Case Number: ITA 784/DEL/2021
Appellant: Sandeep Gupta, Ghaziabad
Respondent: Pr. CIT, Ghaziabad
Assessment Year: 2015-16
Case Filed on: 2021-06-23
Order Type: Final Tribunal Order
Date of Order: 2022-12-06
Pronounced on: 2022-12-06
This case involves Sandeep Gupta, a proprietor of M/s. Sandeep Traders engaged in trading of plywood, and the Principal Commissioner of Income Tax (Pr. CIT) of Ghaziabad. The appellant filed an appeal against the revision order passed under Section 263 of the Income Tax Act by the Pr. CIT for the assessment year 2015-16.
The appellant challenged the order of the Pr. CIT, Ghaziabad, dated 05.03.2021, which directed the reopening of a concluded assessment and ordered a fresh assessment for the assessment year 2015-16. The appeal was filed on the grounds that the order passed under Section 263 was without jurisdiction and bad in law.
The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench “H” on 02.12.2022, with Shri N.K. Billaiya, Accountant Member, and Ms. Astha Chandra, Judicial Member, presiding over the matter. The appellant was represented by Shri Satyajeet Goel, CA, and Shri Prateek Gupta, CA, while the respondent was represented by Shri Rajesh Kumar, CIT (DR), and Shri M. Baranwal, CIT (DR).
The appellant, Sandeep Gupta, filed his return of income on 29.09.2015, declaring an income of Rs. 5,58,770/-. The case was selected for complete scrutiny under CASS. During the assessment proceedings, the AO issued a questionnaire, and the appellant furnished the necessary details, replies, and documents, including books of account.
The AO found that the appellant declared a long-term capital gain (LTCG) of Rs. 22,84,000/- on the sale of 2500 shares of M/s. Surabhi Chemicals and Investment (Scrip Code – 512311). The appellant was asked to submit the computation of the said LTCG, which he complied with. During the proceedings, the appellant stated that he came to know that the said company was not genuine but maintained that his transactions were genuine. To avoid litigation, he offered to surrender the capital gain amount subject to no penal action being initiated against him.
The AO added the surrendered LTCG of Rs. 22,58,715/- to the income of the appellant under Section 69 of the Act and completed the assessment accordingly on 29.12.2017 under Section 143(3) of the Act. The AO did not record satisfaction for initiating penalty proceedings under Section 271(1)(c) of the Act in the body of the assessment order but issued a penalty notice for unexplained investment/concealment of income.
In response to the penalty notice, the appellant filed a detailed reply on 05.02.2018, arguing that there was no concealment of income or filing of inaccurate particulars. The appellant surrendered the LTCG to purchase peace and avoid penal proceedings. The AO, after considering the facts and the appellant’s submissions, dropped the penalty proceedings on 24.05.2018.
The Pr. CIT initiated proceedings under Section 263 of the Act, issuing a show cause notice to the appellant. The Pr. CIT found that the AO’s decision to drop the penalty proceedings was erroneous and prejudicial to the interests of the Revenue, and directed the AO to reconsider the penalty proceedings and recompute the income tax and interest as per Section 115BBE of the Act.
The appellant challenged the Pr. CIT’s order, arguing that the AO had properly considered the facts and circumstances before dropping the penalty proceedings. The appellant relied on various judicial decisions, including CIT vs. Nihal Chand Rekyan and Pr. CIT vs. M/s. Universal Music India Pvt. Ltd., to support his case.
The tribunal, after considering the submissions and material on record, found that the Pr. CIT’s assumption of jurisdiction under Section 263 was not justified. The tribunal noted that the AO had considered the facts and the appellant’s detailed reply before dropping the penalty proceedings. The tribunal also observed that the case did not involve any incriminating documents or search operations that would justify the Pr. CIT’s assumption of jurisdiction.
The tribunal emphasized that the AO’s decision to drop the penalty proceedings was neither erroneous nor prejudicial to the interests of the Revenue. The tribunal vacated the Pr. CIT’s order and allowed the appeal filed by the appellant.
In conclusion, the appeal filed by Sandeep Gupta against the order of the Pr. CIT, Ghaziabad, under Section 263 of the Income Tax Act was allowed. The tribunal found that the AO’s decision to drop the penalty proceedings was justified and not erroneous, thereby vacating the Pr. CIT’s order.
Order pronounced in the open Court on 06/12/2022
Signed:
N.K. Billaiya, Accountant Member
Astha Chandra, Judicial Member
Assistant Registrar, ITAT, New Delhi
Sandeep Gupta vs. Pr. CIT: Appeal on Section 263 Revision Order – ITA 784/DEL/2021
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