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10-06-2019, Shri Balaji Industrial Engineering, Section 271AAB, Tribunal Jaipur

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1 week 1 day ago #9709 by amit
Section - 271AAB, 132, 69, 69B, 139(1)
Order Date - 10-06-2019
Favouring - Assessee
Court - Tribunal Jaipur
Appellant - Shri Balaji Industrial Engineering Ltd.
Respondent - ACIT
Justice - RAMESH C SHARMA, AM & VIJAY PAL RAO, JM
Citation - 619Taxpundit125
Appeal No. - ITA No. 1014/JP/2016
Asstt. Year - 2013-14

Order

PER : VIJAY PAL RAO, J.M.

This appeal by the assessee is directed against the order dated 09.09.2016 of the ld. CIT(A), Jaipur arising from the penalty order passed U/s 271AAB of the I.T. Act for the assessment year 2013-14.

The assessee has raised following ground:-

“1. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the penalty of Rs. 19,50,000/- under section 271AAB as imposed by ld. AO. The Action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty amounting to Rs. 19,50,000/- imposed under section 271AAB.

2. The assessee company carves its rights to add, amend or alter any of the grounds on or before the hearing.”

2. The assessee has also raised additional ground which reads as under:-

“In the facts and circumstances of the case and in law, the ld. AO erred in treating the declared income during the course of search as ‘undisclosed income’ within the meaning as defined in section 271AAB. Action of the ld. AO is illegal. Relief may please be granted by quashing the penalty order”

3. We have heard the ld. AR as well as the d. DR on the admission of the additional ground, we find that the assessee has raised a legal issue in the additional ground that the income surrendered by the assessee during the course of search is not ‘undisclosed income’ within the meaning as def ned in the explanation to Section 271AAB of the IT Act. Therefore, the additional ground raised by the assessee is purely a question of law and does not involve investigation of any new facts or inquiry for adjudication of the same. There is no quarrel on the point that the parties in appeal can raise a fresh plea or ground before this Tribunal for the first time so long as the relevant facts for adjudication of such legal plea are already on record. Therefore, once the relevant facts are already on record for adjudication of the question raised in the additional ground and no new facts are required to be investigated then in view of the decision of the Hon’ble Supreme Court in case of NTPC vs. CIT 229 ITR 383 the additional ground raised by the assessee is admitted for adjudication along with the main ground of appeal. We may make it clear that the additional ground raised by the assessee is only a plea in respect of the main ground raised in the memo of appeal.

4. There was a search and seizure action U/s 132(1) of the Incometax Act on 06.11.2012 at various premises of Kanodia Group to which the assessee belongs. Thus, the assessee was also covered by the search and seizure action and statement of Shri kailash Kanodia a director of the assessee was recorded U/s 132(4) of the Act on 06.11.2012 & 07.11.2012. In those statements he disclosed/surrendered a sum of Rs. 2 crore on his behalf and equal amount of Rs 2 crore on behalf of his son Shri Abhishak Kanodia total amounting to Rs. 4 crore. Thereafter vide letter dated 25.01.2013 of Shri Kailash Kanodia also surrendered a sum of Rs. 65,00,000/- on behalf of the assessee company on account of cash purchase of raw material. The assessee filed its return of income U/s 139(1) of the Act on 28.09.2013 declaring total income as loss of Rs. 72,92,396/-. This loss was due to unabsorbed depreciation which has been carried forward. The assessee filed its revised return of income on 21.03.2015 in which undisclosed income of Rs. 65,00,000/- was also declared as surrendered vide letter dated 25.01.2013. The AO has completed the assessment on the revised return of income accepting the surrender income of Rs. 65,00,000/-. Subsequently, The AO initiated the proceedings U/s 271AAB of the Act by issuing show cause notice dated 19.08.2015. The assessee objected to the proposed levy of penalty U/s
271AAB of the Act. The AO while passing the order dated 29.09.2015 levied penalty @ 30% of undisclosed income amounting to Rs. 19,50,000/-. The assessee challenged the action of the AO before the ld. CIT(A) but could not succeed.

5. Before us, the ld. AR of the assessee has submitted that during the course of search on 06.11.2012 a paper Exhibit-2 page 25 was found and seized containing the details of payment made in cash for purchase of raw material. The ld. AR has referred to the said seized document and submitted that it contains the date of payment for purchase of iron ore in cash however, at the time of search the stock found was duly recorded in the accounts. Therefore, there was no discrepancy found in the stock of the assessee at the time of search and hence the payment made in cash for purchase of raw material itself

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