TMI Blog2019 (8) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... full facts, for the time being we delete the penalty with a direction to the learned assessing officer, to re-examine the issue of penalty after making compliance with the direction of the coordinate bench only. Accordingly, the issue of levy of penalty on the above sum is restored back to the file of the learned AO. Suppressed sales and receipt - HELD THAT:- AO made the above addition which was confirmed by the learned CIT(A). As the above sum was disclosed by the assessee himself before the settlement commission as undisclosed income of the assessee, we do not find any merit in the argument of the learned authorised representative that assessee has not concealed the above income. In view of this the penalty u/s 271 (1) ( c) is confirmed on the above amount and the order of the learned CIT(A) is confirmed. Penalty for disallowance u/s 40 A (3) - HELD THAT:- Out of the above cash sales assessee has incurred expenditure which are in violation of the provisions of section 40A (3). Therefore the addition was made. In the present case the AO made the addition on account of undisclosed sales whereas the learned CIT(A) found that the undisclosed sales has been properly account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the assessee against the order of the ld CIT(A)-I, New Delhi dated 21.10.2011 for the Assessment Year 2002-03 wherein the learned CIT capital is confirmed the penalty of INR 6285118/ levied by the learned assessing officer u/s 271 (1) (C) of the income tax act. 2. The assessee has raised the following grounds of appeal in ITA No. 265/Del/2012 for the Assessment Year 2002-03:- 1. That the learned Commissioner of Income-tax (Appeals)-II, New Delhi has erred in confirming the penalty imposed by the ld Assessing Officer without providing sufficient opportunity to the appellant and without considering the material available on record. 2. That it is accordingly prayed that the additions confirmed by the learned Commissioner of Income-tax (Appeals) may kindly be deleted. 3. The brief facts of the case shows that a search was conducted in the case of the assessee and the assessment was completed u/s 153A read with section 143 (3) of the income tax act where in various additions were made in the hands of the appellant. The assessee approached the settlement commission and had made an admission of INR 3,300,000 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has remained completely non cooperative before the lower authorities and therefore there is no reason to delete the above penalty. He further stated that the assessee has disclosed INR 3,300,000 as suppression of sales as per its own admission therefore on this amount the penalty cannot be deleted at all. With respect to the other addition, he submitted that the sum of the bogus share capital of INR 7 805370/ has also been considered by the coordinate bench and confirmed the same. Wth respect to the bogus unsecured loan he submitted that the coordinate bench has set aside the issue back to the file of the learned assessing officer with a direction to re-examine the same. In view of this he submitted that there is a confirmed addition of INR 3,300,000 on account of suppressed sale and receipts and of INR 7,800,000 on account of bogus share capital, on which the penalty cannot be deleted as assessee has concealed income. 7. We have carefully considered the rival contention and perused the order of the lower authorities. With respect to the argument of the learned authorised representative that there is no sufficient opportunity granted to the assessee is devoid of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing we delete the penalty with a direction to the learned assessing officer, to re-examine the issue of penalty after making compliance with the direction of the coordinate bench only. Accordingly, the issue of levy of penalty on the above sum of INR 6,500,000 is restored back to the file of the learned assessing officer. 11. In the result appeal filed by the assessee for AY 2002-03 is partly allowed. 12. Now we come to the appeal filed by the assessee for AY 2005-06. 13. ITA no 266/del/2012 is filed for AY 2005-06 against the order of the learned Commissioner Of Income Tax (Appeals) I, New Delhi dated 21/10/2011 wherein the penalty levied by the learned the Asst Commissioner Of Income Tax, Central Circle 13, New Delhi (the learned AO) u/s 271 (1) (c) read with section 274 of the income tax act 1961 as per order dated 30/3/2010 of INR 4 698190/ was confirmed. 14. The assessee has raised the following grounds of appeal in ITA No. 266/Del/2012 for the Assessment Year 2005-06:- 1. That the learned Commissioner of Income-tax (Appeals)-II, New Delhi has erred in confirming the penalty imposed by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the act on 30/3/2010 levying the penalty of INR 4 698190 being hundred percent of tax sought to be evaded on concealed income of INR 1 2839217/ . 16. Assessee preferred an appeal before the learned Commissioner of income tax (appeals). The learned CIT A granted several opportunities as mentioned in paragraph number 3 of his order. However the assessee did not avail and therefore the learned assessing officer giving a detailed reasoning as per para number 5 14 of his order confirmed the levy of the penalty. Aggrieved by the order of the learned CIT A assessee preferred an appeal before us. 17. The learned authorised representative vehemently contested the levy of the penalty and submitted that assessee has disclosed the sum of INR 1 300000/ before the settlement commission however assessee could not pay the tax because of the severe financial constraints. He therefore submitted that the disclosure of the assessee was voluntary and mere failure of payment of the tax should not result into the penalty for concealment of income. With respect to the addition made by the learned CIT A u/s 40 A (3) of the income tax act he submitted that it is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made the above addition because of disclosure made by the assessee before the settlement commission however, no taxes have been paid and therefore the proceedings before the settlement commission got abetted on 30/9/2007. The learned assessing officer made the above addition which was confirmed by the learned CIT A. As the above sum was disclosed by the assessee himself before the settlement commission as undisclosed income of the assessee, we do not find any merit in the argument of the learned authorised representative that assessee has not concealed the above income. In view of this the penalty u/s 271 (1) ( c) of the income tax is confirmed on the above amount and the order of the learned CIT A is confirmed. 21. With respect to the disallowance u/s 40 A (3) of the income tax act the fact shows that the learned assessing officer has made an addition of INR 8 526204/ on account of the unexplained investment u/s 69 of the income tax act whereas the learned CIT A has deleted the above addition. However, he invoked the provisions of section 40A (3) of the income tax act 1961 stating that based on the seized documents the assessee has constructed the books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure of r₹ 2950195/ the assessee submitted that the above expenditure has been incurred by the assessee for exploring the future business opportunities. The learned AO disallowed the above sum u/s 37 of the income tax act as assessee failed to prove that the expenditure is wholly and exclusively laid out or expended for the purposes of the business of the assessee. In absence of any clarity about the purposes for which the expenditure has been incurred the above sum was disallowed by the learned assessing officer. The learned CIT A has also confirmed above disallowance holding that the above expenditure has no nexus either with the existing business or any other business venture of the assessee. The assessee is merely exploring to start new business in South Africa. Thus these expenditure cannot be allowed as a deduction as incurred exclusively for the purposes of the business. The learned CIT A also stated that no material has been produced to suggest that the assessee has explored some new activity in South Africa, which subsequently aborted for some reasons. Therefore on the basis of the above facts it is apparent that the expenditure incurred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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