IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER Assessment year : 2021-22 M/s. Giriraj Enterprises DCIT, Central Circle

1 Modi Baug, Building A, 1(1), Pune Vs.

Shivaji Nagar, Ganesh Khind Road, Pune – 411016 PAN: AACFG1563G (Appellant) (Respondent)

ITA No.553/PUN/2025 Assessment year : 2021-22 ACIT, Central Circle M/s. Giriraj Enterprises

1(1), Pune 1 Modi Baug, Building A, Vs.

Shivaji Nagar, Ganesh Khind Road, Pune – 411016 PAN: AACFG1563G (Appellant) (Respondent)

Assessee by : Shri Nikhil S Pathak Department by : Shri Amol Khairnar, CIT-DR Date of hearing : 19-06-2025 Date of pronouncement : 24-07-2025

O R D E R

PER R.K. PANDA, VP :

These are the cross appeals – the first one filed by the assessee and the second one filed by the Revenue and are directed against the order dated 27.12.2024 of the Ld. CIT(A), Pune-11 relating to assessment year 2021-22. For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.

2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in business of dealership in various FMCG products mainly Tobacco, lime, generation of power from windmill, Bajaj two wheeler and service station etc. A search and seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was carried out in the case of Malpani group of cases on 17.02.2021 during which the business premises of the assessee was also covered. During the course of search and seizure action the assessee firm admitted that it has made unaccounted sale of Gai Chap tobacco and other products. In response to the notice u/s 153A of the Act the assessee filed the return of income on 08.03.2022 declaring total income of Rs.81,73,67,960/- on account of unaccounted sale of Gai Chap tobacco and other products admitted at the time of search. The additional income offered to tax for assessment year 2021-22 was worked out as under:

a. Total unaccounted sales – Rs.1,26,59,41,430/-

b. Gross profit percentage – 64.38%

c. Income offered to tax – Rs.81,51,03,640/-

3. The Assessing Officer completed the assessment u/s 153A / 143(3) of the

Act wherein no addition regarding the unaccounted sale was made and the only

addition made by the Assessing Officer was the disallowance of deduction claimed

u/s 80IA(4) of Rs.18,01,430/-.

4. Subsequently the Assessing Officer initiated penalty proceedings u/s 271AAB of the Act. The assessee submitted that the declaration made during the course of search on account of sale of Gai Chap tobacco and other products was well before the due date for filing the return of income and even the financial year was not ended. It was submitted that the sale was disclosed in the return of income u/s 139(1) of the Act and has been assessed to tax in the order passed u/s 143(3) of the Act, therefore, it cannot be considered as undisclosed income within the meaning defined in section 271AAB of the Act. The assessee further submitted that if by any stretch the penalty u/s 271AAB(1A) is to be applied, the same will be after considering the GST payment made well within same year as the sales made by the assessee were inclusive of GST. Accordingly, as against gross profit of Rs.81,51,03,640/- for assessment year 2021-22 the assessee has paid total GST and interest on GST totaling to Rs.65,24,14,109/- which is pertaining to assessment year 2021-22. So the profit after the GST payment is Rs.16,26,89,531/-. Accordingly it was argued that the penalty is applicable only on this amount. The assessee also challenged the rate of penalty.

5. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. According to him, during the course of search action the assessee firm had admitted the unaccounted sale of Gai Chap tobacco and other products. He referred to the provisions of section 271AAB(1A) of the Act and observed that as per the said provisions ‘u