2024 (9) TMI 346 - AT - Income Tax

Levy of penalty u/s 271AAA - seized documents relating to undisclosed consideration on the sale of land as observed that the relevant seized material (Annexure BS-24) was seized from the premises of the assessee himself and contains details of various unaccounted transaction - HELD THAT - Though the paper was found in the premises of the assessee, and the name of the assessee is also mentioned in that page, the assessee never contended that the contents in the seized material were prepared by some other person. If that be so, the onus was on the assessee to give details of such other person once the signed material has been found from the premises of the assessee. Accordingly, the AO after looking into the facts and circumstances of the case had confirmed the addition in the hands of the assessee on account of undisclosed consideration on sale of land. The assessee at any stage of proceedings, has not challenged the rate of sale consideration of such land, as mentioned in the seized documents. Assessee has also not disputed the fact that the documents were recovered from his premises and the said documents also clearly mentioned the name of the assessee. Accordingly, looking into the instant facts, we are of the considered view that the additions have not been made by the AO based on dumped documents. Further, the additions made by the AO have also been confirmed by the Ld. CIT(A) and subsequently by the Hon ble High Court. Accordingly, looking into the instant facts we are of the considered view that Ld. CIT(A) has not erred in facts and in law in confirming levy of penalty under Section 271AAA of the Act. Levy of penalty with respect to protective addition made in the hands of undisclosed capital gain - HELD THAT - In the case of Mohd. Khasim 2014 (10) TMI 140 - ITAT BANGALORE the ITAT held that where Revenue itself was not sure as to whether alleged capital gains was to be assessed in the hands of assessee and such addition was made on protective basis, penalty under Section 158BFA could not be levied on the assessee. In the case of CIT vs. Sanatan Seva Mandal 2012 (8) TMI 1235 - GUJARAT HIGH COURT the High Court held that where pursuant to search proceedings, certain addition was made to assessee s income on protective basis and in case of one K on substantive basis, in view of fact that substantive additions were already subjected to penalty, no penalty could be levied in respect of said additions protectively made against the assessee. Accordingly, additions have been made in the hands of the assessee on protective basis , we are of the considered view that Ld. CIT(A) has erred in confirming levy of penalty under Section 271AAA of the Act on additions made in the hands of the assessee on protective basis. Levy of penalty u/s 271AAA with regards to undisclosed capital gain on sale of land - In this case, we observe that the Ld. CIT(A), after taking into consideration the seized material found during the course of search, confirmed the quantum additions in the hands of the assessee. Such quantum additions amounting to Rs. 1.48 crores towards unaccounted sale consideration was later confirmed by order of Hon ble Gujarat High Court. Accordingly, in our considered view, looking into the instant facts, AO and Ld. CIT(A), after analysis of the seized documents on record have come to the conclusion that the assessee had earned undisclosed capital gain on sale of land. The aforesaid additions were also later confirmed by the Hon ble Gujarat High Court in 2018 (10) TMI 1657 - GUJARAT HIGH COURT . Accordingly, in view of the above facts, we find no infirmity in the order of CIT(A) while confirming levy of penalty under Section 271AAA of the Act in the hands of the assessee. Penalty u/s 271(1)(c) - We observe that in the case of Dr. Naman A. Shastri 2015 (11) TMI 109 - ITAT AHMEDABAD ITAT held that provisions of sections 271AAA and 271(1)(c) are mutually exclusive and, thus, once penalty is initiated under section 271AAA for specified previous year , there cannot be any occasion to impose penalty under Section 271(1)(c). Addition based on seized material - HELD THAT - In this case, the entire addition has been made by the AO only on the basis of seized material in an ex-parte order passed u/s 144 of the Act and from the contents of the order it is observed that the AO had no concrete proof / corroborative evidences to establish that the assessee, alongwith his father had in fact purchased the property in question. No notices were issued to the so-called sellers of such property to confirm whether any sale of such property had been made to the assessee and his father, no land revenue records were called for to establish that the assessee and his father had in fact purchased the property, there was no sale deed / purchase deed to establish that the assessee and his father had purchased the property in question and the entire additions in these facts were only made on the basis of entries made in seized documents, without any corroborative evidence to support the factum of purchase of such property. Accordingly, in our considered view, this is a fit case where levy of penalty under Section 271(1)(c) of the Act is liable to be deleted. Levy of penalty u/s 271(1)(c) with respect to addition of unexplained deposit in bank - The additions were confirmed by the assessee in the absence of any information regarding source of such cash deposits coming from the assessee and subsequently, the additions were later confirmed by the appellate authorities in quantum proceedings. We also observe that this is an abated assessment year and therefore, the additions in quantum proceedings are not restricted to only the material found during the course of search proceedings. Accordingly, in quantum proceedings have also confirmed the additions in the case of the assessee, we accordingly uphold the levy of penalty u/s 271(1)(c) with respect to addition of unexplained deposit in bank in the hands of the assessee. Additions with respect to unexplained bank deposits / credit entries in the hands of the assessee s brother - HELD THAT - As noted by us earlier, this is a case of abated assessment year and during the course of assessment proceedings the assessee was unable to provide any explanation with regard to excess deposits in his bank account. In absence of any explanation provide by assessee, a sum as added as unexplained income in the hands of the assessee and in quantum appeal against the aforesaid addition, the Appellate Authorities also subsequently confirmed these additions in the hands of the assessee. Since the assessee was not able to provide any plausible explanation regarding the excess cash deposits in his bank account, there was no infirmity on the part of CIT(A) in confirming levy of penalty u/s 271(1)(c) of the Act in the hands of the assessee.

Issues Involved:
1. Condonation of Delay
2. Levy of Penalty under Section 271AAA
3. Levy of Penalty under Section 271(1)(c)
4. Unexplained Investments and Bank Deposits
5. Undisclosed Capital Gains

Detailed Analysis:

1. Condonation of Delay:
The appeals filed by the assessee were time-barred by 282 and 332 days. The assessee submitted affidavits explaining the delay, attributing it to inadvertence and negligence by the Chartered Accountant. The Tribunal observed that the delay was not deliberate or intentional and condoned the delay in the interest of justice.

2. Levy of Penalty under Section 271AAA:
Undisclosed Consideration on Sale of Land (Rs. 1,89,43,840/-):
The assessee sold land and declared capital gains. Based on seized materials, the Assessing Officer added Rs. 1,89,43,840/- as undisclosed consideration. The High Court upheld the quantum addition, and the Supreme Court dismissed the SLP. The Tribunal confirmed the penalty under Section 271AAA, noting the seized documents were found at the assessee's premises and were not disputed by the assessee.

Protective Addition for Undisclosed Capital Gain (Rs. 1,48,00,000/-):
The Assessing Officer made a protective addition of Rs. 1,48,00,000/- based on seized documents. The Tribunal held that penalty cannot be levied on protective additions, citing various judicial precedents. The penalty under Section 271AAA was deleted.

3. Levy of Penalty under Section 271(1)(c):
A.Y. 2005-06 (Rs. 5,13,833/-):
The addition was based on material not seized during the search. The Tribunal noted that similar additions in the case of the co-owner were deleted. The penalty under Section 271(1)(c) was deleted.

A.Y. 2006-07 (Rs. 86,60,942/-):
The addition was based on seized documents. The Tribunal noted that similar additions in the case of the co-owner were deleted. The penalty under Section 271(1)(c) was deleted.

A.Y. 2007-08 (Rs. 45,99,000/-):
The addition was based on seized documents. The Tribunal noted that the Assessing Officer did not verify the transaction with third parties. The penalty under Section 271(1)(c) was deleted.

A.Y. 2008-09 (Rs. 2,00,000/- and Rs. 3,46,930/-):
The addition was based on seized documents. The Tribunal noted that similar additions in the case of the co-owner were deleted. The penalty under Section 271(1)(c) was deleted.

A.Y. 2009-10 (Rs. 2,61,93,070/- and Rs. 53,16,417/-):
The addition of Rs. 2,61,93,070/- was based on seized documents. The Tribunal noted that similar additions in the case of the co-owner were deleted. The penalty under Section 271(1)(c) was deleted. However, the penalty on Rs. 53,16,417/- was upheld as the assessee failed to explain the source of bank deposits.

A.Y. 2010-11 (Rs. 33,83,768/-):
The addition was based on unexplained bank deposits. The Tribunal noted that the assessee failed to provide any explanation. The penalty under Section 271(1)(c) was upheld.

4. Unexplained Investments and Bank Deposits:
The Tribunal noted that the Assessing Officer failed to verify the transactions with third parties and relied solely on seized documents. In cases where the assessee provided explanations or where similar additions were deleted in the case of co-owners, the penalties were deleted.

5. Undisclosed Capital Gains:
The Tribunal observed that the Assessing Officer failed to bring corroborative evidence to support the additions based on seized documents. In cases where similar additions were deleted in the case of co-owners, the penalties were deleted.

Conclusion:
The Tribunal allowed some appeals, deleted penalties in cases where similar additions were deleted in co-owners' cases, and upheld penalties where the assessee failed to provide explanations for unexplained bank deposits.

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