PANKAJKUMAR CHIMANLAL LODHIYA,RAJKOT V. THE ACTIT, CENTRAL CIRCLE-2, RAJKOT, RAJKOT

ITA 77/RJT/2022

AI Insights

The case involves multiple appeals by the assessee, Pankaj C. Lodhiya, against penalties imposed for the assessment years 2008-09 to 2012-13 and 2014-15. The penalties were related to undisclosed income from foreign accounts, deemed rental income, and disallowance of commission payments, which were initially added to the assessee's income during assessments following a search and seizure operation. The Tribunal's decision to delete the penalties was based on the finding that the penalty notices were vague and did not clearly specify the charges, and that the additions to income were based on estimates rather than actual undisclosed income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312473 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Other Referred Cases: CIT vs. Anwar Ali, Burmah Shell Oil Storage and Distributing Co. of India Limited v. ITO, Dilip N. Shroff v. Joint Commissioner of Income Tax, CIT vs. Arkay Saree Museum, CIT vs. Sangrur Vanaspati Mills Ltd., CIT vs. Lallubhai Jogibhai Patel, ITO vs. Admiracle Advertising Pvt. Ltd, CIT vs. Norton Electronics System Pvt. Ltd, PCIT vs. Prabodhchandra Jayantilal Patel
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA
• Assessee Lawyers: MEHUL RANPURA
• Keywords: Set aside; Business income; Unexplained cash credit; Unexplained investment; Document seized; Documents seized; TDS; Search and seizure; Non-deduction of tax
• Section: 143(3); 154; 271(1)(c); 132; 153A; 68; 40(a)(ia)

Judgement Text

"आयकरअपीलȣयअͬधकरण,राजकोटÛयायपीठ,राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं/.ITA No.76 to 80/RJT/2022 Ǔनधा[रणवष[ / Assessment Year: 2008-09 to 2012-13 AND आयकरअपीलसं/.ITA No. 81/RJT/2022 Ǔनधा[रणवष[ / Assessment Year: 2014-15 Shri Pankaj Chimanlal Lodhiya 3rd Floor, Parth, Diwanpara Main Road, Rajkot-3600 001 PAN : AAMPL 3903 F बनाम Vs. Assistant Commissioner of Income-tax, Central Circle-2 Rajkot, 2nd Floor, Amruta Estate, M.G. Rad, Rajkot-360 001 (अपीलाथȸ/Assessee) : (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Mehul Ranpura, AR राजèव कȧ ओर से/Revenue by : Shri Sanjay Punglia, CIT-DR सुनवाई कȧ तारȣख /Date of Hearing : 05/03/2025 घोषणा कȧ तारȣख /Date of Pronouncement : 30/04/2025 ORDER Per Bench, Captioned six appeals filed by the assessee, pertaining to the Assessment years (AYs) 2008-09 to 2012-13 and AY 2014-15, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), (“ld.CIT(A)” for short) under section 250 of the Income Tax Act, 1961 (“the Act” for short), which in turn arise out of separate penalty orders, passed by the Assessing Officer u/s 271(1)(c) and 271AAB(1)(c) of the Act. 2 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 2. The assessee`s appeals in ITA Nos.76 to 80/RJT/2022, relates to penalty u/s 271(1)(c) of the Act and appeal in ITA No.81/RJT/2022 relates to penalty u/s 271AAB(1)(c) of the Act. 3. Since the issue involved in all these appeals are common and identical, therefore, we have clubbed these six appeals and heard together and a consolidated order is being passed for the sake of convenience and brevity. 4. First, we sell adjudicate, the assessee`s five appeals in ITA Nos.76 to 80/RJT/2022, which relate to the penalty u/s 271(1)(c) of the Act. For the sake of convenience, the grounds as well as the facts narrated in ITA No. 76/RJT/2022, for assessment Year 2008-09, have been taken into consideration for deciding the above appeals en masse. The grounds of appeal raised by the assessee, in ITA No.76/RJT/2022, “lead” case, are as follows: 1.The grounds of appeal mentioned hereunder are without prejudice to one another. 2.The learned Commissioner of Income-tax (Appeals)-11, Ahmedabad erred on facts as also in law in confirming levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred as to the \"Act\"] at Rs.35,55,728/-on the alleged ground that the assessee has not disclosed the income earned of Rs.1,04,61,096/- from the undisclosed foreign account either in the return of income filed u/s.139(1) or 153A of the Act. The penalty confirmed is totally unjustified on facts as also in law and may kindly be deleted. 3.The Id. CIT(A) erred on facts as also in law in confirming penalty of Rs.61,182/- on deemed rental income of Rs.1,80,000/-. The penalty confirmed is totally unjustified on facts as also in law and may kindly be deleted. 4.The Id. CIT(A) erred on facts as also in law in confirming penalty on Rs.1,01,970/- on disallowance made of Rs.3,00,000/-u/s.40(a)(ia) of the Act, being commission paid to Rajesh Bhatt on the alleged ground that assessee had wrongly claimed the said amount as expenses without deducting TDS. The penalty confirmed is totally unjustified on facts was also in law and may kindly be deleted. 5. The relevant material facts, as culled out from the material on record, are as follows. The assessee, before us, is an in individual and has originally filed return of income u/s 139(1) of the Act, on 30.09.2008, declaring total income of 3 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya Rs.2,66,40,980/-. In this case, search and seizure action u/s 132 of the Act, was carried out at the residential, as well as business premises of the assessee, on 20.05.2013. Thereafter, in response to the notice u/s 153A of the Act, dated 10.10.2013, the assessee filed return of income, on 08.08.2014, declaring total income of Rs.2,66,40,980/-. Accordingly, in this case, assessment u/s 143(3) r.w.s 153A of the Income Tax Act, was completed on 10.07.2017, by assessing total income at Rs.642,49,62,439/-, as against returned income of Rs.2,66,40,980/-. In the said assessment, additions of Rs.639,83,21,459/- are made as under: (i). Income earned out of credit entries in undisclosed foreign Bank account - Rs.32,40,46,529/-. (ii). Unexplained credit entries of various concerns/third parties in Standard Bank, London's account - Rs.3,77,42,710/-. (iii). Unmatched entries in STCSH account - Rs.3,78,49,800/-. (iv). Unexplained credit entries in unallocated Gold/Silver account of STCH - Rs.589,63,46,541/-. (v). Cash/Premium payment reflected in STCSH account - Rs.2,40,77,958/-. (vi). Unexplained Investment in Properties and Rent thereof as per KYC documents of Undisclosed Foreign Bank Account - Rs.5,93,51,875/- (Rs.5,82,72,750/- + Rs.10,79,125/-). (vii). Deemed Rent of more than one property reflected in Balance sheet - Rs.1,80,000/-. (viii). Disallowance of payment of commission to Shri Rajesh Bhatt - Rs.3,00,000/-. (ix). Disallowance of interest u/s 36(1)(iii) of the Act - Rs.1,04,88,591/-. (x). Disallowance of hedging loss Rs.79,37,455/-. 6. In respect of above additions, penalty u/s 271(l)(c) of the Act, was also initiated for concealment of income by furnishing inaccurate particulars of 4 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya his income. Accordingly notice u/s 274 r.w.s. 271(l)(c) dated 10.07.2017, was issued and served on the assessee. 7. Thereafter, rectification u/s 154 was carried out, vide order dated 28.02.2018 wherein addition of Rs.589,63,46,541/-, made on account of unexplained credit entries in unallocated gold/silver account of STCSH is reduced to Rs.9,01,43,236/-, as there was error in considering gold and silver rate and mistake in calculation thereof. Accordingly total income revised at Rs.61,87,59,134/-. 8. The Ld CIT(A)-12, Ahmedabad in order No. CIT(A)-ll/C, C. 2/Raj/086- R/2017-18, dated 26.03.2018, granted relief to the assessee, aggregating to Rs.50,18,25,184/-, in respect of various additions. Thereafter in view of order of the Hon'ble ITAT, Rajkot Bench, Rajkot, in order no. ITA No.160 &161/Rjt/2018 and 92 & 93/RJV2018, dated 09.10.2018, the following additions were confirmed, on which penalty u/s 271(l)(c) of the Act, was proposed to levy by the assessing officer: (1) Income earned out of credit entries in undisclosed foreign account : Rs.1,04,61,096/- (2) Deemed rent of more than one properties, reflected in the Balance Sheet Rs.1,80,000/- (3) Disallowance of payment of commission to Shri Rajesh Bhatt : Rs.3,00,000/- 9. In order to levy penalty, u/s 271(1) (c) of the Act, on the above three items, the assessing officer issued, show cause notice dated 05.07.2019 to the assessee, to show cause, as to why an order imposing a penalty in respect of the additions confirmed above, should not be passed under section 271(l)(c) of the Income Tax Act, 1961. 5 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 10. In response to show-cause notice, the assessee filed his submissions, before the assessing officer, vide letter dated 12.07.2019. The authorized representative of the assessee attended the office of the assessing officer and explained the submission dated 12.07.2019 and requested to treat the same as a sufficient compliance to the penalty proceedings. 11. Then after, issue wise penalty u/s 271(l)(c) of the Act, in respect, of confirmed additions, as mentioned above, were dealt by the assessing officer, as follows: 11. Issue-1. Income earned out of credit entries in undisclosed foreign account, Rs.1,04,61,096/-: During the course of search proceedings, it was noticed that the assessee is having accounts in foreign Banks that is as under: Sr. No. Bank account No./Name Bank Name Country 1, STCSH (Precious LON) Standard Bank Singapore 2. 134496/Pankj(Precious LON) Standard Bank UK 3. Pankaj C Lodhiya A/c. No. 025332626002 RAK Bank UAE 4. 'Vin Gold LLC' Standard Chartered Bank UAE The assessing officer noticed that the assessee failed to explain the transactions made in the said account and also failed to reconcile the entries of the said accounts. The said account was not reflected anywhere in assessee's books of account. Therefore, the peak value worked out for the year under consideration was at Rs.32,40,46,529/- and treated as undisclosed income of the assessee from the undisclosed foreign Bank account u/s 69A of the Income Tax Act,1961. In respect of this addition, penalty u/s 271(l)(c) was also initiated “for concealment of income by furnishing inaccurate particulars of his income.” 6 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya The assessing officer observed that the Hon'ble ITAT has restricted the addition on account of income earned out of credit entries in undisclosed foreign Bank account to Rs.1,04,61,096/- (Rs. 32,40,46,529- Rs.31,35,85,433), as against addition of Rs.32,40,46,529/- and granted relief to the assessee of Rs.31,35,85,433/-. Therefore, assessing officer proposed to levy the penalty u/s 271(1)(c) of the Act, on Rs.1,04,61,096/-. 12. During the penalty proceedings, the assessee submitted reply before the assessing officer, the relevant portion of the assessee's submission is reproduced as under: \"6. As regard the levy of penalty on addition retained of Rs. 1,04,61,096/-on account of profit from derivative transaction carried out in account maintained with Standard Bank, London it is submitted the impugned addition was made without appreciating the facts and evidences on record and therefore the proposal to levy penalty on such addition is invalid and is strongly objected. Further, right from the beginning of the search and also during the post search proceedings. I had clarified that I do not own any foreign bank accounts and the account with Standard Bank London was opened in my name but the same was maintained by Mr. Mehul Nandha of Vingold LLC, Dubal. Hence, question of furnishing of inaccurate particulars of income or concealment income does not arise. 7. In connection with the above, it also needs mention that there is no evidence on record to show that I have remitted or received / recovered any funds from Dubai. It is evident from the data of Mehul Nandha submitted and accepted by the department in the form of audit report that all income received has been received by him and enjoyed the same. Nothing was received by me and therefore no addition on that account should have been made. Enjoyment of funds by Mehul Nandha is apparent from this audit report and he was the beneficial owner of the account. Therefore, addition made on account of profit from derivative transactions from the impugned account is merely based upon conjectures and surmises which is erroneous and proposal to levy penalty on the basis of such addition is invalid and void-ab-initio. 8. Furthermore, it is not the case where I have wilfully concealed the income or furnished inaccurate particulars of income but only issue that contention put forth during the assessment proceedings and before the appellate authorities was not believed to be satisfactory. However, such disagreement does not vouch for the fact that I have concealed income or furnished inaccurate particulars of income and therefore, proposal to levy penalty u/s 271(1)(c) of the Act on account of alleged concealment of income is strongly objected. 7 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 9. In connection with the above, it is submitted that the findings arrived at during the course of assessment proceedings cannot be said to be conclusive to justify the levy of penalty. The penalty proceedings are separate and distinct from assessment proceedings. Therefore, if the assessee is able to offer bona-fide and satisfactory explanation about the additions/disallowances made, penalty proceedings cannot be initiated as was held by Apex Court in the case of CIT vs. Anwar Ali (1970) 76 ITR 696 (SC). 10. Thus, in view of the above, the proposal to levy penalty on addition retained of Rs. 1,04,61,096/- is invalid and is strongly objected.” 13. However, the assessing officer rejected the above contention of the assessee and observed that assessee has furnished inaccurate particulars of his income and thereby concealed the income. Therefore assessee is liable for penalty u/s 271(1)(c) of the Income Tax Act, 1961, hence, the assessing officer, levied penalty the under section 271(1) (C), of the Act, to the tune of Rs.35,55,728/- 14. Issue No.2- Deemed rent of more than one properties reflected in the Balance Sheet, Rs.1,80,000/-. During the course of assessment proceedings, on verification of the audited accounts filed by the assessee, along with return of income, it was noticed by the assessing officer that the assessee was owning more than one house property, however, no income from such properties were offered for taxation. In this regard, assessee himself in his reply dated 05.05.2017 submitted before the assessing officer that \"I am the owner of two house properties viz (1) Residential flat at Orchid Park, Ahmedabad and (ii) Residential house located at Bhupendra Road near Diwanpara Police Station, Rajkot. In connection with the above it is submitted that the residential house at Rajkot was claimed by me as self occupied property in the wealth tax return filed for the assessment year under consideration. Therefore, it is requested to treat the other house property situated in Orchid Park, Ahmedabad as let out on deemed basis and accordingly enhance my returned income to the extent of Rs. 8 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 84,000/- (i.e. Rs. 7,000/- per month) on account of deemed rent realized from such property.\" However, assessing officer noticed that considering to the locality in which the said property is situated, it could fetch at least rent of Rs. 15,000/- per month. Therefore, income on account of the rent of Rs. 1,80,000/- (Rs.15,000/- x 12) was added to the total income of the assessee. In respect of this addition, penalty u/s 271(1)(c) was also initiated for concealment of income by furnishing inaccurate particulars of his income. 15. During the penalty proceedings, the assessee submitted following return submission before the assessing officer, which is reproduced below: “11. Further, as regard the proposal to levy penalty on addition made of Rs. 1,80,000/-. On account of deemed rent from house property, it is to submit that during the course of assessment proceedings, I had suo-moto offered deemed rental income of Rs. 72.000/-p.a. looking to the locality and standardized rent in the area. However, while finalizing the assessment for the year under consideration, an addition of Rs. 1,80,000/- was made without bringing any credible evidence on record against the rental income offered during the assessment proceedings. 12. As regards proposal for levy of penalty on deemed rental income of Rs. 1,80,000/- it is submitted that addition of deemed rental income was made on estimate basis, hence there is no case of levy penalty u/s 271(1)(c) of the Act on such notional addition made on estimate basis. In this connection reliance is placed on the decisions of Hon'ble Bombay High Court in the case of CII vs. Arkay Saree Museum 187 ITR 147 (Bom) wherein it has been held that \"Mere addition to income on estimated basis would not constitute basis for levy of penalty u/s. 271(1)(c) unless the revenue proves the ingredients of concealment or that of furnishing of inaccurate particulars.\" 13. In connection with the above, reliance is further placed on following decisions: (i) Hon'ble High Court of Punjab & Haryana has in the case of CIT vs. Sangrur Vanaspati Mills Ltd. 303 ITR 53 (P &H) held that when the addition of income is based on estimate, penalty is not leviable (ii) Hon'ble High Court of Gujarat has in the case of CIT vs. Lallubhai Jogibhai Patel 261 ITR 216 (Guj) has held that no penalty u/s 271(1)(c) could be sustained in respect of estimated addition. (iii) Hon'ble ITAT, Rajkot Bench Rajkot in the case of ITO vs. Admiracle Advertising Pvt. Ltd, ITA No. 07/Rjt/2010 and 649/Rj1/2010. 14. Thus there is no question of any concealment of income in respect of addition made on notional basis and therefore, proposal to levy u/s. 271(1)(c) of the Act may kindly be dropped.\" 9 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 16. However, assessing officer rejected the above contention of the assessee and held that assessee has furnished inaccurate particulars of his income and thereby concealed the income. Therefore assessee is liable for penalty u/s 271(1)(c) of the Income Tax Act, 1961 at Rs.61,182/-. 17. Issue No.3-Disallowance of payment of commission to Shri Rajesh Bhatt, Rs.3,00,000/-. On verifications of the Audited accounts submitted by the assessee for the Financial Year (FY) 2007-08, it was noticed by the assessing officer that the assessee paid commission of Rs.3,00,000/-, to Shri Rajesh Bhatt. On perusal of the submission made by the assessee in this regard, it was noticed that the assessee claimed to have paid the said commission from his Bangalore Branch. However complete address of Shri Rajesh Bhatt and circumstances under which the such payments have been made was not specifically submitted by the assessee. Therefore the claim of the assessee for the payment was treated as not allowable. Further, no TDS was made from alleged payment of commission in view of section 194H of the Income tax Act 1961. Therefore the claim of payment of commission amounting to Rs.3,00,000/- was disallowed and added to the total income of the assessee. In respect of this addition, penalty u/s 271(1)(c) was also initiated for concealment of income by furnishing inaccurate particulars of his income. 18. During the penalty proceedings, the assessee submitted the following written submission before the assessing officer, the relevant portion of the assessee's submission is reproduced as under: \"15. As regard the levy of penalty on disallowance commission paid of Rs. 3,00,000/- u/s.40(a)(ia) of the Act on the alleged ground of non-deduction of tax at source, it is submitted that the disallowance is made by resorting to deeming provisions of section 40(a)(ia) of the Act. As such it is legitimate business expense and disallowance is under deeming provision. There was no intention to conceal the income or to furnish any inaccurate particulars of income. Further, it is also submitted that the disallowance of expenses are made only on technical grounds. It is not a case that I have not incurred such expenses. Thus it cannot be assumed to be 10 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya my income or a case of concealment of income or furnishing inaccurate particulars of income. 16. It is further submitted that during the course of assessment proceedings, these expenses were treated as genuine and the disallowance was made merely due to technical reasons. Thus, the disallowance of claim for expenses itself is not a case of concealment or furnishing inaccurate particulars of income. In this connection reliance is placed on the decision of Hon'ble High Court of Kolkata in the case of Burmah Shell Oil Storage and Distributing Co. of India Limited v. ITO, 112 ITR 592. In connection to the above, it is submitted that it is well settled proposition of law the legal fiction crated by section 40(a)(ia) will not apply to the provisions of Section 271(1)(c) of the Act, the disallowance made simply by invoking the provisions of Section 40(a)(ia) of the Act will not attract penalty for furnishing of inaccurate particulars of income because there is no inaccurate particulars of income in the return. Reliance is placed on case of DCIT vs. Mardal Ltd, and Saraswati Construction Co. in ITA No. 2865/Ahd/2010 wherein Tribunal has dismissed the appeal of Revenue challenging the cancellation of penalty levied on disallowance made under section 40(a)(ia) of the Act. 18. Thus, the proposal to levy penalty u/s 271(1)(c) of the Act on the disallowance made on account of deeming provisions and on technical grounds is invalid and is strongly objected.\" 19. However, the assessing officer rejected the above submission of the assessee and held that assessee has furnished inaccurate particulars of his income. Therefore assessee is liable for penalty u/s 271(1)(c) of the Income Tax Act, 1961.In view of the above, the assessee has concealed his income by furnishing inaccurate particulars of total income, and therefore, assessing officer, levied penalty of Rs. 1,01,970/-, u/s. 271(1)(c) of the Act, 1961. 20. Therefore, total Penalty u/s 271(1)(c) of the Act, was levied on the following additions/disallowances, by the assessing officer: 1. Income earned out of credit entries in undisclosed foreign account: Rs.35,05,728/- 2. Deemed rent of more than one properties reflected in the Balance Sheet: Rs. 61,182/- 3. Disallowance of payment of commission to Shri Rajesh Bhat Rs.1,01,970/- Total amount: Rs.37,18,880/- 11 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 21. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal, before the learned CIT(A), who has confirmed the penalty imposed by the assessing officer. The ld.CIT(A) has distinguished all the judgments cited by the assessee on technical issue and on merit, and thereafter the ld.CIT(A) has confirmed the order passed by the assessing officer. The ld CIT(A) upheld the action of the assessing officer and confirm the penalty amounting to Rs.35,55,728/- levied on Income earned out of credit entries in undisclosed foreign account amounting to Rs. 1,04,01,000/-. In case of deemed rent of more than one properties reflected in the balance sheet amounting to Rs.1,80,000/-, Rs. 61,182/ (Penalty amount) and disallowance of payment of commission to Shri Rajesh Bhatt amounting to Rs.3,00,000/-, Rs.1,01,970/- (penalty amount), the ld CIT(A) noticed that assessing officer had made addition of Rs.1,80,000/- on account of deemed rent of more than one properties, reflected in the balance sheet and Rs.3,00,000/- on account of disallowance of payment of commission to Shri Rajesh Bhatt, while passing the assessment order u/s 143(3) rw.s. 153A of the Act, dated 31.07.2019 and Initiated penalty proceedings u/s 271(1)(c) of the Act. Further, in the first appeal, the CIT(A) had confirmed the said additions. Thereafter, the Hon'ble ITAT had also confirmed the said additions made by the assessing officer. Accordingly, the assessing officer had levied penalty u/s 271(1)(c) of the Act of Rs.61,182/-on the confirmed addition of Rs.1,80,000/- and Rs.1,01,970/- on the confirmed addition of Rs.3,00,000/- for concealment of income. During the appellate proceedings, the assessee submitted before the ld. CIT(A) that the assessing officer had estimated the deemed rent income @15,000/- per month. Therefore, penalty cannot be levied on estimated addition. Similarly, the assessing officer had made addition on disallowance of commission payment of Rs.3,00,000/- to Shri Rajesh Bhatt by invoking provision of section 40(a)(ia) of the Act, for non-deduction of TDS. Since, the addition was upheld by invoking 12 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya deemed provision, penalty cannot be levied. The assessee has further stated that the assessment proceeding and penalty proceedings are distinct. In the assessment proceedings, the additions may be good but not for penalty. The assessee has relied on the various judgements. However, ld CIT(A) rejected the above contention of the assessee and confirmed the penalty u/s 271(1)(c) of the Act, at Rs.37,18,880/- (Rs.35,55,728 + Rs.61,182 + Rs.1,01,970). 22. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. 23. Shri Mehul Ranpura, Learned Counsel for the assessee, at the outset, argued that the initiation of proceedings u/s 271(1)(c) of the Act, is itself bad in law, as the penalty notice is defective. The assessing officer in the penalty order and in the show -cause notice u/s 271(1)(c) of the Act, has levied penalty on two limbs viz. (i) Concealment of income and (ii) furnishing inaccurate particulars of income. The ld. Counsel for the assessee submitted that the penalty notice under section 271(1)(c) of the Act, should not contain both the charges, that is, Concealment of income and furnishing inaccurate particulars of income. In assessee’s case under consideration, either the assessing officer should levy penalty on concealment of income or furnishing of inaccurate particulars of income, not on both. However, in the assessee’s case, the assessing officer has levied penalty on both the limbs. The Section 271(1)(c) of the Act stipulates that penalty may be levied, if an assessee has: (a) Concealed the particulars of his income, or (b) Furnished inaccurate particulars of such income. The language of the provision indicates that these two grounds are mutually exclusive and constitute separate charges. The Assessing Officer must specify under which limb the penalty is being levied. 13 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 24. The Learned Counsel for the assessee, further submitted that there is erroneous combination of charges by the Assessing Officer. In the present case, of assessee, the Assessing Officer has levied penalty on the Assessee for \"concealment of income by furnishing inaccurate particulars,\" thereby merging the two distinct limbs into a single charge. This approach is not sanctioned by the statute and amounts to an overreach of the Assessing Officer's authority. The ld. Counsel relied on the judgement of the Hon`ble Supreme Court, in Dilip N. Shroff v. Joint Commissioner of Income Tax [(2007) 291 ITR 519 which clearly states about Judicial Precedents supporting the distinction between the two Limbs, viz: concealment of income or furnishing of inaccurate particulars of income, and prayed the Bench, that the penalty imposed by the assessing officer may be deleted. 25. On the other hand, Learned CIT-DR for the Revenue submitted that just because the assessing officer has mentioned two limbs in the penalty order, does not vitiate penalty proceedings. The meaning of these two limbs, are more or less same. 26. The ld. CIT-DR also pointed out that the assessing officer has rightly initiated penalty, stating that “have concealed the particulars of your income by furnishing inaccurate particulars of income.”, which is only one limb. That is, learned DR pointed out that by furnishing inaccurate particulars of income, the assessee has concealed the particulars of income. The learned DR submitted that assessee has not disclosed the bank account in the return of income (for example, Standard Bank account) at all, therefore, the bank account, which was belonged to the assessee, has been concealed (kept secret) by the assessee. That is, bank accounts were hidden by the assessee, therefore, actually the penalty was imposed by the assessing officer, on account of concealment of Income, rather than furnishing inaccurate particulars of income. Therefore, the sentence used by the assessing officer stating that “have 14 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya concealed the particulars of your income by furnishing inaccurate particulars of income.”, gives only one meaning, that is concealment of Income. Therefore, it is only one limb and only one charge, and there are no two separate charges, stated by the assessing officer, in the penalty notice issued under section 271(1)(c) of the Act, as well as in the penalty order under section 271(1)(c) of the Act. Therefore, ld. CIT-DR contended that assessing officer imposed, penalty under section 271(1)(c) of the Act, on account of only “concealment of Income,” and not for “furnishing inaccurate particulars of income”, hence, penalty notice, as well as, the findings of the assessing officer while imposing penalty under section 271(1)(c) of the Act is valid in the eye of law. Therefore, the ld. DR stated that penalty is actually on the “concealment of income” and not for “furnishing inaccurate particulars of income”, therefore, on technical ground, the penalty should not be deleted. 27. We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee with the able assistance of Shri Shri Mehul Ranpura, representing the assessee and Shri Sanjay Punglia, ld. CIT-DR, representing the Revenue. We find that one key issue arises for our apt adjudication in the instant lis, is whether the notice issued by the assessing officer u/s 271(1)(c) of the Act, and the charges of the penalty imposed by the assessing officer, in the Penalty order and the notice are bad in law or not? Before embarking upon the discussion on the core issue, we thought that it would be appropriate, first, to consider the notice issued by the assessing officer, u/s 271(1)(c) of the Act, which is re-produced below for better understanding: 15 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 28. We have gone through the above penalty notice and find that in the same manner, the assessing officer has issued notice u/s 271(1)(c) of the Act, in other four appeals, having the same pattern. Therefore, as a sample, we reproduced above the penalty notice to understand whether the notice issued by the assessing officer is defective or not. After going through the above notice, we find that the assessing officer issued notice u/s 271(1)(c), stating that: “have 16 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya concealed the particulars of your income by furnishing inaccurate particulars of income.”. These are both limbs of the notice, that is, “concealment of income” and for “furnishing inaccurate particulars of income”, therefore, it is abundantly clear that the assessing officer has initiated penalty on both the limbs, that is, concealment of income and furnishing of inaccurate particulars of income. The assessing officer did not strike off the irrelevant portion. The assessing officer is not shown, whether he has initiated penalty on concealment of income or on furnishing inaccurate particulars of income. Therefore, the assessee has not been informed by way of notice about the correct charge. In this situation, the assessee was not aware about the exact nature of penalty and correct charge, whether it is on concealment of income or it is on furnishing of inaccurate particulars of income. Therefore, we find that there is no definite (fix) charge on the assessee as to whether the assessee should be penalized for “furnishing inaccurate particulars of income” or “for concealment of income” therefore, on this account the penalty initiated by the assessee officer is bad in law and therefore the penalty so levied by the assessing officer should be cancelled. 29. We do not agree with ld.CIT-DR for the revenue to the effect that there is no much difference between the term “concealment of income” and “furnishing inaccurate particulars of income”. According to us, there are lot of differences between these two terms. We are of the view that assessing officer has initiated penalty under section 271(1)(c) of the Act, on two limbs stating that “have concealed the particulars of your income by furnishing inaccurate particulars of income.”. It is by now well settled that while issuing a notice u/s 271(1)(c) of the Act, the Assessing Officer is required to specify as to what is the default on the part of the assessee, as to whether the case is one of furnishing inaccurate particulars, or whether it is a case of concealment of 17 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya income, or both. We note that Hon`ble Supreme Court in the case of T Ashok Pai - 292 ITR 11 (SC) held that “concealment of income” and “furnishing of inaccurate particulars of income” carry different connotations. The Hon`ble Gujarat High Court in case of Manu Engineering Works -122 ITR 306 (Guj.) held that the penalty order has to be clear as to limb for which it is levied and the position being unclear penalty is not sustainable. Further, on the identical facts, Hon`ble Gujarat High Court in case of Nayan C. Shah vs. ITO [Tax Appeal No. 543 of 2012 (Guj- HC)] held as follows: \"11. Another notable aspect of the matter is that while the Assessing Officer has imposed penalty on the ground that the assessee has furnished inaccurate particulars of income, the Tribunal has set aside the order of the Commissioner (Appeals) by holding that the assessee has suppressed the actual particulars of income by not making disallowance under section 40(a)(ia) of the Act. Thus, the Assessing Officer has imposed penalty on the ground of furnishing inaccurate particulars, whereas the Tribunal has upheld the order of the Assessing Officer on the ground of concealment of particulars. It is by now well settled that while issuing a notice under section 271(1)(c) of the Act, the Assessing Officer is required to specify as to what is the default on the part of the assessee, as to whether the case is one of furnishing inaccurate particulars, or whether it is a case of concealment of income, or both. In the facts of the present case, the Assessing Officer has proceeded on the footing that inaccurate particulars were filed by the assessee, whereas the Tribunal has held that the assessee had suppressed particulars for the year under consideration. Under the circumstances, the Tribunal, having confirmed the penalty imposed by the Assessing Officer on the ground of suppression of actual particulars in respect of which the assessee was not put to notice, the order of the Tribunal is rendered unsustainable on this ground also.\" 30. We note that the main grievance of the ld. Counsel is that there is no any definite charge/ accusation on the assessee, whether initiation of penalty proceeding is on account of ‘concealment of income’ or on account of ‘furnishing inaccurate particulars of income’. The assessing officer has initiated penalty under section 271(1)(c) of the Act, on two limbs stating that “have concealed the particulars of your income by furnishing inaccurate particulars of income.”. In the present case, the Assessing Officer has levied penalty on the Assessee for \"concealment of income by furnishing inaccurate particulars,\" thereby merging the two distinct limbs into a single charge. This 18 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya approach is not sanctioned by the statute and amounts to an overreach of the Assessing Officer's authority, for that reliance is placed on the judgement of the Hon`ble Supreme Court in the case of Dilip N. Shroff v. Joint Commissioner of Income Tax [(2007) 291 ITR 519 (SC)], wherein the Hon`ble Supreme Court held as follows: \"66. Section 271(1) (c) remains a penal statute. Rule of strict construction shall apply thereto. Ingredients of imposing penalty remains the same. The purpose of the Legislature that it is meant to be deterrent to tax evasion is evidenced by the increase in the quantum of penalty, from 20 per cent under the 1922 Act to 300 per cent in 1985. 67. 'Concealment of income' and 'furnishing of inaccurate particulars' are different. Both concealment and furnishing inaccurate particulars refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressioveri or suggestiofalsi. Although it may not be very accurate or apt but suppressioveri would amount to concealment, suggestiofalsi would amount to furnishing of inaccurate particulars. 68. The authorities did not arrive at a finding that the consideration amount fixed for the sale of property was wholly inadequate. The authorities also do not show that what are the inaccurate particulars furnished by the assessee. They also do not state that what should have been the accepted principles of valuation. We, therefore, do not accept the submissions of the learned Additional Solicitor General that concealment or furnishing of inaccurate particulars would overlap each other, the same would not mean that they do not represent different concepts. Had they not been so, the Parliament would not have used the different terminologies.\" 31. Therefore, we are of the view that the Assessing Officer must be clear as to the basis on which penalty is levied. The term “Concealment of income” and “furnishing inaccurate particulars of income” carry different connotations. However, in the present case the Assessing Officer has initiated penalty proceedings in assessment order by stating that \"concealment of income by furnishing inaccurate particulars\" and the same analogy has been continued by the assessing officer even in notices as also in penalty orders. This approach clearly shows that the assessing officer himself is not clear since initiation of penalty proceeding, till conclusion of the same, that under which limb of section the penalty has been initiated and levied. This approach has vitiated the entire proceeding and made it defective since inception as also made it bad in law. The 19 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya section does not empower the Assessing Officer to merge or fuse these two grounds into a third hybrid ground such us \"concealment of income by furnishing Inaccurate particulars. 32. On the identical facts, the Hon'ble High Court of Karnataka in CIT vs. SSA'S Emerald Meadows [2016] 73 taxmann.com 241 (Karnataka) has held as follows: “3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated ie, whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.). 33. Hon`ble jurisdictional High Court of Gujarat, in the case of A.M. Shah & Co. [2000] 108 TAXMAN 137 (GUJ.), held that basis for issuing notice and levying penalty must be same. If the notice is issued in the context of concealment of income, then the penalty cannot be levied by shifting the basis to inaccuracy of particulars. We have already observed that the show cause notice issued in the present case u/s 271(1)(c) of the Act, does not specify the charge against the assessee, as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show -cause notice u/s 271(1)(c) of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee, which is based on the decisions referred to in the earlier para of this order, has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. 20 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 34. In the result, appeal filed by the assessee (in ITA No.76/RJT/2022), is allowed. 35. As we have deleted the penalty u/s 271(1)(c) of the Act, on the technical issue, being the penalty notice is defective, therefore, all other issues on merits of the penalty, in the impugned assessment proceedings, are rendered academic and infructuous, hence do not require adjudication. 36. Since the facts and circumstances in the case of ITA No.76/RJT/2022, for AY 2008-09, are identical to those considered in the case of other appeals of the assessee, in ITA Nos.77 to 80/RJT/2022, our decision in the case of ITA No.76/RJT/2022, for AY 2008-09, shall apply mutatis mutandis in the case of other appeals of the assessee, in ITA Nos.77 to 80/RJT/2022, also. Accordingly, in these appeals, the penalties are deleted and therefore these appeals are also allowed. 37. In the result, appeals filed by the assessee (in ITA Nos. 76 to 80/RJT/2022), are allowed. 38. Now we deal with the penalty in ITA No.81/RJT/2022, wherein the assessing officer imposed penalty u/s 271AAB(1)(c) of the Act. In this appeal, the assessee has raised the following grounds: “1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2.The learned Commissioner of Income-tax (Appeals)-11, Ahmedabad erred on facts as also in law in confirming levy of penalty u/s 271AAB(1)(c) of the Income-tax Act, 1961 [hereinafter referred as to the \"Act\"] in respect of addition retained of Rs.23,20,000/- on accounted of alleged unexplained investment as per seized material. The penalty confirmed is totally unjustified on facts as also in law and may kindly be deleted. 21 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 3.The Id. CIT(A) erred on facts as also in law in confirming penalty of on deemed rental income of Rs.1,80,000/-. The penalty confirmed is totally unjustified on facts as also in law and may kindly be deleted. Your Honour's assessee craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.” 39. The facts, which can be stated quite shortly are as follows. During the penalty proceedings, the assessing officer noticed that on appeal by the assessee, before the ld. CIT(A), the Ld. CIT(A)-12 Ahmedabad, in order No. CIT(A)-11/granted relief to the assessee aggregating to Rs 225,14,31,201/-, in respect of various additions made by the assessing officer. Thereafter, in 092- R/CC-2/2017-18, dated 04/02/2019, of order of CIT(A)-11, Ahmedabad, the following additions are confirmed, on which penalty u/s 271AAB is proposed to levy: (i) Addition of Rs.1,80,000/ made on account of deemed Rent of more than one properties, reflected in balance sheet Rs.1,80,000/- (ii) Addition of Rs. 23,20,000/- made on account of seized documents 40. The facts relating to addition of Rs.1,80,000/- made on account of deemed Rent of more than one properties, reflected in Balance sheet, are that the assessing officer had made addition of Rs.1,80,000/- on account of deemed rent of more than one properties reflected in the balance sheet, while passing the assessment order u/s.143(3) r.w.s. 147 of the Act, dated 10.07.2017, and initiated penalty proceedings u/s.271AAB of the Act. Further, in the first appeal, the CIT(A) had confirmed the said addition. Accordingly, the assessing officer had levied Penalty u/s.271AAB(1)(c) of the Act on the confirmed addition of Rs.1,80,000/-which was not disclosed. During the penalty proceedings, the assessee submitted that the assessing officer had estimated the deemed rent income @15,000/- per month. Therefore, penalty cannot be levied on estimated addition. Since, the addition was made on estimation, penalty 22 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya cannot be levied. The assessee has relied on the various judgements. However, the assessing officer observed that on being questioned during the assessment proceedings, the assessee himself offered Rs.7000/- per month for taxation. However, looking to the locality and the type of property, the assessing officer had estimated the deemed rent at Rs.15,000/- per month, which is found to be not in excess of market rent which similar property might fetch in the open market. On appeal by the assessee, the ld CIT(A) held that the assessing officer had rightly levied the penalty on the said undisclosed rental income of the assessee. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. 41. The facts relating to addition of Rs.23,20,000/- made on account of seized documents are that during the assessment proceedings, the addition was made on the ground that during the search action at the residential premises of the assessee, a loose paper file, marked as A-1 (page no. 1 to 38) was found. It is found that on page no. 6 & 7 of this file, there are noting of advances given to various persons. The total advance worked out at Rs. 23,20,000/-. Since the assessee failed to substantiate his claim and also keeps on changing his version, therefore, assessing officer noticed that it can easily concluded that the assessee does not have any explanation for the same. Therefore, an amount of Rs. 23,20,000/-was treated as income of the assessee. In respect of this addition, penalty u/s 271AAB was also initiated for concealment of income by not disclosed of his income in the return file u/s. 153A. The CIT(A) confirmed the addition of Rs. 23,20,000/-. In this regard, vide assessing officer`s letter, the assessee was asked to show cause as to why an order imposing a penalty in respect of the above additions confirmed, by ld CIT(A), should not be passed under section 271AAB of the Income Tax Act, 1961. The assessee, during the penalty proceedings, submitted its reply before the assessing officer, however, 23 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya the assessing officer rejected the reply of the assessee and held that assessee's case falls in the ambit of Section 271AAB (1)(c) of the Act. Accordingly, assessing officer satisfied that penalty u/s. 271AAB should be levied in the case of the assessee at the rate of 30% of the undisclosed income of the specified previous year. The undisclosed income of the specified previous year was Rs.25,00,000/- (Rs.1,80,000/- deemed Rent + Rs. Rs. 23,20,000 advance), therefore, thirty percent of such undisclosed income works out to Rs.7,50,000/- (30% of s. 25,00,000). Since the learned CIT(A) confirmed the action of the assessing officer in levying the penalty, therefore assessee is in appeal before us. 42. Learned Counsel for the assessee submitted that deemed rent of Rs.1,80,000/-, is merely estimation and no penalty can be levied on the addition made on account of mere estimates. About addition of Rs.23,20,000/-, the ld. Counsel argued that there is no base to levy the penalty, as the addition was deleted by the Tribunal. 43. On the other hand, the Ld. CIT-DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 44. We have carefully considered the facts of the case, the submission of the Learned Counsel for the assessee and ld DR for the Revenue and evidences on record. We find that in respect of penalty of deemed Rent of Rs.1,80,000/-, levied by the assessing officer, it is on deemed rent computed by the assessing officer during the assessment proceedings, and it is not actual received by the assessee. Hence, there is no any element of undisclosed income, as such, as the addition of rent was made on estimate basis and it is well settled principle that no penalty can be levied on the addition made on account of mere estimates. In 24 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya this connection reliance is placed on the decision of Hon'ble High Court of Allahabad has in the case of CIT vs. Norton Electronics System Pvt. Ltd [2014] 41 taxmann.com 280 (Allahabad) where in it was held as follows: Assessee engaged in electronic business filed loss return. Assessment was completed by making various additions on estimate basis. Said additions were deleted partly by Commissioner (Appeals) and further by Tribunal High Court had upheld said deletion. Penalty was not sustainable. 45. Based on these facts and circumstances, we delete the penalty imposed by the assessing officer based on estimation of rent of Rs.1,80,000/-. 46. Now coming to the addition of Rs.23,20,000/-, made on account of seized documents, we find that the addition of Rs.23,20,000/-, has been deleted by the Tribunal, vide order of the Tribunal, dated 12.02.2025 in assessee`s appeals in IT(SS)A No. 06 & 07 & 08& 09/RJT/2019 for AYs 2010-11 to 2012-13 & 2014-15, observing as follows: “81. The assessee, also submitted written submission before the assessing officer, along with documentary evidences, vide his submission dated 06/07/2017 which are reproduced below: \"Unexplained (w.r.t. section 68 of the Income-tax Act, 1961) cash credits/Unsecured loans in respect of Jay Khodiyar Dairy Farm received in the F.Y. relevant to A.Y.2012-13 and for the new loans pertains to A.Y.2014-15. (i). As regard the loan taken from Jay Khodiyar Dairy Farm during the A.Y.2012-13, it is submitted that copy of account of the party and bank statement evidencing the transaction has already been submitted. Further, confirmation from the said party is called for and will be submitted forth with once received. (ii). Further, as regard the cash credits / loan accepted during the financial year 2013-14, it is submitted that ledger accounts of all the parties along with copies of bank statements has been submitted which is on record. (ii). However, confirmation of concerned parties has been called for and will be immediately submitted on receipt of the same.\" 82. However, the assessing officer rejected the contention of the assessee and observed that the assessee failed to substantiate his claim, therefore, an amount of Rs.23,20,000/- was treated as income of the assessee. 25 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya 83. On appeal, the ld. CIT(A) confirmed the action of the assessing officer, therefore, the assessee is in further appeal before us. 84. Learned Counsel for the assessee, submitted that so far as source of advances given as per the noting made in the seized paper, are concerned, these are the temporary advances given out of the unaccounted business income of Rs.7,47,00,000/- , declared in the audited financial statements and paid the due taxes thereon, and such advances were received back to him (assessee). Besides, there is no signature of the assessee on these documents, and moreover, no date is mentioned. Therefore, these are the dump documents, and hence the addition should not be made in the hands of the assessee. 85. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 86. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We find merit in the submissions of learned Counsel for the assessee to the effect that these advances were given by the assessee, as per the noting made in the seized paper, however, these temporary advances were given out of the unaccounted business income of Rs. 7,47,00,000/- declared in the audited financial statements and such amount has already been suffered Tax and moreover such advances were received back to him (assessee). On perusal of seized document reproduced by the assessing officer at Page 80 of the assessment order and statement of Shri Chimanlal Laljibhai Lodhiya, wherein in response to question 13, we find that assessee has specified that one page pertaining to transaction of his friend and other page is some unknown noting. Apparently, these documents do not contain any specific information of nature of transactions, specifically whether it is income or expenditure or receivable/payable amount. Further, no other corroborative material has been brought on record which suggest the same is income of the assessee. Therefore, the addition should not be made in the hands of the assessee, for that we rely on the judgement of Hon'ble jurisdictional High Court of Gujarat in the case of PCIT vs. Prabodhchandra Jayantilal Patel 153 taxmann.com 302 (Gujarat) wherein it was held that where Assessing Officer based on signed \"Sauda Chithhi\" found in search of assessee's premises made addition in respect of unaccounted transactions of land carried out by assessee, since land in question was not transferred to any person, Tribunal rightly treated said document as a dumb document and deleted addition. Based on these facts and circumstances, we delete the addition of Rs. 23,20,000/-.” 47. We have heard both the parties. Learned Counsel for the assessee argued before us that since the addition has been deleted, therefore there is no base to levy the penalty and hence the penalty should be deleted. However, ld.CIT-DR for the revenue relied on the findings of the lower authorities. We find merit in 26 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya the submissions of the learned Counsel for the assessee, to the effect that since the addition has been deleted by the Tribunal, therefore, there is no base to levy the penalty. Therefore, we note that penalty does not have any leg to stand. We find that the basic premise on which the penalty was levied by the assessing officer, has been deleted by the Tribunal, therefore, there is no base to levy the penalty, therefore, the penalty imposed by the assessing officer and confirmed by the ld. CIT(A), completely fails. Once the foundation fails, the superstructure also fails, that is, the addition is deleted, hence, penalty should also be deleted. In this regard, we placed reliance on the legal maxim “Sublato fundamento cadit opus” (meaning thereby that foundation being removed, structure /work falls). Hence, the initial action of the revenue itself is not in consonance with law, then all the subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. Considering, these facts and circumstances, we delete the penalty. 48 In the result, the appeal of the assessee in ITA No.81/RJT/2022 is allowed. 49. In the combine results, appeals filed by the assessee in ITA Nos. 76 to 81/RJT/2022), are allowed. Order is pronounced in the open court on 30/04/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (DR. ARJUN LAL SAINI) Æयाियक सदÖय/JUDICIAL MEMBER लेखा सदÖय/ACCOUNTANT MEMBER राजकोट /Rajkot Ǒदनांक/ Date: 30/04/2025 DKP Outsourcing Sr.P.S 27 ITA No.76 to 81/RJT/2022 (AY 8-09 to 12-13 & 14-15) Pankaj C Lodhiya आदेश कì ÿितिलिप अúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Appellant  ÿÂयथê/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ(अपील)/ The CIT(A)  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File By order/आदेश से, सहायक पंजीकार आयकर अपीलȣय अͬधकरण, राजकोट "