A2Z Infra Engineering Limited, Gurgaon V. DCIT- Central Circle-2, Faridabad

ITA 944/DEL/2019

AI Insights

The case involves A2Z Infra Engineering Limited appealing against a penalty imposed by the Assessing Officer under Section 271AAA of the Income Tax Act, 1961, for the Assessment Year 2013-14. The penalty was related to undisclosed income identified during a search and seizure operation. The assessee contended that the undisclosed income was duly reported in the tax return and set off against business losses, with no tax payable. The Commissioner of Income Tax (Appeals) upheld the penalty, leading to the appeal before the Tribunal. The Tribunal, referencing a CBDT circular and relevant case law, found in favor of the assessee, noting that the penalty was not justified as the assessee had complied with the statutory requirements.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121483 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-02-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 06-02-2019
• Other Referred Cases: Pr. CIT vs. Emirates Technologies P. Ltd., Pr. CIT vs. Sundeep Gupta
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER I.T.A No.944/DEL/2019 Assessment Year 2013-14 A2Z Infra Engineering Limited, O-116 First Floor, Shopping Mall Arjun Marg DLF, Phase-I, Gurgaon. v. DCIT, Central Circle-II, Faridabad, Haryana. TAN/PAN: AAECA1203A (Appellant) (Respondent) Assessee by: Ms. Ritu Kamal Kishore, CA Department by: Shri P. Praveen Sidharth, CIT-DR Date of hearing: 07 02 2023 Date of pronouncement: 28 03 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he ca pti oned a ppeal has been file d at t he i ns tance o f the assessee aga inst the o rde r o f t he C ommi ss ione r of In come Ta x (A ppea ls )-II I, Gu rgaon [ ‘C IT (A )’ in short ], da ted 30. 11. 20 18 ar isi ng fro m the penal t y or de r da ted 22. 02. 20 18 pass ed by the A ssessi ng O ffi cer (A O ) under Secti on 271A A A of th e Income Ta x A ct, 1961 ( the A ct) conce rni ng A Y 2013 -14. 2. A s per t he g rounds of ap peal, the assessee has cha l le nge d the i mpos it ion of pena lt y o f Rs . 15, 60,0 00/ - und er Secti on 271AA A of t he Act c oncerning A ssessment Ye ar 2013-14 in que st ion. 3. Br ie fl y s tat ed, sea rc h and seiz ure opera tion un de r Se cti on I.T.As No.944/Del/2019 2 132 of the Ac t w as carrie d out at the premises o f the assesse e on 24. 04.2012, i.e. , duri ng the Financial Yea r 2012-13, rele va nt to A ssess me nt Y ea r 20 13-14 in questi on. It w as noticed tha t th e A ssessi ng O ff ic er had made addit ion of R s. 1 la kh on accou nt of forei gn c urr en cy invent orie d i n locker sea led by C BI was not offer ed as undisc lose d in the return o f income a nd add it i on of Rs. 1, 55, 00, 000/- on acco unt of unac count ed cas h transactions a nd cash found du ring the cours e of searc h was se t off aga ins t the bus iness loss and hence no taxes ha ve bee n pai d. The Assessi ng O fficer w hi le i mp osing pena l ty @ 10% onl y al le ge d that a ssesse e has fa iled t o s u bstant iate the ma nne r of e ar nin g s uc h u ndisclos ed inco me. 4. A gg rieve d b y th e i mp os ition of penalt y, the assessee prefe rr ed app eal by the C IT (A ). The CIT (A) how ever decli ne d t o ente rta in the re lie f plea de d be fore hi m. 5. Fur th er aggr ieve d, the assess ee pref er re d appea l bef ore the Trib una l. 6. In s uppo rt o f its appeal, the assess ee conten ded before the CIT (A ) as wel l as before us t ha t t he amount of Rs. 1, 55, 00, 000/- offer ed i n st at e me nt u nde r S ect ion 132( 4) of the Act has bee n dul y incl uded wh ile de termi ning the taxable income of the assessee. The amoun t of R s.1 l akh has al so been dis closed in othe r assess me nt year and is als o dul y acc ounted fo r. As further contend ed, havin g disc lo sed the a mount, suc h i nc ome has bee n ri ght l y s et off against the exis ting bus in ess l oss in acco rda nce w ith the provis ions of Inc ome Ta x A ct in the a bse nce of any ba r i n this regar d. A ref erence w as made to CBD T ci rcula r 19 /2 019 dat. 19/06/2019 for eli gi bilit y of s et of f in the A Y 2013 -14 i n I.T.As No.944/Del/2019 3 que st ion. The l d. cou nsel thus conte nds that w he n the assesse e is havi ng huge busi ness losses at its dis pos al the re was no w ar rant to ma ke pa yment of t axes w ithout it b ei ng due. It w as con tended t hat the undi scl ose d i ncome once i nc luded in t he retur n of i nc ome pa rt akes the c ha racter o f re gul ar income for the pur poses of set off and ca rry forw ard of remaini ng l osses. 7. O n apprais al we fin d f orce in the plea o f as sessee i n the ma tte r of s et of f having regard to expr ess C BD T cir cula r. The re qui re me nt of pa ymen t of ta xes unde r S. 27 1A AA thus requir es to rea d as ha vi ng been met. T he questi on of pa yment of tax w ould ar ise on ly w here t he t ax is due w hi le de ter mi ni ng the cumu la tive taxable income wh ich is not the case here. F urther, as per pa ra 5 of the pe na lt y ord er, the onl y alle gati on agai nst the assessee is that the A ssessee has failed t o substantia te the manne r of de ri vi ng undis closed income. H ow ever, it is not dis cernible f rom th e penal t y or der or f rom th e firs t a ppe lla te o rder as to w het he r a n y que r y w as rais e d in this re ga rd in the cou rse of s ea rch proceed ings. The assesse e has offe red i nc ome a nd in the abs ence of an y sp ec ific in qui r y from the A uth orized O ffi cer und er Secti on 132(4), the assess ee w as not obl iged to volunteer exp lanation on ma nner o f deter mi ning i nc ome o r subs tant iat ion the reof. A re fe re nce w as made to the ju dgme nt of H on ’ble D el hi H igh C ourt in the cas e of Pr. CIT vs. E mir at es Technologies P . Ltd. , (2017) 399 ITR 18 9 (D el) an d P r. CIT vs. Sunde ep G upta (D H C) IT Appea l N o. 967 -68/2017 dated 13. 11 .2017. Thus, the obligati ons set out in penal t y prov is ion a re con sidered to be ful ly met. The penal t y i mpose d is thus not sust ai na ble i n law . 8. In the res ul t, the appeal of t he asses see is allow e d. I.T.As No.944/Del/2019 4 Order pronounced in the open Court on 28/03/2023. Sd/- Sd/- [ANUBHAV SHARMA] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /03/2023 Prabhat