN WHICH THE APPELLANT-ASSESSEE HAS CONC EALED INCOME OR FURNISHED THE INACCURATE PARTICULARS, IN CERTAIN SITUATIONS. IN THE AMENDED SCENARIO, THE AO IS BOUND TO LEVY PENALTY U /S 271AAB AS THE PERIOD IS SPECIFIED YEAR AS PER SECTION 271A AB. ON THE FACTS SITUATION, THE LEVY OF SUCH PENALTY IS MECHAN ICAL AND IT HINGES ON THE ASSESSEE SUBSTANTIATING THE EXPLANATI ON ABOUT THE EARNINGS-SOURCE AND MODE INVOLVED ET AL, THEREBY PR OVING THE ITA NO. 7704/DEL./2018 3 BONAFIDE. THE EXTANT JURISPRUDENCE IN THIS REGARD A LSO HELPS VIZ- CIT VS. ZOOM COMMUNICATION (P) LTD. [191 TAXMAN 179 (DELHI)/[2010] 327 ITR 510 (DELHI)/[2010] 233 CTR 4 65], UNION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS [(2007) 295 ITR 244] AND MAK DATA P. LTD. VS. CIT [38 TAXMANN.COM 448 (SC)/ [2013] 358 ITR 593 (SC)/[2013] 263 CTR ]. THE APPELLANT HAS FA ILED ON THE FACTS ON THESE COUNTS IN VIEW OF THE SPECIFIC FACTS OF THIS CASE. THE AO HAS INVOKED SECTION 271(1)(C) ON ADDITIONS, MADE ON MATTERS NOT RELATED TO SEARCH. ACCORDINGLY, SECTION 271AAB SHALL NOT BE APPLICABLE HERE. THIS PENALTY UNDER SECTION 271(1)( C) IS UPHELD ACCORDINGLY. FURTHER, THE QUANTUM ADDITION HAS BEEN UPHELD IN FIRST APPEAL BEFORE CIT (A), THE OBJECTIONS REGARDI NG PREMATURE IMPOSITION OF PENALTY ARE RENDERED INFRUCTUOUS. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CHALLENGED THE IMPUGNED PENALTY ORDER ON THE GROUND THAT THE SAME IS BARRED BY LIMITATION IN TERMS OF SECTION 275, BECAUSE THE APP EAL OF THE ASSESSEE WAS PENDING BEFORE THE CIT (A), THEREFORE, AO WAS NOT CORRECT IN LAW TO IMPOSE THE PENALTY, AS SAME WAS PRE MATURE IN TERMS OF SECTION 275(1)(A). ON MERITS, HE SUBMITTED THAT, FIRSTLY, NO INCRIMINATING MATERIAL WAS FOUND IN THE COURSE OF SE ARCH REGARDING ALV; AND SECONDLY, ASSESSEE HAS HIMSELF DISCLOSED T HE ALV OF ALL THE PROPERTY IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A AND HAS ALSO EXPLAINED THE REASON IN DETAIL BE FORE THE ASSESSING OFFICER. APART FROM THAT, NO SPECIFIC CHA RGE HAS BEEN SPECIFIED IN THE ASSESSMENT ORDER OR SHOW CAUSE NOT ICE AS UNDER WHICH LIMB PENALTY IS BEING LEVIED. 5. THE LD. DR HAS STRONGLY RELIED UPON THE ORDE R OF THE AO AND CIT(A), AND POINTED OUT THAT THE LD. CIT(A) HAS CON FIRMED THE ITA NO. 7704/DEL./2018 4 PENALTY ON THE GROUND THAT ADDITION HAS BEEN MADE O N THE MATTERS NOT RELATED TO SEARCH AND THEREFORE, PROVISION OF S ECTION 271(1)(C) IS NOT APPLICABLE AND ALSO THE QUANTUM OF ADDITION HAS BEEN UPHELD IN THE FIRST APPEAL. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND FROM A BARE PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT TH E ASSESSING OFFICER HAS ADDED NOTIONAL RENT IN RESPECT OF ONE P ROPERTY AT G-17A, NDAC, DELHI, AS ASSESSEE HAS NOT SHOWN ANY RENTAL IN COME FROM SUCH PROPERTY. ASSESSEES EXPLANATION WAS THAT IT WAS VERY OLD BUILDING AND PARTLY IN A DILAPIDATED CONDITION HENC E IT WAS INCAPABLE OF BEING LET OUT. HOWEVER, ASSESSING OFFI CER AFTER INQUIRY FOUND THAT THERE WAS A WELL BUILD STRUCTURE AND THER EFORE, ALV SHOULD BE COMPUTED. ACCORDINGLY, HE IMPUGNED NOTION AL RENT OF RS. 1,61,051/- PER MONTH AND DETERMINED THE TOTAL ANNUA L LETTING VALUE AT RS. 19,32,612/- AND AFTER ALLOWING DEDUCTION U/S 24(A) OF RS. 5,79,784/- HE COMPUTED THE INCOME FROM HOUSE PROPER TY AT RS. 13,52,828/-. FURTHER FROM THE PERUSAL OF THE COMPUT ATION OF INCOME IT IS SEEN THAT ASSESSEE AT SHOWN INCOME FROM HOUSE PROPERTY FROM VARIOUS PROPERTIES AND THE NET INCOME FROM THE HOUS E PROPERTY WAS DISCLOSED AT RS. 23,42,090/-. HOWEVER, IN RESPECT OF ONE PROPERTY WHICH HAS BEEN ADDED BY AO WHICH WAS NOT SHOWN IN THE COMPUTATION OF THE TAXABLE INCOME, ASSESSEE HAD EXP LAINED THAT SAID PROPERTY WAS VERY OLD AND PARTLY DAMAGED AND NO T IN THE CONDITION OF THE LET OUT. WHETHER SUCH AN OLD PROPE RTY CAN BE LET OUT HAS NOT BEEN ESTABLISHED AND SIMPLE INQUIRY THAT SO ME STRUCTURE WAS STANDING CANNOT BE CONCLUSIVE THAT IT WILL FETCH RENTAL VALUE AT ITA NO. 7704/DEL./2018 5 MARKET RATE. SIMPLY BECAUSE A PROPERTY HAS NOT BEEN LET OUT DUE TO CERTAIN REASONS, THEN NOTIONAL ALV COMPUTED BY THE ASSESSING OFFICER DOES NOT LEADS TO ANY INFERENCE THAT ASSESS EE HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME. APART FROM TH AT, THE NOTIONAL RENT WHICH HAS BEEN COMPUTED BY THE AO IS PURELY BAS ED ON ESTIMATE WITHOUT ANY CREDIBLE MATERIAL ON RECORD. CO MPUTING THE ALV OF THE PROPERTY WITHOUT ASCERTAINING ITS CONDITI ON WHICH OTHERWISE ALSO WAS NOT LET OUT CANNOT JUSTIFY LEVY OF PENALTY. IF THE ASSESSEE HAS DISCLOSED ALL THE PROPERTY AND ITS NOT IONAL ALV WAS DISCLOSED THEN IN RESPECT OF ONE PROPERTY HAS EXPLA INED THE REASON THEN IT CANNOT BE HELD THAT ASSESSEE HAS PURPOSELY CONCEALED ANY PARTICULARS OR FURNISHED ANY PARTICULARS. THUS, IN THESE CIRCUMSTANCES, PENALTY U/S 271(1)(C) CANNOT BE LEVI ED AND SAME BE DIRECTED TO BE DELETED. THE OTHER GROUNDS AND ISSUE S RAISED BEFORE US HAVE BECOME PURELY ACADEMIC. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST OCTOBER, 2019. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.10.2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ITA NO. 7704/DEL./2018 6 TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI