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TMI Blog2021 (2) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is illegal and bad in law. 2. The ld. CIT(A) has erred on facts and in law in confirming the levy of penalty u/s 271(1)(c) of the IT Act, 1961 on the alleged undisclosed salary income of Rs. 1,80,000/- received from M/s Bhatia Corporation Pvt. Ltd. by not accepting the explanation of assessee that such salary income was inadvertently left to be included at the time of filing the return." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. In this appeal, the assessee is basically aggrieved by the order of the ld. CIT(A) in confirming the penalty imposed U/s 271(1)(c) of the Act. The brief facts of the case are that the assessee derives income from salary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO is not sustainable in law. Only because addition has been made to the income would not lead to penalty u/s 271(1)(c). Further omission of salary from income declared in the ROI filed u/s 153A was a bonafide mistake. On such bonafide mistake no penalty is leviable. The Ld. CIT(A) rejected the explanation of assessee by relying on the decision of Hon'ble Kerala High Court in case of E.N. Gopakumar where it is held that assessment proceedings generated by the issuance of notice u/s 153A can be concluded against the interest of assessee including making additions even without any incriminating material being available against the assessee in the search u/s 132. He further held that M/s Bhatia Corporation Pvt. Ltd. is a group concern w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival contentions of both the parties and carefully perused the orders of the revenue authorities. The ld AR has drawn our attention towards the order passed by the Coordinate Bench in the case of Yash Bhatia in ITA No. 1142/JP/2019 order dated 09/01/2020 wherein the Tribunal had deleted the penalty imposed U/s 271(1)(c) of the Act by observing as under: "8. We have heard the rival contentions and perused the material available on record. The limited point of dispute is whether addition towards salary income made by the Assessing officer during the course of proceedings u/s 153A r/w 143(3) can form the basis for levy of penalty by invoking provisions of explanation 5A to section 271(1)(c) of the Act which reads as under: "Explanation 5A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the instant case, the assessee has not been found to be recipient of salary income during the course of search. The assessee is an individual deriving salary and interest income and not required to maintain books of accounts. There is nothing on record that any documents/material/information was found during the course of search which remotely indicate that the assessee is recipient of salary income. It is only during the course of proceedings u/s 153A that the Assessing officer noticed that the assessee is in receipt of salary income and which has not been disclosed by the assessee in his return and the same was accordingly brought to tax. The dispute is not that the salary income was not offered to tax by assessee in his return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 order dated 13.12.2017 held that assessment or reassessment of income of person other than searched persons based on seized material can be made u/s 153C r.w.s. 153A and has overriding effect on section 147/ 148. In the present case, addition made by the AO is not on the basis of any material seized during the search proceedings. Hence, addition made by the AO in the assessment framed u/s 153A is incorrect. The addition, if any, could have been properly made by invoking the provisions of section 147 of the Act. Therefore, when addition made by the AO is itself illegal & bad in law, penalty levied on such addition is also not sustainable. The Ld. CIT(A) rejected this explanation of assessee by relying on the decision of Hon'ble Kera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or which we all are prone to make. The assessee could not be held guilty of either furnishing inaccurate particulars or attempting to conceal its income. Therefore, imposition of penalty was unjustified. The Ld. CIT(A) did not accept the explanation of assessee by holding that in similar group concerns namely M/s Bhatia Infrastructure Pvt. Ltd. and M/s. Bhatia Automobiles Pvt. Ltd., the company credited salary to Sh. Yash Bhatia but the salary was not declared by him in the return of income filed u/s 153A. It is submitted that in this case also salary was credited in the account of Yash Bhatia but was not actually received by him and therefore, it was left to be included in the income by mistake but when such mistake was noticed while prep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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