INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “A”: NEW DELHI

BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
AND

SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
(Through Video Conferencing)

ITA No. 1509/Del/2015

(Assessment Year: 2009-10)

Ved Parkash Bharti, Vs. ACIT,

S/o. Shri Parmanand, Central Circle,

H. No. 1049-50, Sector-13-17, Karnal

HUDA, Panipat

PAN: AAVPB5477D

(Appellant) (Respondent)

Assessee by : Shri Amit Goel, CA
Shri Nippun Mittal, CA
Revenue by: Shri Sanjay Tripathi, Sr. DR
Date of Hearing
Date of pronouncement 11/11/2020
25/11/2020

O R D E R

PER PRASHANT MAHARISHI, A. M.

1. This appeal is filed by the assessee against the order of the ld CIT(A)-3,
Gurgaon dated 05.01.2015 for the Assessment Year 2009-10, wherein
penalty u/s 271(1)(c) of the Act levied by the Assistant Commissioner of

Income Tax, Central Circle, Karnal amounting to Rs. 2860160/- vide
order dated 30.09.2013 u/s 271(1)(c) of the Act is confirmed.
2. The assessee has raised the following grounds of appeal:-

“1) The search & seizure operation was conducted on Ved Bharti Group
of case on 8-4-2010 & 9-4-2010. During the-" search operation a
pen drive was found & seized from the vehicle no. HR06N0063
parked in front of Residence of assessee. The vehicle was in the
name of Company in which Assessee is one of the director. In the
per drive transaction of Rs. 5,43,71,946/- were there for which
assessee explained 4,54,54,816/- transactions and the balance
amount of Rs. 89,17,140/- remained unexplained and addition were
made in the returned income.

2) During search operation the assessee surrendered Rs. 8 Crore as
per statement under section 132(4) dated 8-4- 2014 & 9-4-2014.

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3) The assessee had declared 6.04 Crore in the returns of income filed
for AY 2011-12 filed u/s 153A(1).

4) To fulfill the commitment made regarding surrender as per
statement under section 234 the A.O made addition of Rs. 110 Lacs
for A.Y. 2011-12 and 89,17,140 in A.Y. 2009-10. The assessee duly
accepted the addition made by the Assessing Officer as he has
already surrendered the amount in statement given u/s 132(4).

5) The assessee did not prefer any appeal since he wanted peace of
mind & wanted to avoid any litigation.

6) During Assessment proceeding the assessee furnished that he had
agreed for addition of Rs. 89,17,140/- since it was declared in the
statement given u/s 132(4) in which he surrendered the income.

7) The A.O. levied penalty u/s 271(1)© since the A.O. believed that
the assessee has not explained the entries of Rs. 89,17,140/-.

8) Further in appeal before Commissioner of Income Tax Appeal-3,
Gurgaon. The assessee gave the reply in which he relied upon the
case law of Prem Arora vs. Deputy Commissioner of Income Tax
(2012) 78DTR (Delhi) Tribunal in which the ITAT deleted the
additions in which the assessee has disclosed the surrender amount
in returned income u/s 153(A) and deleted the penalty u/s
271(l)(c).”

3. Brief facts of the case shows that there was a search on the assessee on

08-9.04.2010. Consequent to that assessee who is deriving income from

salary, business and other sources was issued notice u/s 153A on

10.02.2011. In response assessee submitted that original return filed

may be treated as return u/s 153A. In the return of income the assessee

declared regular income of Rs. 222131/- and agricultural income of Rs.

88200/-. Assessment u/s 153A was passed wherein, addition of Rs.

8917140/- was made with respect to surrendered income and deficit

therein. Assessment order u/s 153A was passed on 25.03.2013

determining total taxable income of Rs. 9139271/-. During the course of

assessment proceedings the ld AO initiated penalty proceedings stating

that assessee is liable for penalty u/s 271(1)(c) of the Act for concealing

and furnishing inaccurate particulars of his income.

4. The assessee did not prefer any further appeal.

5. Therefore, the ld AO initiated penalty proceedings. In response to the

penalty proceedings the assessee submitted that assessee has accepted

this addition and explained the entries of the disclosures. No

documentary evidence etc are found during search. Assessee also stated
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that it has accepted the addition to buy peace and to avoid further
litigation. The ld AO rejected the contentions of the assessee stating that
assessee has concealed income of Rs. 8917140/- and levied a penalty of
Rs. 2860160/- by the order dated 30.09.2013.
6. The assessee preferred appeal before the ld CIT(A) who confirmed the
same and therefore, assessee is in appeal before us.
7. At the time of hearing the assessee submitted a paper book wherein, at
page No. 19 he referred to the application for admission of additional
ground of appeal stating that no satisfaction has been recorded by the ld
AO in the assessment order and therefore penalty orders are liable to be
cancelled. He also raised the second ground that the notice u/s 274
issued in this case is defective and contrary to the provision of law and
therefore penalty u/s 271(1)(c) of the Act is liable to be cancelled. He
submitted that the additional ground raised by the assessee are though
covered in ground No. 1 of the appeal of the assessee, however, they
bring out the specific reason for raising the above ground. He submitted
that these grounds are purely legal in nature and goes to the root of the
matter and therefore, should be admitted.
8. The ld DR vehemently objected to the admission of the additional ground
and stated that same were never raised before the lower authorities.
9. We have carefully considered the rival contentions and find that additional
ground raised by the assessee goes to the root of the matter of levy of
penalty as it challenges the validity of the penalty itself. These are legal
ground, does not require any further investigation of the fact and hence
same are admitted.
10. On the additional ground we have heard rival contentions and find that in
the assessment order itself the ld AO at the time of making the
assessment order did not specify any one limb of the reason for levy of
penalty. In the assessment order he initiated the penalty proceedings
stating that assessee is liable for penalty u/s 271(1)(c) of the Act for
concealing and furnishing inaccurate particulars of income. In the show
cause notice issued u/s 274 of the Act read with section 271(1)(c) of the
Act dated 25.03.2013 he has not struck off any of the twin charges. At

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the time of passing the penalty order the ld AO has levied the penalty for
concealment of the income. The ld AR has relied upon the decision of the
Hon’ble Delhi High Court in Pr. CIT Vs. Sahara India Life insurance
Company Ltd 2019 (8) TMI-409. The Hon’ble Delhi High Court in the
above decision relying upon the decision of the Hon’ble Karnataka High
Court in case of CIT Vs. Manjunatha Cotton and Ginning Factory and CIT
Vs. SSA’s Emerald Meadows has held in para NO. 21 that the notice
issued by the ld AO for levy of the penalty would be bad in law if it did
not specify which limb of section 271(1)(c) the penalty proceedings have
been initiated. In the present case the notice issued by the ld AO section
271(1)(c) is silent. Even otherwise in the assessment order passed the ld
AO was not clear whether the penalty was leviable for concealment of
income or for furnishing inaccurate particulars of income. Thus, it was not
discernable clearly in which limb the assessee was to be penalized. The
Hon’ble Delhi High Court in 171 Taxmann 156 in Virgo Marketing Pvt. Ltd
has held that if one is unable to discern from the reading of the
assessment order why the ld AO choose to initiate penalty proceedings
against the assessee and under which limb the penalty proceedings
cannot be upheld. In view of the above facts and the binding judicial
precedents of the Hon’ble High Court we set aside the orders of the lower
authorities and direct the ld AO to delete the penalty u/s 271(1)(c) of the
Act of Rs. 2860160/-.
11. Accordingly, the appeal filed by the assessee in ITA No. 1509/Del/2015 is
allowed.
Order pronounced in the open court on 25/11/2020.

- Sd/-
(PRASHANT MAHARISHI)
Sd/-
(SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER

JUDICIAL MEMBER

Dated : 25/11/2020
A K Keot

Copy forwarded to

1. Applicant
2. Respondent

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3. CIT
4. CIT (A)
5. DR:ITAT

ASSISTANT REGISTRAR
ITAT, New Delhi

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Date of dictation 25.11.2020
Date on which the typed draft is placed before the 25.11.2020
dictating member 25.11.2020
Date on which the typed draft is placed before the 25.11.2020
other member 25.11.2020
Date on which the approved draft comes to the Sr. 25.11.2020
PS/ PS 25.11.2020
Date on which the fair order is placed before the 25.11.2020
dictating member for pronouncement
Date on which the fair order comes back to the Sr.
PS/ PS
Date on which the final order is uploaded on the
website of ITAT
date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant
Registrar for signature on the order
Date of dispatch of the order

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