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TMI Blog2021 (9) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case the very initiation of penalty proceeding under Section 271(1)(c) is contrary to the statutory provision, palpably bad and not maintainable in the eye of law - taking into consideration the entire aspect of the matter we find that initiation of the penalty proceeding is erroneous and is not sustainable. Thus, the same is hereby quashed. - Decided against revenue. - I.T.A. No. 3431/Ahd/2015 - - - Dated:- 9-9-2021 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Revenue : Shri Om Prakash Singh, CIT DR For the Assessee : Shri Deepak Rindani, AR ORDER PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the Revenue is directed against the order dated 07.09.2015 passed by the Commissioner of Income Tax (Appeals)-1, Rajkot arising out of the order dated 31.12.2013 passed by the ITO, Ward 9(1), Ahmedabad under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred as to the Act ) for the Assessment Year (A.Y.) 2010-11. 2. The facts culled out from the records is this that the assessment under Section 143(3) of the Act was completed on 21.02.2012 determining total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nearly projects of Rushabh Vatika situated in Chekla Village having identical business of land as determined by the Hon ble Settlement Commission. The relevant observation made by the Ld. CIT(A) in the quantum appeal is as follows:- 6.6 So far as the estimation of profit which should be taxed in the hands of the appellant is concerned, it is pointed out by the appellant that the Hon ble Commission has determined the net profit which should be charged in respect of the projects Kothariya 172, Silver Stone and Silver Springs @30% in place of 20% disclosed in the returns of income as well as in the application submitted before the Settlement Commission. This is also a fact that both Silver Springs and Rushabh Vatika are nearby projects situated in Chekhla Village having identical business of selling of plots of land. The Hon'ble Commission while estimating the profits of Silver Springs @ 30% has duly considered the business activities of nearby Rushabh Vatika Project for the purpose. Therefore, it cannot be disputed that the estimation of profits of the appellant in respect of Rushabh Vatika Project has to be in tune with the estimation of profits in the cases of Silver S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se from Ahmedabad to Rajkot and requested to keep the penalty proceedings pending. Section 271(1)(c) of the I.T Act provides that where the assessing officer, in the course of any proceedings under the IT Act, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Penalty is leviable in view of Explanation 1 to Section 271(1)(c) of the Act also. The Explanation 1 to section 271(1)(c) is reproduced as under :- Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act, - (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) to be false, or (B) such person offers an explanation which he is not able to substantiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urate particulars of income. 7. In view of the discussions made in the preceding paragraphs, it is clear that the assessee had consciously and deliberately concealed income by way of furnishing inaccurate particulars of income to the tune of ₹ 4,15,88,930/- and hence it is liable for penalty u/s. 271(1)(c) of the Act. Further, though delivered on different set of facts, it is pertinent to refer to the decision of Hon'ble Karnataka High Court in the case of CIT V/ s. Sree Valliappa Textiles (2007) 294 ITR 322 wherein it has been held that Section 271(1)(c) has to be strictly applied in the larger interest of discipline in filling correct returns by the assessees. 8. Therefore, I am satisfied that this is a fit case for levy of penalty u/s 271(1)(c) of the Act. The maximum penalty leviable @300% of the tax sought to evaded works out to ₹ 3,85,52,980/- and minimum penalty @100% comes to ₹ 1,28,50,980/-. Looking to the facts of the case, I levy minimum penalty of ₹ 1,28,50,980/- u/s. 271(1)(c) of the I.T. Act. 8. The Ld. CIT(A) while dealing this particular aspect of the matter observed as follows:- I find that the search was cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable in the case. In view of above, I hold that the order of levying penalty u/s 271(1)(c) of the Act cannot be sustained on this ground itself and hence the levy of penalty is directed to be deleted. It would also be necessary to deal with the second aspect of the contentions advanced on behalf of the appellant which are with regard to the provisions of Sec. 271AAA itself. In this regard/ the A.R. submitted before me that while Sec. 271AAA provides for penalty to be computed @ 10% of the undisclosed income of the specified previous year, sub-section (2) thereof provides that nothing contained in sub-section (1) shall apply if the assessee in a statement u/s 132(4) admits the undisclosed income, specifies the manner in which it has been derived, substantiates the manner and pays tax with interest thereon. On this aspect, the A.R. argued that in the case of the appellant all the said three conditions of sub-section (2) were duly fulfilled because the undisclosed income was admitted u/s 132(4), it was specified that the same was derived upon sale of plots in a specific real estate scheme named Rushabh Vatika of Chekhla, the manner of deriving the same was in cash which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the returns of relevant years of relevant concerns and had also clearly declared the same with an understanding that if on the said income they will be entitled to get the benefit of penalty u/s 271AAA, than they will get the said benefit. Thus, it can be seen on an overall perusal of the entire statement read with seized material and the assessment order in the light of subsequent appellate orders, that the appellant was forthright in making disclosure in the light of specific provisions of the Act and thus even the investigating officer cannot be said to be unaware of the same. In view of above, in addition to my findings earlier above with regard to validity of order u/s 271(1)(c), the levy of penalty is deleted even if the same can be said to have been levied u/s 271AAA of the Act. In the result, ground no. 1 is allowed. 9. The argument advanced by the Ld. Counsel appearing for the assessee by way of a written submission is reproduced hereinbelow:- (i) No penalty is levied by the A.O, on the amount of income on admitted sales offered by the firm in ROI i.e. ₹ 1,03,97,233/- being 20% profit of total disclosure of ₹ 5,19,86,163/-; hence no penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in course of search proceeding in relation to undisclosed sales amounts of real estate plots. Such undisclosed income of the specified previous year is found, in the instant case, during search proceedings initiated under Section 132 of the Act on 15.09.2009 i.e. on or after 01.06.2007 but before 01.07.2012. Therefore, admittedly the appellant s case coming under the purview of the statutory provision of Section 271AAA of the Act. However, Section 271AAA (3) specifically prohibits initiation of penalty proceeding under Section 271(1)(c) in respect of an undisclosed income as referred under sub-Section 1 of Section 271AAA. However, we find that the impugned penalty proceeding has been initiated and culminated into imposition of penalty under Section 271(1)(c) but the same has been explicitly prohibited by the provision of sub-Section 3 of Section 271AAA particularly where undisclosed income has been found during the search proceeding. This provision left no space for confusion or doubt in barring the Ld. AO to assume jurisdiction to levy penalty under Section 271(1)(c) of the Act. Thus, in the present facts and circumstances of the case the very initiation of penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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