Sunilkumar N.Agrawal, Ahmedabad vs Assessee

This is the assessee's appeal against the order of Ld. CIT(A)-XI, Ahmedabad dated 10-07-2013 for A.Y. 2006-07.

I.T.A No. 2113/Ahd/2013 A.Y. 2006-07 Page No 2 Sunilkumar N. Agrawal vs. ITO

2. The facts as culled out from the material on record are as under.

3. Assessee is an individual stated to be deriving income from software commission. Assessee filed his return of income for A.Y. 2006-07 on 23- 06-2006 declaring total income at Rs. 1,10,361/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 24-12-2008 and the total income was determined at Rs. 17,85,360/- by making addition of Rs. 16,75,000/- as unexplained investment u/s. 69 of the Act. On the aforesaid addition of Rs. 16,75,000/- made, AO levied penalty u/s. 271(1)(c) of Rs. 5,44,851/- vide order dated 30.03.2012. Aggrieved by the aforesaid order of AO, Assessee carried the matter before CIT(A) who vide order dated 10/07/2013 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), Assessee is now in appeal before us and has raised the following grounds:-

"In view of the facts and circumstances of the case, the learned Assessing Officer/Commissioner of Income Tax (Appeals) erred -

1. In not appreciating the written submissions made before him dated 19.06.2013 wherein it was inter alia contended that the penalty order u/s. 271(1)(c) is to be kept in abeyance till the outcome of the ITAT decision in quantum proceedings.

2. Without prejudice, it is prayed that as contended, the income sought to be evaded has already been taxed in the hands of brother Shri Rajeshkumar Agarwal, and as such, it is amount to double taxation, therefore, the penalty is not leviable and liable to be deleted.

3. Even otherwise, in view of the facts and circumstances of the case, it is prayed that there is no justification for initiating as well as levying penalty u/s. 271(1)(c), and therefore, the penalty levied may please be cancelled."

I.T.A No. 2113/Ahd/2013 A.Y. 2006-07 Page No 3 Sunilkumar N. Agrawal vs. ITO

4. Before us, Ld. AR submitted that though assessee has raised various grounds but the only issue is with respect to levy of penalty u/s. 271(1)(c) of the Act.

5. Before us, Ld. AR submitted that against the quantum addition made and confirmed by CIT(A), assessee had preferred appeal before Tribunal. Hon'ble Tribunal vide order in ITA No. 1011/Ahd/2011 order dated 12-12- 14 had substantially deleted the additions and had only confirmed the additions of Rs. 1,16,000/-. He therefore submitted that when substantial additions have been deleted, there is no case of levy of penalty. He further submitted that AO had levied the penalty on the entire additions of Rs. 16.75 lacs but since substantial additions have been deleted, penalty u/s. 271(1)(c) could not have been levied on the entire additions more so when the assessee had submitted the explanation and further it is a settled law that penalty proceedings and assessment proceedings are distinct and separate. He therefore submitted that the penalty levied by the AO be deleted. Ld. DR on the other hand supported the order of AO and CIT(A).

6. We have heard the rival submissions and perused the material available on record. We find that AO had made an addition of Rs. 16.75 lacs and the Co-ordinate Bench of Tribunal has deleted most of the additions and only upheld the addition of Rs. 1,16,000/- but however penalty u/s. 271(1)(c) has been levied on the entire addition made by AO. With respect to the additions that have been confirmed by the Co-ordinate Bench of Tribunal, we find that before Tribunal, Assessee had filed confirmation letters for 3 credit entries, but however the addition was confirmed because Assesse could not prove beyond doubt the entries. It is well settled that the parameters of judging the justification for addition made in the assessment case of the assessee is different from the penalty I.T.A No. 2113/Ahd/2013 A.Y. 2006-07 Page No 4 Sunilkumar N. Agrawal vs. ITO imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceeding on the preponderance of probabilities, but no penalty could be imposed u/s 271(1)(c) of the Act on the preponderance of probabilities and Revenue has to prove that the claim by the assesses was not genuine or was inflated to reduce its tax liability. Considering the totality of the aforesaid facts, and relying on the decisions cited by the Ld AR, we are of the view that in the present case no penalty u/s 27l(1)(c) of the Act is leviable and therefore we direct its deletion. Thus this ground of Assessee is allowed.

7. In the result, the appeal of the Assessee is allowed.

Order pronounced in open court on the date mentioned hereinabove at caption page

Sd/- Sd/-

(SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 26/02/2015 ak

आदे श क ूितिल प अमे षत / Copy of Order Forwarded to:-

1. Assessee

2. Revenue

3. Concerned CIT

4. CIT (A)

5. DR, ITAT, Ahmedabad

6. Guard file.

By order/आदे श से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद