Jaibalaji Business Corporation Pvt. Ltd., Principal Commissioner of Income Tax, Pune-4 V. Principal Commissioner of Income Tax, Pune

ITA 840/PUN/2022

AI Insights

The case involves M/s. Jaibalaji Business Corporation Pvt. Ltd., which appealed against the penalty imposed by the Assessing Officer (AO) and confirmed by the CIT(A) under section 270A of the Income-tax Act, 1961, for the assessment year 2017-18. The penalty was based on an addition made under section 43CA, which was initially computed at Rs.2.80 crores but later reduced to Rs.7,05,000 following a DVO report. The Tribunal examined whether the penalty for under-reporting of income was justified, given that the addition was based on an estimated value by the DVO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137743 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 23-11-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154; 43CA; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपीऱ सं. / ITA. No.840/PUN/2022 निर्धारण वषा / Assessment Year : 2017-18 M/s. Jaibalaji Business Corporation Private Limited B-105, Kalpataru Plaza, 224, Bhawani Peth, Pune – 411042 PAN : AACCJ5284G Vs. ACIT, Circle – 14, Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : This appeal by the assessee is directed against the order dated 15.10.2022 passed by the National Faceless Appeal Centre (NFAC), Delhi confirming the imposition of penalty amounting to Rs.6,99,669 imposed by the Assessing Officer (AO) u/s 270A of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to assessment year 2017-18. 2. Briefly stated, the facts of the case are that the assessee is engaged in the business of Solar power generation. Return was Assessee by Shri Gaurav Kabra Revenue by Shri Ramnath P Murkunde Date of hearing 10-02-2023 Date of pronouncement 10-02-2023 ITA No.840/PUN/2022 M/s. Jaibalaji Business Corporation Pvt. Ltd. 2 filed declaring total income at Nil. Assessment was completed u/s 143(3) of the Act at total income of Rs.2,80,07,310 making an addition of equal amount u/s 43CA. The assessee had sold certain land on various dates at a price less than the stamp value. The AO proposed to make addition on the basis of stamp value. The assessee made a request for making a reference to the DVO. The AO completed the assessment by taking note of stamp value in certain other cases subject to rectification on the receipt of report of the DVO. Thereafter, the report was received, pursuant to which the rectification order was passed u/s 154 of the Act reducing the addition to Rs.7,05,000. The addition was computed by taking note of the value declared by the assessee at Rs.71,83,800 and the value determined by the DVO at Rs.78,88,800. On this basis, the AO rectified the original assessment and also imposed penalty u/s 270A of the Act at Rs.6,99,669. The ld. CIT(A) affirmed the penalty. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 3. Having heard both the sides and gone through the relevant material on record, it is seen that the only basis for imposition of penalty u/s 270A is the making of addition u/s 43CA on the ITA No.840/PUN/2022 M/s. Jaibalaji Business Corporation Pvt. Ltd. 3 strength of report of the DVO. The AO originally took certain comparable circumstances and computed the amount of addition at Rs.2.80 crores, which got reduced on the receipt of report of the DVO to Rs.7,05,000. We have gone through the report of the DVO, a copy of which has been placed on record. It is apparent from such report that the value determined by the DVO is again an estimate, inasmuch as he considered certain other properties at different rates and then averaged such rates to find out the value which the property ought to have realized on the transfer. It is vivid that the difference between the value declared by the assessee and the value determined by the DVO is minimal and further the value of the DVO is on the basis of value of certain other nearby properties. 4. Section 270A of the Act provides for imposition of penalty for under-reporting and misreporting of income. Sub-section (2) enlists certain circumstances of under-reporting of income. Sub- section (3) deals with the determination of under-reported income, which, in our context, is by reducing the income returned by the assessee from the amount of income finally assessed. Sub-section (6) is relevant for our purpose which states that under-reported ITA No.840/PUN/2022 M/s. Jaibalaji Business Corporation Pvt. Ltd. 4 income for the purpose of this section shall not include certain items. Clause (b) of sub-section (6) refers to: “the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer ....”. It is ostensible from the language of sub- section (6) that an addition made on the basis of estimation cannot provide foundation for under-reported income for the purpose of imposition of penalty u/s 270A of the Act. As the only basis of the addition is the estimate made by the DVO, we hold that the penalty cannot be sustained. We, therefore, order to delete the same. 5. In the result, the appeal is allowed. Order pronounced in the Open Court on 10 th February, 2023. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 10 th February, 2023 GCVSR ITA No.840/PUN/2022 M/s. Jaibalaji Business Corporation Pvt. Ltd. 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. DR, ITAT, ‘A’ Bench, Pune ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 10-02-2023 Sr.PS 2. Draft placed before author 10-02-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *