Case Number: ITA 5534/DEL/2019
Appellant: Deepak Wadhwa, New Delhi
Respondent: ACIT Circle-31(1), New Delhi
Assessment Year: 2010-11
Result: Appeal Allowed
Case Filed on: 2019-06-25
Order Type: Final Tribunal Order
Date of Order: 2021-01-07
Pronounced on: 2021-01-07
The appeal in this case was filed by Deepak Wadhwa, based in New Delhi, against the Assistant Commissioner of Income Tax (ACIT), Circle-31(1), New Delhi. The case pertained to the assessment year 2010-11 and was initially filed on 25th June 2019. The dispute arose due to the penalty levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961.
Deepak Wadhwa filed the appeal against the order of the Commissioner of Income Tax (Appeals)-11, New Delhi, dated 4th June 2019. The primary reason for the appeal was to contest the penalty of Rs. 1,98,600/- levied under Section 271(1)(c) of the Income Tax Act for allegedly furnishing inaccurate particulars of income.
The case was heard before the Income Tax Appellate Tribunal (Delhi Bench ‘B’) in New Delhi on 7th January 2021. The bench comprised Shri H.S. Sidhu, Judicial Member, and Shri Anadee Nath Misshra, Accountant Member. The appellant was represented by Shri Rajesh Mahna, Advocate, and Shri Mayank Kauth, Advocate. The Revenue was represented by Shri Rajesh Kumar, Senior Departmental Representative (DR).
The appellant filed the return of income on 15th October 2010, declaring an income of Rs. 59,67,040/-. The returned income was accepted by the Revenue, and the return was not selected for scrutiny initially. However, proceedings under Section 147 of the Income Tax Act were started on 29th March 2017 by issuing a notice under Section 148. The appellant, in response, reiterated the income declared in the original return.
In the reassessment proceedings, the AO noted a discrepancy related to an amount of Rs. 6,62,000/-. The amount, initially declared under “Profits and Gains of Business and Profession” (PGBP), was reclassified as an unexplained cash credit under Section 68 of the Income Tax Act. Despite this reclassification, the assessed income remained unchanged at Rs. 59,67,040/-. The AO, however, levied a penalty of Rs. 1,98,600/- under Section 271(1)(c) for furnishing inaccurate particulars of income.
The appellant’s counsel argued that the penalty was erroneous as there was no addition to the returned income in both the original and reassessment proceedings. They contended that the reclassification of income did not constitute furnishing inaccurate particulars. The Revenue’s representative relied on the AO’s order and cited relevant judicial pronouncements to support the penalty.
The tribunal found that the returned income was accepted both in the original return and the reassessment proceedings. The tribunal noted that the reclassification of the amount under a different head did not result in any tax evasion. The judicial pronouncements cited by the Revenue were deemed inapplicable as they did not involve cases where the assessed income was the same as the returned income.
The tribunal held that the AO and the CIT(A) failed to establish how the appellant sought to evade tax when the assessed income remained unchanged. Consequently, the penalty of Rs. 1,98,600/- was deemed unwarranted and was canceled.
The appeal of Deepak Wadhwa vs. ACIT Circle-31(1), New Delhi, was allowed. The tribunal canceled the penalty of Rs. 1,98,600/- imposed under Section 271(1)(c) of the Income Tax Act. This outcome emphasizes the importance of proving tax evasion for levying penalties under Section 271(1)(c).
The order was pronounced by Shri H.S. Sidhu, Judicial Member, and Shri Anadee Nath Misshra, Accountant Member, on 7th January 2021.
Members Present:
Shri H.S. Sidhu, Judicial Member
Shri Anadee Nath Misshra, Accountant Member
Document Reference:
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)-11, New Delhi
5. DR: ITAT
ASSISTANT REGISTRAR, ITAT NEW DELHI
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