Case Law Details
Bharat Mahesh Malhotra Vs ITO (ITAT Mumbai)
We note that AO has noted that during the course of survey, assessee has agreed for declaration of Rs. 6 lacs as additional income. In the profit and loss account, it has duly declared, the said credit of Rs. 6 lacs. However, after adjustment of the expenses profit was Rs. 2,34,576/-. In these facts, AO of the opinion that assessee has not declared what he has agreed under survey and he added Rs. 6 lacs. Firstly, we note that this is not a case of concealment or furnishing of inaccurate particulars of income. Rs. 6 lacs declared during survey has been credited in the profit and loss account by the assessee. But, the AO was of the opinion that this should have been declared, over and above profit shown for the year. In our considered opinion, these facts do not lead to a conclusion that assessee is guilty of concealment or furnishing inaccurate particulars of income. Moreover, though we are not sitting in the merits of the case, it is settled law as declared by Hon’ble Supreme Court in the case of S. Kader Khan (25 taxmann.com 413), that statement of survey without any corroborative material cannot be the sole reason for addition to income. In this view of the matter, when the addition itself is on such a weak footing, penalty u/s. 271(1)(c) for such an addition is not at all sustainable. In this view of the matter, we set-aside orders of the authorities below and delete the levy of penalty in this case.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the Assessee is directed against the order of learned CIT(A)-1 dated 10.07.2019 and pertains to Assessment Year 2009-10. The issue raised is that Ld.CIT(A) erred in sustaining penalty levied u/s. 271(1)(c) of the Act amounting to Rs. 97,923/-.
2. Grounds of appeal read as under:-
1. That the order of the Ld. CIT(A) confirming the action of the Ld. Assessing Officer in levying penalty of Rs. 97,923/-under section 271(1 )(c) of the Income Tax Act, 1961 is against the provisions of law, facts circumstances of the case and deserves to be quashed.
2. That the Ld. CIT(A) has erred in law in confirming penalty under section 271(1)(c) levied by the Assessing Officer which is arbitrary and contrary to the provisions of law as show cause notice issued by the Ld. Assessing Officer is general in nature with mentioning specific charge of imposition of penalty.
3. That the issue in question now squarely covered by the decisions of the coordinate Benches of the ITAT, Delhi Benches in case of Sanjay Mitra Vs. DCIT, ITA no. 5206/Del/2016 and Ashwini Mongia Vs. ITO, ITA no. 6044/Del/2015. The penalty of Rs. 97,923/- needs to be deleted. Also, See: M/s Ocloa Laboratories Ltd. vs. ACIT, Circle – 23(1), New Delhi, ITA No. 4967/Del/2016.
4. That even on merits the Ld. CIT (A) has erred on facts and in law as the material placed on record was not considered in its proper perspective leading to erroneous conclusion.
5. That the order of the Ld. CIT(A) confirming the erroneous order of the Assessing Officer is bad in law and against the facts of the case.”
3. Brief facts of the case leading to the levy of penalty are that in this case AO noted that during survey u/s. 133A(1)(b) of the I.T.Act 1961 on 10.09.2008 statement on oath of the appellant was recorded and the appellant had declared additional income of Rs. 6,00,000. That however, ongoing through the profit and loss account, it was seen that after crediting Rs. 6,00,000/- which the appellant had declared during the course of survey, to the profit and loss account on the total receipts of Rs. 35,22,903/- net profit was shown at Rs. 2,34,576/- which worked out to 6.65%. Thus AO was not satisfied, he noted that additional income was agreed and declared during the course of survey. Hence, the same is to be added to the total income on agreed basis. Hence, the AO made addition for Rs. 6,00,000/-. On this addition penalty u/s. 271(1)(c) was levied and confirmed by the ld.CIT(A).
4. Against the above order, assessee is in appeal before us.
5. We have heard the ld. DR and perused the records. We note that AO has noted that during the course of survey, assessee has agreed for declaration of Rs. 6 lacs as additional income. In the profit and loss account, it has duly declared, the said credit of Rs. 6 lacs. However, after adjustment of the expenses profit was Rs. 2,34,576/-. In these facts, AO of the opinion that assessee has not declared what he has agreed under survey and he added Rs. 6 lacs. Firstly, we note that this is not a case of concealment or furnishing of inaccurate particulars of income. Rs. 6 lacs declared during survey has been credited in the profit and loss account by the assessee. But, the AO was of the opinion that this should have been declared, over and above profit shown for the year. In our considered opinion, these facts do not lead to a conclusion that assessee is guilty of concealment or furnishing inaccurate particulars of income. Moreover, though we are not sitting in the merits of the case, it is settled law as declared by Hon’ble Supreme Court in the case of S. Kader Khan (25 taxmann.com 413), that statement of survey without any corroborative material cannot be the sole reason for addition to income. In this view of the matter, when the addition itself is on such a weak footing, penalty u/s. 271(1)(c) for such an addition is not at all sustainable. In this view of the matter, we set-aside orders of the authorities below and delete the levy of penalty in this case.
6. In this result, assessees appeal stands allowed.
Pronounced in the open court on 10.03.2022.
