2024 (5) TMI 496 - AT - Income Tax

Penalty u/s 271(1)(c) - unexplained expenditure u/s 69C and unaccounted cash receipt - HELD THAT - Tribunal s finding vide order 2022 (1) TMI 1328 - ITAT AHMEDABAD clearly reveals that the assessee has disclosed all the relevant material before the AO during the assessment proceedings and, therefore, the element of concealment of income or furnishing of inaccurate particulars of income will not arise in the present scenario. In respect of disallowance of interest incurred on unsecured loan, the assessee has not prayed this ground and, therefore, the addition was sustained. Thus, this cannot be stated as concealment of income or furnishing of inaccurate particulars of income. Thus, CIT(A) has rightly granted partial relief to the assessee and there is no need to interfere with the same. Appeal filed by the Revenue is dismissed. Penalty u/s 271D - Directors of the Company given cash loans in order to enable the Company to incur various expenses including the investment in land - CIT(A) confirmed the penalty u/s 271D of the Act and deleted the remaining amount relatable to share application/investment - HELD THAT - The very objection of the CIT(A) appears to be contradictory when documents shown by the assessee and the findings given by the Tribunal 2022 (1) TMI 1328 - ITAT AHMEDABAD . Since the addition itself was deleted by the Tribunal and the Assessing Officer has taken partial penalty proceedings u/s 271(1)(c) and 271D, AO has not segregated the findings independently and has not pointed out how the violation of Section 269SS has taken place in the present 271D proceedings. Thus, appeal of the assessee is allowed. Penalty u/s 271E - It is pertinent to note that the assessee has given explanation before the AO as to how the loan was repaid and that explanation in fact was accepted by the Tribunal vide order dated 13.01.2022. Thus, the very finding given by the Tribunal confirms that the assessee has categorically given the explanation related to the repayment of loans which was paid through directors/Preet Patel and Pravin Patel. In fact, Ghanshyam Gandhi also have repaid the loan. Thus, the imposition of penalty u/s 271E of the Act will not sustain.

Summary

Issues Involved:
1. Penalty u/s 271(1)(c) for concealment of income.
2. Penalty u/s 271D for contravention of provisions of Section 269SS.
3. Penalty u/s 271E for contravention of provisions of Section 269T.

Summary:

1. Penalty u/s 271(1)(c) for concealment of income:

The Revenue filed an appeal (ITA No.47/Ahd/2023) against the CIT(A)'s order which restricted the penalty u/s 271(1)(c) to Rs. 3,05,953/- from Rs. 1,31,79,630/- levied by the Assessing Officer. The Tribunal noted that the CIT(A) had granted partial relief based on the Tribunal's prior order dated 13.01.2022, which had already provided relief of Rs. 3,96,31,306/- and sustained an addition of Rs. 9,90,140/-. The Tribunal found no concealment of income or furnishing of inaccurate particulars by the assessee as the relevant material was disclosed during assessment proceedings. Hence, the appeal by the Revenue was dismissed.

2. Penalty u/s 271D for contravention of provisions of Section 269SS:

The assessee's appeal (ITA No.108/Ahd/2023) contested the penalty of Rs. 5,96,11,178/- confirmed by the CIT(A) under Section 271D. The Tribunal observed that the CIT(A) had confirmed the penalty based on the cash loans received by the assessee from its Directors and another individual, which was in violation of Section 269SS. However, the Tribunal noted contradictions in the CIT(A)'s findings and the Tribunal's earlier order, which had deleted the addition to the extent of Rs. 3,96,31,306/-. The Tribunal found that the Assessing Officer did not segregate the findings independently to substantiate the violation of Section 269SS. Consequently, the appeal by the assessee was allowed.

3. Penalty u/s 271E for contravention of provisions of Section 269T:

The assessee's appeal (ITA No.109/Ahd/2023) challenged the penalty of Rs. 1,89,00,000/- confirmed by the CIT(A) under Section 271E. The Tribunal noted that the assessee had provided explanations regarding the repayment of loans, which were accepted by the Tribunal in its order dated 13.01.2022. The Tribunal concluded that the imposition of penalty under Section 271E was not sustainable as the assessee had categorically explained the loan repayments. Therefore, the appeal by the assessee was allowed.

Other Appeals:

The Revenue's appeal (ITA No.192/Ahd/2023) concerning partial relief granted by the CIT(A) in respect of penalty levied under Section 271D was dismissed, aligning with the observations made in the assessee's appeal (ITA No.108/Ahd/2023).

Conclusion:

Both appeals filed by the Revenue were dismissed, and both appeals filed by the assessee were allowed.

Order pronounced in the open Court on this 8th May, 2024.