TaxTMI 
TaxTMI 
2017 (8) TMI 1504
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....7-08 and hence the CIT(A) has directed to tax the said income in A.Y. 2007-08; the A.O has therefore not initiated any penalty proceedings in A.Y. 2007-08 in respect of the above income offered to tax by the appellant in A.Y. 2008-09; the CIT(A) has also not initiated and levied penalty u/s. 271(1)(c) in A.Y. 2007-08; therefore penalty u/s. 271(1)(c) is not leviable. (ii) the CIT(A) has not initiated or levied penalty u/s. 271(1)(c) of the Act and hence in view of ratio laid down in the case of CIT V s. Manjunatha Cotton and Ginning Factory, ITA No. 2564 etc. dated 13/12/2012 of Hon'ble Karnataka High Court, the penalty u/s. 271(1)(c) is required to be cancelled. (iii) the addition has been made on estimation basis without bringing on record any concrete evidence and only on the basis of statement of the director and hence as the addition to original income returned has not been proved to the hilt, penalty u/s. 271(1)(c) is not leviable. Your appellant craves, leave to add, alter, delete above or any of the ground/s of appeal. 3. The assessee has raised following grounds of appeal in ITA No. 346/PUN/2015 :- 1. On the facts and in law the CIT(A) has erred in confirm....
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....analyzed the reply given by the assessee and found the same to be not tenable since full working of cash, cheque component, amounts received in cash, ready reckoner rate, stamp duty paid and registration charges paid were mentioned completely on the seized document. The Assessing Officer made similar analyses for each of the entry as tabulated at page No. 3 of the assessment order. Another contention of the assessee was that the instances of receipt of on money were only during the period assessment year 2008-09. Hence, he pointed out that no addition could be made in the earlier years. The Assessing Officer did not accept this contention of the assessee holding that the assessee was in the business of developing and selling land. The Assessing Officer further observed that during course of search, contemporaneous evidences were found that substantiate the claims of receipt of on money on regular basis. The Assessing Officer thus held that in view thereof the question which remained was to quantify or estimate the extent of net cash receipts in the hands of the assessee. The Assessing Officer noted from tabulated details that the cash component varied from 52% to 250% and consideri....
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....nd statement recorded u/s. 132(4) of the Act and held as under : "4.9 In respect of transaction Nos. 4 to 8 pointed out by the A.O, it is noticed that the transactions relate to the A.Y. 2008-2009. The total on-money in respect of the said transactions pointed out by the A.O is Rs. 24,30,226/-. These transactions mainly relate to the plots in Hindustan Nagar Project. Total transactions in respect of sale of plots in A.Y. 2008-2009 in Hindustan Nagar project specific Gat numbers stated by the appellant in statement u/s. 132(4) of the Act, upto the date of search and seizure action u/s. 132 of the Act as per audited ledger accounts are Rs. 1,65,71,925/-. The A.O has pointed out in the tabular chart of on-money specifically in respect of plots sold for Rs. 16,11,500/-. Therefore, the on money receipts of remaining plots sold for recorded consideration of Rs. 1,49,60,425/- is to be taxed in the hands of the appellant. The appellant has agreed in his statement recorded u/s. 132(4) that it has received 15% to 20% on money in respect of plots in specific Gat numbers of land. Hence on the basis of statement u/s 132(4) of the Act, the on-money receipt at 17.50% [ i.e. average of 15% an....
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....ther pointed out that in this respect, the Assessing Officer had not initiated penalty proceedings though penalty u/s. 271(1) (c) could be levied on the said amount. The assessee stated that the addition of Rs. 12,00,000/- which was sustained by the CIT(A), was the addition made on account of on-money in assessment year 2008-2009. He further pointed out that the Assessing Officer had initiated penalty proceedings in respect of all the additions on account of on-money receipt during assessment years 2002-2003 to 2008-2009. He further stated that the CIT(A) partly confirmed the addition to the extent of Rs. 12,00,000/- in assessment year 2007-2008 and Rs. 13,48,300/- in assessment year 2008-2009 respectively. The Assessing Officer, in such circumstances held that the assessee had concealed the income and also furnished inaccurate particulars of income. The Assessing Officer had relied on various cases laws vide Para- 6 to hold that assessee had concealed the income within the meaning of Section 271(1)(c) read with explanation 1, where the assessee had not been able to substantiate the explanation and had failed to prove that the explanation was bon-fide vide Para-7, the Assessing Off....
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....assessment year 2008-2009. It may be pointed out here in itself that the Assessing Officer while levying penalty at Para-6 recorded satisfaction that the assessee had concealed income and furnished inaccurate particulars in respect of the income of Rs. 13,48,300/-. The CIT(A) after relying on the provision of Section 271(1) (c) held the assessee to have furnished inaccurate particulars of income and concealed particulars of income to the tune of Rs. 13,48,000/- and hence, the Assessing Officer was justified in imposing penalty of Rs. 4,12,580/- u/s. 271(1) (c) of the Act. The assessee is in appeal against the said order of CIT(A). 12. Both the appeals filed by the assessee were filed after a delay of 22 days. The assessee had filed applications for condonation of delay along with affidavit of the assessee stating that there was no intention to file the appeal belatedly as the Tribunal appeal fees in respect of both the appeals were duly paid on 01.02.2015 i.e within the stipulated period. But because of the delay in the office of the C/A, the appeals were filed late. In totality of the facts and circumstances, we find merit in the plea of the assessee and the delay of 22 days is h....
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....the other hand CIT(A) taxed it in assessment year 2007-2008. 14. The Ld. DR for the Revenue in this regard pointed out where the assessee admitted earning of on money, statement u/s. 132(4) was recorded and additional income was offered, then, since the Assessing Officer estimated 50% as on money on the basis of transaction found and the CIT(A) vide Para 4.7 on the basis of some documents made addition in the hands of the assessee, then levying penalty u/s. 271(1) (c) of the Act merits to be upheld. 15. In rejoinder, the Ld. AR for the assessee pointed out that assessee had offered the additional income in assessment year 2008-09 but addition was made in assessment year 2007-08. In respect of penalty levied in assessment year 2008-2009, the Ld. AR for the assessee pointed out that no additional income was offered in the hands of the assessee company. He further referred to the opinion of the Assessing Officer and presumption that assessee must have received on money for all 11 transactions and total addition was worked out at Rs. 1.51 Crore against which in the hands of the Managing Director, the assessee had offered sum of Rs. 57.82 Lakhs and net addition of Rs. 93,28,774/- was ....
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....e at page 6 of the assessment order. For assessment year 2007-08, addition on account of on-money was made at Rs. 33,65,995/- and in assessment year 2008-09 at Rs. 1,51,10,774/-. Certain other additions were also made which were deleted by the CIT(A), hence, the same are not being referred. 17. Now, coming to the additions made by the Assessing Officer on account of on-money by estimating the same @ 50% of total sale consideration for different years under search period. The CIT(A) while deciding the quantum addition vide para 4.4 noted the contentions of assessee that on-money admitted was in respect of specific plots and specific land in specified Gat numbers and not in respect of all plots and land sold. Reference was made to the reply to question No.3 recorded in statement under section 132(4) of the Act and the CIT(A) found the contention of assessee to be correct. He referred to the statement of assessee that in later year i.e. assessment year 2008-09, when the real estate market started booming and hence, the cash on-money. Here the CIT(A) observed that the same could not be assumed to have also prevailed in earlier years, when there was no rise in real estate market. He al....
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....ons in respect of sale of plots as per audited ledger accounts were Rs. 1,65,71,925/-. The CIT(A) noted that the Assessing Officer has pointed out in tabulated chart of on-money specifically in respect of plots sold for Rs. 16,11,500/-. Therefore, he further held that on-money receipts of remaining plots sold for recorded consideration of Rs. 1.49 crores was to be taxed in the hands of assessee, wherein the assessee in the statement recorded under section 132(4) of the Act had agreed that it had received 15% to 20% on-money in respect of specific Gat numbers of plots of land sold. The CIT(A) thus, estimated the on-money @ 17.50% of Rs. 1,49,60,425/- at Rs. 26,18,704/-. The total on-money thus, was held to be taxed in the hands of assessee at Rs. 50,48,300/-, Rs. 24,30,226/- evidence found plus Rs. 26,18,074/- estimation of on-money. As against the same, the assessee had offered to tax Rs. 25 lakhs in assessment year 2008-09 and hence, resultant addition was worked out at Rs. 25,48,300/-. The CIT(A) further observed that where Rs. 12 lakhs was already directed to be assessed in assessment year 2007-08, then the balance on-money to be taxed in assessment year 2008-09 was only Rs. 13,....
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....ch circumstances, where the addition has been sustained on a ground other than the ground on which the addition was made, then penalty proceedings under section 271(1)(c) of the Act initiated on original additions do not stand. The CIT(A) had the power to initiate penalty proceedings on the addition made by him in assessment year 2007-08, however, he failed to do so and under the circumstances, the assessee cannot be held to have furnished inaccurate particulars of income or concealed the income in respect of addition of Rs. 12 lakhs, which is ultimately sustained in the hands of assessee. Accordingly, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act on addition of Rs. 12 lakhs in assessment year 2007-08. 23. Before parting, we may also mention the infirmity in the penalty order passed by the Assessing Officer, wherein while completing the assessment, the Assessing Officer had recorded satisfaction that the assessee has concealed its income for which penalty proceedings were initiated. However, while passing the order levying penalty under section 271(1)(c) of the Act, the Assessing Officer in the first instance, in para 4 after makin....
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....use notice to the assessee, there is no merit in levy of penalty. 26. Applying the said principle to the facts of the present case, where the Assessing Officer had recorded satisfaction of the assessee having concealed its income but where while levying penalty for concealment, the Assessing Officer held the assessee to have furnished inaccurate particulars of income and also concealed its income in para 5 and thereafter, in para 6 to have held that it has concealed income and in para 7, the Assessing Officer was satisfied that the assessee has furnished inaccurate particulars of income, the said order of Assessing Officer suffers from infirmities in not coming to the conclusion as to whether the assessee has concealed its income or furnished inaccurate particulars of income. Penalty for concealment is leviable in the case of assessee on satisfaction of one of the limbs, since the ultimate addition which has been sustained in the case of assessee is one. In the totality of the above said facts and circumstances, penalty order passed in the present case suffers from non-exercise of jurisdictional power of the Assessing Officer correctly and hence, the same is held to be invalid. 2....