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TMI Blog2024 (8) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld. AR would have no application to the facts of the present case since the limb which would apply to assessee s case has clearly been spelt by Ld. AO in the penalty order. No other limb could have been invoked against the assessee. The arguments of Ld. AR, in this regard, stand rejected. In the present case, the limb was clearly spelt out and the assessee could not offer any explanation against the impugned addition. The assessee never raised any grievance against notices of penalty before lower authorities and merely pleaded to keep the proceedings in abeyance till the disposal of quantum appeals by Hon ble High Court of Madras. Penalty order is barred by limitation u/s 275(1) - The extant statutory provision provides that in case the assessment order is subject matter of appeal before appropriate authorities including Tribunal, no order shall be passed after the expiry of financial year in which the relevant proceedings in which penalty is initiated are completed or within one year from the end of the month in which the appellate order is received, whichever is later. In the present case Tribunal has passed order in quantum appeal on 27-09-2019. Considering the same, penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal in abeyance till disposal of assessee s quantum appeal by Hon ble High Court. However, Ld. CIT(A) held that the assessee did not adduce any valid grounds on merits against levy of penalty. Accordingly, the penalty was confirmed against which the assessee is in further appeal before us with following grounds of appeal: - 1. The orders of the learned Commissioner of Income Tax (Appeals) ('CIT(A)') is against the law, the facts and circumstances of the case and the principles of equity and natural justice. 2. The CIT(A) erred in completing the proceedings in an arbitrary manner without considering the submissions made by the Appellant. The CIT(A) failed to appreciate that the Ld AO has failed to give sufficient opportunity of being heard to the appellant and merely upheld the order of the AO. The order of the AO and the CIT(A) is in gross violation of principles of equity and natural justice. 3. The CIT(A) erred in upholding the order of the AO imposing penalty under section 271AAB of the Act without appreciating that income assessed as disallowance / addition does not fall within the purview of undisclosed income as defined in explanation (c) to section 271AAB of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard rival submissions, oral as well as written and upon perusal of case records, our adjudication would be as under. 5. Upon perusal of Tribunal s quantum order in ITA No.1081/Chny/2019 dated 27-09-2019, it could be seen that the assessee group was searched u/s 132 on 20-11-2014 and an assessment was framed u/s 143(3) r.w.s. 153B(1)(b) of the Act on 29-12-2017. The assessee was engaged in Lottery business. In para-3 of the assessment order, it was noted by Ld. AO that the assessee did not maintain details of winners of prize money of less than Rs. 10,000/- and also did not keep unsold tickets of paper lotteries. Sri Prasan Chand Jain, Sr. Executive, in his deposition recorded on 22-11-2014 stated that record for this data was not kept and it was not possible to keep such record. Various other statements were recorded wherein discrepancies were admitted. The key persons of the assessee, in statement recorded u/s 132(4), agreed to disclose additional amount of Rs. 203 Crores for the group over and above the regular income. During post search investigation on 16-01-2015, Shri Naresh C. Mangal, Director submitted a letter in which he agreed to offer Rs. 200 Crores in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be acceptable as additional income offered to tax at the time of search operation. As stated earlier, the said sum of ₹. 203 crores was admitted as additional income voluntarily expressing its inability to explain the issues that were raised in respect of accounting for of the returned or unsold paper lottery tickets and the recipients of the prize winning money in the online lottery. Thus, further investigation was thwarted and in the circumstances, it appears that the assessee has acted in with a preconceived plan to take the situation to its advantage. Further, Service Tax Refund of ₹. 77.80 Crores whereas the variation in income admission is at ₹. 80,53,26,740/- and the assesse has failed to explain reasons for this variation. Hence, by rejecting assessee's explanation the deficit amount of ₹. 80,53,26,740/- not admitted during the course of search was brought to tax. On appeal, the ld. CIT(A) confirmed the addition. 4.1 In this case, it is an admitted fact that during the course of search under section 132 of the Act, the Department has not impounded any incriminating documents or materials against the assessee. The Director of the assessee compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds service tax refund, the Assessing Officer cannot held that the benefit of service tax refund accrues to the assessee in the assessment year 2015-16 automatically. Moreover, the assessee also filed an undertaking before the Assessing Officer by way of an affidavit that the actual receipt of the service tax refund will be offered to tax, we are of the considered opinion that the Assessing Officer was not factually and legally correct to bring the same to tax in the assessment year in which the assessee has not actually received the refund or accrued. Under the above facts and circumstances, the addition to the extent of ₹. 77.80 crores made by the Assessing Officer to bring the service tax refund under tax net stands deleted. 4.3 With regard to the balance addition of ₹. 2,73,26,740/- [₹.80,53,26,740- ₹. 77,80,00,000], towards variation in additional income admitted, the ld. Counsel for the assessee has not advanced any argument or the assessee has furnished any material evidence on record. When the assessee was asked to explain with regard to the short fall in income that was admitted under section 132(4) of the Act being ₹. 80,53,26,740/-, before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s case has clearly been spelt by Ld. AO in the penalty order. No other limb could have been invoked against the assessee. The arguments of Ld. AR, in this regard, stand rejected. 10. The case law of Hon ble High Court of Madras in Pr. CIT vs. Shri R. Elangovan (TCA No.770 ors. dated 30-03-2021) is distinguishable. Upon perusal of para 15 of the order, it is clear that Ld. AO did not mention the specific limb which would apply to the case of the assessee. Further, the assessee was strenuously canvassing the jurisdictional issue from the inception. The same is not the case here. In the present case, the limb was clearly spelt out and the assessee could not offer any explanation against the impugned addition. The assessee never raised any grievance against notices of penalty before lower authorities and merely pleaded to keep the proceedings in abeyance till the disposal of quantum appeals by Hon ble High Court of Madras. Therefore, this case law renders no support to the case of the assessee. Similarly, the other case laws have also been found to be not applicable to the facts of the present case and therefore, not specifically dealt with. 11. The Ld. AR has argued that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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