TaxTMI 
TaxTMI 
2015 (2) TMI 112
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....acts in deleting penalty of Rs. 12,76,429/- (Rs.13,69,715/- for AY 20001-02, Rs. 16,07,025/- for AY 2002-03, Rs. 27,37,111/- for AY 2003-04, Rs. 46,07,024/- for AY 2004-05 & Rs. 35,14,624/- for AY 2005-06) levied by the Assessing Officer by holding that penalty cannot be levied in respect of the additions made on estimate basis by applying the gross profit rate. 2. In doing so, the ld.CIT(A) failed to appreciate that where there is a justification for the admission of income, as in the instant case, the burden is on the assessee to prove that there is no concealment and where there is failure in that direction to discharge the burden, penalty is leviable. 3. On the facts and in the circumstances of the case, the Ld.CIT(A) ought to have upheld the order passed u/s.271(1)(c) of the Act. 2. The facts as recorded by the ld.CIT(A) vide paras-3.0 & 3.1 in the appellate order, are reproduced hereunder (extracted from IT(ss)A 15/Rjt/2011):- "3.0. The second, third and fourth ground of appeal are in respect of the imposition of penalty of Rs. 12,76,429/- u/s.271(1)(c) of the Act on the additional income of Rs. 30,06,000/- voluntarily disclosed in the return furnished in response....
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.... basis and reduced to Rs. 3,09,400/- at appellate stage." 2.1. The ld.CIT(A), after considering the submissions and following the decision of the Coordinate Bench (ITAT Rajkot) rendered in the case of DCIT vs. M/s. Balaji Multiflex P. Ltd. in IT(ss)A Nos.64 & 65/RJT/09 for AYs 2004-05 & 2005-06) dated 10/08/2010, allowed the appeal of the assessee by deleting the penalty. 3. The ld.CIT-DR submitted that the ld.CIT(A) was not justified in deleting the addition and supported the order of the AO. 3.1. On the contrary, ld.counsel for the assessee reiterated the contentions as were made in the synopsis. He submitted that this issue is squarely covered by the catena of judgements in favour of assessee and against the Revenue. He further submitted that out of the addition made by the AO, majority of the additions were deleted by the ld.CIT(A) in quantum proceedings. He submitted that even otherwise also, the AO was not justified in initiating the proceedings on the addition made on the basis of estimation. He also submitted that immunity available under Explanation 5 to section 271(1)(c) of the Act is available in favour of the assessee. Apart from the above, the ld.counsel for t....
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....ribunal and dismissed the appeal(s). He has also submitted that the AO has followed the decision of the Hon'ble ITAT Ahmedabad Bench rendered in the case of ACIT vs. Shri Kirit Dahyabhai Patel (in ITA Nos.2344, 2345, 2346, 2348 and 2389/Ahd/2007). The said decision of the Hon'ble ITAT has been reversed by the Hon'ble Gujarat High Court in a recent judgement in Tax Appeal Nos.1181, 1182 and 1185 of 2010, dated 03/12/2014 and decided the issue in favour of the assessee. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements relied upon by the ld.counsel for the assessee. The assessee has filed a written synopsis and the contentions of the same are reproduced hereunder:- "SYNOPSIS 1.0 Search u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as the "Act") carried out at the premises of the directors of the respondent Company on 27.10.2005. Consequent Survey u/s 133A was also carried out at the premises of the respondent. During the course of search at the residential premises of directors as also survey at the factory premises nothing was found to sug....
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.... section 271(1)(c) specifically provides for immunity from penalty in case of admission of concealed income recorded during search. It is in this context of plain language of the law, the concurrent finding of the first appellate authority and the Tribunal was upheld in CIT Vs Chhabra Emporium 264 ITR 249 (Delhi). Penalty was found to be not leviable in Gebilal Kanaiyalal (HUF) Vs ACIT) 270 ITR 523 (Raj). Reliance is also placed on the following decisions: a. Hon'ble ITAT, Rajkot Bench Rajkot in the case of DCIT vs M/s. Balaji Multiflex P. Ltd., in IT(SS) Nos. 64 & 65/RJT/09 [Paper book Page 1 to 9] wherein on identical facts the order of the Id. CIT(A) deleting the penalty was upheld. The appeals filed by the revenue against the order of the Hon'ble ITAT vide Tax Appeal Nos. 83 & 84 have dismissed by the Hon'ble High Court of Gujarat vide orders dated 19.10.2011 [copies attached at Page (6 to 9 ]. b. Hon'ble ITAT, Rajkot Bench, Rajkot in the case of ACIT vs Shri Shantilal J. Maheshwari IT(SS)A No. 69/RJT/2009 [Paper book Page 10 to 12]. c. Hon'ble ITAT, Rajkot Bench, Rajkot in the case of ACIT vs Shri Samat A. Jaria IT(SS)A No. 71 to 73/RJT/2010 [Paper....
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....tion 5A to section 271(1)(c) of the Act for levy of penalty w.e.f. 01.04.2007 and 01.06.2007 respectively. Therefore, also immunity is available from the penalty action. 9.0 The respondent disclosed additional income only on the basis of understanding that no penal action shall be initiated. This fact was specifically mentioned in the letter of disclosure also. Under the circumstances levy of penalty is totally unjustified and uncalled for. Hon'ble ITAT, AHMEDABAD 'C' BENCH in the case of ASHOK NATVARLAL PATEL vs. ACIT61 TTJ (Ahd) 139. 10.0 In view of the above, the order of the Id. CITA(A) may kindly be upheld." 4.1. The contention of the ld.counsel for the assessee is that under the identical facts, the issue of levy of penalty travelled upto the stage of Hon'ble Gujarat High Court in the case of CIT vs. M/s. Balaji Multiflex Pvt. Ltd. in Tax Appeal Nos.83 & 84 of 2011 (supra). We find that the ld.CIT(A) while deleting the addition has followed the decision of Hon'ble Coordinate Bench rendered in the case of DCIT vs. Balaji Multiflex Pvt.Ltd & Ors, wherein the penalty levied u/s.271(1)(c) of the Act on the income admitted during the course of survey p....