IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM ITA No. 577/JP/2014 Assessment Year : 2006-07. Income Tax Officer, cuke M/s. Krishi Upaj Mandi Samiti, Jhalawar. Vs. Jhalara Patan, Dist. Jhalawar. PAN No. AAATL 9422 C Appellant Respondent Revenue by : Shri R.A. Verma (Addl. CIT) Assessee by : Shri Aditya Vijay (Advocate) Date of Hearing : 19.10.2016. Date of Pronouncement : 21/10/2016. ORDER PER SHRI KUL BHARAT, JM. This appeal by revenue is directed against order of ld. CIT (Appeals), Kota dated 30.06.2014 pertaining to A.Y. 2006-07. revenue has raised following grounds of appeal :- On facts and in circumstances of case, ld. CIT (A) has erred in :- i. Deleting penalty of Rs. 10,11,232/- imposed by AO u/s 271(1)(c) of Income Tax Act, 1961. ii. appellant craves liberty to raise additional ground and to modify/amend ground of appeal at time of hearing. 2. Briefly stated facts are that case of assessee was picked up for scrutiny and assessment under section 143(3) of Income Tax Act, 1961 (hereinafter referred to as Act) was framed vide order dated 24th December, 2 ITA No. 577/JP/2014 Krishi Upaj Mandi Samiti 2008. While framing assessment, AO made disallowance of expenditure on ground that issue of registration under section 12AA of Act has not been accepted by Department and appeal has been filed before Hon ble Rajasthan High Court. Therefore, AO made disallowance of expenditure as claimed by assessee and added same to total income of assessee. AO also initiated penalty proceedings under section 271(1)(c) of Act. Subsequently, AO imposed penalty of Rs. 10,11,232/-. Aggrieved by this order, assessee has filed appeal before ld. CIT (A), who after considering submissions, deleted penalty. 3. Now feeling aggrieved by order, revenue has filed present appeal. 4. During course of hearing, ld. Counsel for assessee has submitted that Hon ble Jurisdictional High Court in case of CIT vs. Krishi Upaj Mandi Samiti has held that assessee is entitled for registration under section 12AA and exemption under section 11A of Act. ld. Counsel submitted that under these facts order of ld. CIT (A) is justified. 4.1. On contrary, ld. D/R has supported order of AO. 4.2. We have heard rival contentions and perused material available on record. ld. CIT (A) decided issue by observing as under :- assessee has shown sale proceeds from sale of shops in its receipt and expenditure account and same was subject to tax u/s 11A. It does not mean that assessee has concealed its income, merely confirmation of addition by CIT (A) is not sufficient Assessing Officer has to brought material to shown that assessee has committed default u/s 271(1)(c). assessee has furnished all details and difference was only w.r.t. application of law. Even Assessing Officer was not aware about section 11A and therefore it cann t be presumed that assessee has 3 ITA No. 577/JP/2014 Krishi Upaj Mandi Samiti deliberately not disclosed capital gain u/s 11A. Section 11A was first time invoked by CIT (A). I am therefore of opinion that it s not fit case for levy of penalty u/s 271(1)(c). It is not disputed that addition was made by AO on ground that assessee has not been granted registration under section 12AA, which was basis for making disallowance by AO. Since registration has been granted by Hon ble Jurisdictional High Court, therefore, we do not see any reason to interfere in order of ld. CIT (A). Ground raised by revenue is dismissed. 5. In result, appeal of revenue is dismissed. Order is pronounced in open court on 21.10.2016. Sd/- Sd/- ( BHAGCHAND) ( KUL BHARAT ) Accountant Member Judicial Member Jaipur Dated:- 21/10/2016. Das/ Copy of order forwarded to: 1. Appellant- Income Tax Officer, Jhalawar. 2. Respondent M/s. Krishi Upaj Mandi Samiti, Jhalrapatan. 3. CIT(A). 4. CIT, 5. DR, ITAT, Jaipur 6. Guard File (ITA No. 577/JP/2014) By order, Assistant. Registrar 4 ITA No. 577/JP/2014 Krishi Upaj Mandi Samiti Income-tax Officer, Jhalawar v. M/s. Krishi Upaj Mandi Samiti