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TMI Blog2017 (8) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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. - Decided in favour of assessee In assessment year 2008-09 AO had initiated penalty proceedings on that basis. Further, addition which has been made in the hands of assessee on account of evidence found and also on estimation of on-money. CIT(A) has totally changed the colour of addition though on account of on-money the addition made by the AO has been deleted and has been held to be unwarranted and further, the CIT(A) has directed assessment of on-money of ₹ 12 lakhs in assessment year 2007-08 instead of amount offered by the assessee in assessment year 2008-09 and had worked out the balance addition on account of on-money at ₹ 13,48,300/-. CIT(A) has changed the colour of addition, then it is incumbent upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 confirming the penalty of ₹ 4,12,5801-levied by the A.O u/s. 271(1)(c) of the Act. 2. On the facts and in law the ld. CIT(A) has not appreciated the fact that- (i) the A.O has initiated penalty on different count i.e. estimating on money @ 50% of the total amount of business receipts credited in the books of account, whereas, the CIT(A) has confirmed addition in respect of specific plots @ 17.5% of the sale consideration which is on different count i.e. not on the count in respect of which the A.O has made addition and initiated penalty proceedings. (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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 considering the fact that the assessee may have paid some amounts in cash for making its purchases, the Assessing Officer opined to take net cash receipts in this case at 50% of the total sale consideration for the years under consideration. The tabulated year-wise cash component is available at page No. 6 of the assessment order. Thus, in assessment year 2007-08, net on money receipts worked out at ₹ 33,65,995/- and the same was added to the total income of the assessee. In assessment year 2008-09, addition was made of ₹ 1,51,10,774/-.The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act after recording satisfaction that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ledger accounts are ₹ 1,65,71,925/-. The A.O has pointed out in the tabular chart of on-money specifically in respect of plots sold for ₹ 16,11,500/-. Therefore, the on money receipts of remaining plots sold for recorded consideration of ₹ 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% and 20%] of ₹ 1,49,60,425/- works out to ₹ 26,18,074/- The total on- money which is required to be taxed is therefore ₹ 50,48,300/- (i.e. ₹ 24,30,226 +Rs.26,18,074). The appellant has offered to tax ₹ 25,00,000/- in respect of these transactions relating to plots in Hindustan Nagar Project in return of income filed for A.Y.2008-09. The resultant addition on this count is ₹ 25,48,300/-. The A.O is directed to make addition accordingly. As already pointed out in earlier paragraph that the appellant has offered to tax an amount of on-money of ₹ 12,00,000/- in A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that the CIT(A) partly confirmed the addition to the extent of ₹ 12,00,000/- in assessment year 2007-2008 and ₹ 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 Officer held that in view of the entire circumstances of the case, he was satisfied that the assessee had furnished inaccurate particulars in respect of above income and hence, penalty was levied at ₹ 4,03,200/- u/s. 271(1)(c) of the Act. 10. The CIT(A) while deleting levy of penalty u/s 271(1) (c) of the Act noted that the Tribunal had confirmed the decision of CIT(A) in direction to the Assessing Officer to tax said income of ₹ 12,00,000/- in assessment year 2007-2008 instead of assessment year 2008-2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 13,48,000/- and hence, the Assessing Officer was justified in imposing penalty of ₹ 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 hereby condoned. 13. The Ld. AR for the assessee pointed out that consequent to search action, loose papers were found which recorded on money receipt for certain transactions. He further pointed that the assessee admitted on money receipt in his statement recorded u/s. 132(4) of the Act at totaling ₹ 57.82 Lakhs. The Ld. AR further pointed out that the additional income offered during search was declared in the hand of Managing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds 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 ₹ 1.51 Crore against which in the hands of the Managing Director, the assessee had offered sum of ₹ 57.82 Lakhs and net addition of ₹ 93,28,774/- was made. He further pointed out that CIT(A) holds that the estimation of addition was on basis of specific evidence. He referred to the CIT(A) order in Para 4.9 and pointed out that the basis of addition had changed. He stresses that additions were not made on the basis of clinching evidence but was on estimation and hence, levy of penalty u/s. 271(1) (c) of the Act was not justified. He further refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imating 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 also referred to the tabulated details prepared by the Assessing Officer and noted that in some cases of purchase, on-money was also to be paid. The CIT(A) vide para 4.6 held as under:- 4.6 In view of the above facts and discussion and also in view of the ratio laid down by the decisions mentioned in the preceding paragraph relied on by the appellant, I am of the considered view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores 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 ₹ 1,49,60,425/- at ₹ 26,18,704/-. The total on-money thus, was held to be taxed in the hands of assessee at ₹ 50,48,300/-, ₹ 24,30,226/- evidence found plus ₹ 26,18,074/- estimation of on-money. As against the same, the assessee had offered to tax ₹ 25 lakhs in assessment year 2008-09 and hence, resultant addition was worked out at ₹ 25,48,300/-. The CIT(A) further observed that where ₹ 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 ₹ 13,48,300/-. The Assessing Officer also initiated penalty proceedings in respect of said addition of ₹ 13,48,300/-. 21. First, we shall take the factual aspects of assessment year 2007-08, wherein, in the first instance, the Assessing Officer had made addition on account of estimation of on-money @ 50% of tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 ₹ 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 ₹ 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 making reference to the addition of ₹ 12 lakhs observed that it proves that the assessee has concealed the income and also furnished inaccurate particulars of income. Further, in para 6 of the penalty order, the Assessing Officer was satisfied that the assessee has concealed the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alment, 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. 27. In assessment year 2008-09, the first addition made by the Assessing Officer by estimating 50% as on-money on recorded consideration has been held to be unwarranted vide para 4.6 by the CIT(A). The Assessing Officer had initiated penalty proceedings on that basis. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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