Saurabh Gupta vs DCIT

PER M. BALAGANESH, A. M.:

The appeal in ITA No.3600/Del/2023 for AY 2017-18, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. DIN & Order No: ITBA/NFAC/S/250/2023-24/1057061026(1) dated 14.10.2023 against the order of assessment passed u/s 271D of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.08.2022 by the Assessing Officer, JCIT, Range-4, New Delhi (hereinafter referred to as ‘ld. AO’).

The only effective issue to be decided in this appeal is as to whether the Learned NFAC was justified in confirming the levy of penalty under section 271(1)(c ) of the Act in the facts and circumstances of the instant case.

We have heard the rival submissions and perused the materials available on record. The assessee is an individual deriving income from salaries, capital gains and income from other sources. The original return of income was filed declaring total income of Rs. 6,33,680 which was duly processed under Section 143(1) of the Act accepting the returned income. The assessee based on the legal advise, filed revised return on 30-3-2015 declaring total income at Rs 50,47,710 after withdrawing the claim of exemption under section 10(38) of the Act in the sum of Rs 44,14,029 and paid the remaining additional tax with interest thereon. This revised return was also duly processed under section 143(1) of the Act on 2-6-2015 accepting the revised return. The assessment was completed under Section 143(3) of the Act on 13-12-2016 determining total income at Rs. 50,47,710. It is pertinent to note that the penalty proceedings under section 271(1)(c) of the Act were not initiated on the withdrawal of claim of long term capital gains exemption by the Learned AO while completing the assessment. The said assessment was sought to be revised by the Learned Principal Commissioner of Income Tax- 19, New Delhi vide revision order passed under Section 263 of the Act dated 23-3-2018. Pursuant to the revision order, the total income of the assessee was re-computed on 26-11-2018 at Rs. 51,58,060 after making an addition of Rs. 1,10,350 under Section 69C of the Act. The penalty proceedings under Section 271(1)(c) of the Act stood initiated on the said addition made under Section 69C of the Act for furnishing of inaccurate particulars of income which culminated in the levy of penalty of Rs. 34,098.

We find that the addition made under section 69C of the Act represent alleged commission paid by the assessee for obtaining alleged exempt long term capital gains under section 10(38) of the Act which was later withdrawn by the assessee voluntarily in the revised return filed in time. We find that the entire addition is notional and was only based on an estimated basis by the Learned AO as per the directions of the Learned PCIT in revision order under section 263 of the Act. There is absolutely no evidence brought on record by the revenue that the assessee had indeed obtained accommodation entries in the form of exempt long term capital gains or had incurred commission expenditure for obtaining such accommodation entries. Hence there cannot be any furnishing of inaccurate particulars of income by the assessee in the instant case. The addition has been made under section 69C of the Act which goes to prove that the same is not recorded in the books of accounts of the assessee. When a particular alleged commission expenditure is not even recorded by the assessee, there is no question of furnishing any inaccurate particulars by the assessee. Hence the penalty levied under section 271(1)(c) of the Act deserves to be deleted on this count also. Since the penalty is deleted on merits, the other grounds raised by the assessee need not be adjudicated and they are left open.

In the result, the appeal of the assessee is partly allowed.