2026 (1) TMI 706

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....-2024 in the matter of impugned penalties as levied by Ld. Addl. CIT, Range-5, Chandigarh vide orders dated 12-11-2018. Having heard rival submissions and upon perusal of case records, the appeals are disposed-off as under. 2. It emerges that the assessee filed return of income declaring business income of Rs. 1,17,930/- and other income of Rs. 7,500/-. The assessee declared agricultural income of Rs. 14 Lacs which was accepted by Ld. AO in the assessment proceedings. However, Ld. AO disallowed Architect Fees of Rs. 1.75 Lacs which was claimed as business expenses. The matter reached up-to Tribunal wherein, vide ITA No.17/Chd/2022 order dated 30-06-2022, the issue was restored back to Ld. AO for fresh consideration. 3. The Ld. AO, whi....

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.... the assessee contended that the assessee as well as the lenders was having agricultural income and his income was also below taxable limit and therefore, such penalties were not leviable. Another contention was that the transactions were under bona-fide belief and the same were genuine. The assessee was new in construction business and prior to this year, the assessee was cultivating his ancestral land only. The assessee obtained loans to start the new business. Reference was made to various case laws to assail levy of penalties on these facts. However, Ld. CIT(A) rejected the contentions on the ground that no business exigency was shown by the assessee and the assessee earned business income. The assessee was to demonstrate bona-fide reas....

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....h was filed by the assessee before Ld. AO. The assessee had also filed copies of land revenue records (Fard) to Ld. AO which is not in dispute. Similar documents have been filed for Shri Surjit Singh. Therefore, the assessee, in my considered opinion, would be covered under second proviso. 6. Proceeding further, the assessee would succeed on the plea of reasonable cause also since it is the first year of start of business. The nature of business i.e., construction and building material would involve cash transactions. The lenders are agriculturists and close family friends of the assessee residing in remote villages. The genuineness or the source of loan is not in dispute. The Ahmedabad Tribunal in the case of Narinder Kumar Chunilal Son....