SUJAN INFRASTRUCTURE PVT. LTD.,AHMEDABAD V. THE DY.CIT, CENTRAL CIRCLE-1(2), AHMEDABAD

ITA 474/AHD/2024

AI Insights

The case involves Sujan Infrastructure Pvt. Ltd., which appealed against the penalty imposed by the Deputy Commissioner of Income-tax, Central Circle 1(2), Ahmedabad, confirmed by the Commissioner of Income-tax (Appeals)-11, Ahmedabad. The penalty was initially based on 'concealment of particulars of income' but was later levied for 'furnishing of inaccurate particulars of income' based on the findings from a search operation under Section 132(1) of the Income-tax Act, 1961. The Tribunal examined the consistency of the grounds for penalty imposition and found a significant deviation in the basis of the penalty, leading to its decision to set aside the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25150 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Other Referred Cases: ITO Vs. Shri Rameshwar Ramnivas Maniyar (ITA No. 3206/Ahd/2015), Shri Kantibhai Naranbhai Prajapati Vs. ITO (ITA No.2880/Ahd/2024), New Sorathia Engineering Company Vs. CIT (2006) 282 ITR 642 (Guj.), CIT Vs. Manu Engineering Works (1980) 122 ITR (306) (Guj.), Gian Chand Batia Vs. DCIT 61 ITD 24 (All)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH M ISHRA
• Assessee Lawyers: TUSHAR HEMANI; PARIMALSINH B. PARMAR
• Keywords: Unexplained investment; Income from undisclosed sources; Initiation of penalty proceedings
• Section: 250; 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No. 474/Ahd/2024 (Assessment Year: 2006-07) Sujan Infrastructure Pvt. Ltd., 1705, Sankalp Square III, Nr. Taj Skyline, Sindhubhavan Road, Shilaj, Ahmedabad Gujarat-380059 [PAN : AAHCS 2546 P] Vs. Deputy Commissioner of Income-tax, Central Circle 1(2), Ahmedabad (Appellant) .. (Respondent) Appellant by : Shri Tushar Hemani, Sr Advocate & Shri Parimalsinh B. Parmar, AR Respondent by: Shri Yogesh Mishra, Sr. DR Date of Hearing 08.01.2025 Date of Pronouncement 07.03.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals)-11, Ahmedabad (hereinafter referred to as \"CIT(A)\" for short) dated 26.02.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2006-07. 2. The grounds of appeal raised by the Assessee are as follows:- 1. The learned CIT(A) has erred in law and on facts of the case in confirming initiation of penalty proceedings u/s 271(1)(c) of the Act. 2. The learned CIT(A) has erred in law and on facts of the case in confirming levy of penalty of Rs.12,00,659/- u/s 271(1)(c) of the Act ITA No. 474/Ahd/2024 Sujan Infrastructure Pvt Ltd Vs. DCIT Asst. Year : 2006-07 - 2– in respect of addition of Rs.35,67,018/- made by the learned Assessing Officer. 3. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.” 3. The Assessee has also raised an additional ground of appeal which reads as under:- “The Ld. CIT(A) has erred in not appreciating that penalty levied u/s 271(1)(c) is not tenable in the eye of law since while passing the Assessing Order, Assessing Officer had initiated penalty proceedings for ‘concealment of particulars of income’ whereas while passing the penalty order, penalty came to be levied for ‘furnishing of inaccurate particulars of income’.” 4. In this case, a search operation u/s 132(1) of the Act was conducted in the cases of Navratna Group on 10.05.2006 and various documents/books of accounts and other valuable articles/things were found and seized from the various premises covered u/s 132(1) and 132(1A) of the Act. On verification of such documents found and seized, it was noticed that various incriminating documents belonged to the assessee-company. The Assessing Officer observed that the assessee had received booking amount of Rs.1,75,50,350/- as against the ‘booking amount’ recorded in the books of accounts of Rs.1,05,42,850/-. Therefore, the Assessing Officer made an addition of Rs.70,07,500/- (Rs.1,75,50,350 – Rs.1,05,42,850) on account of alleged unaccounted money, not recorded in the books. Aggrieved by the aforesaid addition made by the Assessing ITA No. 474/Ahd/2024 Sujan Infrastructure Pvt Ltd Vs. DCIT Asst. Year : 2006-07 - 3– Officer, the assessee has taken up the issue with Ld. First Appellate Authority who restricted the addition to Rs.35,67,018/-. The Assessing Officer subsequently levied the impugned penalty u/s 271(1)(c) of the Act on the addition of Rs.35,67,018/- made on the basis of loos paper found during search. 5. Aggrieved, the assessee preferred appeal before the Ld. CIT(A) who confirmed the impugned penalty on the ground that the assessee has furnished inaccurate particulars of income and the Assessing Officer has made addition on the basis of analysis of data & incriminating document found during the course of search action. 6. Aggrieved by the order of the Ld. CIT(A) confirming the penalty, the assessee is now in appeal before the Tribunal. 7. Before us, the Ld. Counsel for the assessee submitted that the penalty proceedings were initiated for ‘concealment of particulars of income’, whereas while passing penalty order, the penalty was levied by the Assessing Officer for ‘furnishing of inaccurate particulars of income’. He, therefore, argued that there is a change in satisfaction at the end of the Assessing Officer inasmuch as in the quantum proceedings the penalty was initiated for concealment of particulars of income and the penalty was ultimately levied for ‘furnishing inaccurate particulars of income’. He therefore, relying upon the judgement of Co-ordinate Bench of this Tribunal in the case of ITO Vs. Shri Rameshwar Ramnivas Maniyar (ITA No. 3206/Ahd/2015) & Shri Kantibhai Naranbhai Prajapati Vs. ITO (ITA No.2880/Ahd/2024), contended that the penalty levied u/s 271(1)(c) of the Act is liable to be deleted. ITA No. 474/Ahd/2024 Sujan Infrastructure Pvt Ltd Vs. DCIT Asst. Year : 2006-07 - 4– 8. The Ld. DR, on the other hand, relied upon the Assessment Order, penalty order and the order of the Ld. CIT(A). 9. We have gone through the assessment order dated 31.12.2008. The Assessing Officer made addition of Rs.70.95 lakhs on account of unaccounted investments, Rs.33 lakhs on account of unexplained cash credits, Rs.70 lakhs on account of unaccounted income – totaling to Rs.174 lakhs. The Assessing Officer levied penalty on the amount confirmed by the Ld. CIT(A) and initiated penalty for ‘concealment of particulars of income’ in the assessment order. We have also gone through the penalty order wherein it is mentioned that ‘as brought out in the assessment order, it is very clear that the assessee has furnished inaccurate particulars of income to the tune of Rs.39,31,296/- and therefore this is a fit case for levy of penalty u/s 271(1)(c)’. To conclude, the Assessing Officer levied penalty holding that ‘the assessee has committed default u/s 271(1)(c) of the Act by way of furnishing inaccurate particulars of income and committed default within the meaning of Section 271(1)(c) of the Income-tax Act, 1961’. On this issue, we straight away find that the Assessing Officer vide penalty order dated 20.07.2021 u/s 271(1)(c) of the Act imposed penalty on additions made alleging ‘furnishing of inaccurate particulars of income’. Apparently, the basis and foundation for imposition of penalty has been altered by the Assessing Officer. It is thus ostensible that findings recorded by the Assessing Officer show that penalty has been levied on a different premise and the original satisfaction for imposition of penalty has been altered or modified. In such circumstances, where the original basis of imposition of penalty has been altered in a ITA No. 474/Ahd/2024 Sujan Infrastructure Pvt Ltd Vs. DCIT Asst. Year : 2006-07 - 5– significant way by the Assessing Officer, the very basis for sustaining the penalty is rendered non-existent. Needless to say, the imposition of penalty is solely dependent upon the ‘satisfaction’ of the Assessing Officer and non- else. The ground for action by Assessing Officer was allegation of ‘concealment’ initially but finally ended up in levy of penalty for ‘furnishing inaccurate particulars of income’. Thus, in the absence of continuity in the findings of the Assessing Officer, the order of the penalty passed by the Assessing Officer is liable to be struct down on this ground alone. Reliance is being placed to the decision of the Hon’ble Gujarat High Court in the case of New Sorathia Engineering Company Vs. CIT (2006) 282 ITR 642 (Guj.) and CIT Vs. Manu Engineering Works (1980) 122 ITR (306) (Guj.). Similar view has been taken by the Coordinate Bench of the Tribunal in Gian Chand Batia Vs. DCIT 61 ITD 24 (All). Therefore, where Assessing Authority itself is not sure about nature of default, the penal action u/s 271(1)(c) of the Act is not sustainable in law. 10. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 07.03.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 07/03/2025 btk ITA No. 474/Ahd/2024 Sujan Infrastructure Pvt Ltd Vs. DCIT Asst. Year : 2006-07 - 6– आदेश की \u0007ितिलिप अ\rेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b\tथ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड\u001f फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation ……………. 2. Date on which the typed draft is placed before the Dictating Member …………. 3. Other Member………….….……………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ………….……. 5. Date on which the fair order is placed before the Dictating Member for pronouncement………….… 6. Date on which the fair order comes back to the Sr.P.S./P.S ………….…………. 7. Date on which the file goes to the Bench Clerk ………….…………….. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "