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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 29/11/2019, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)–36, Mumbai, [“learned CIT(A)”], which in turn arose from the penalty order dated 28/06/2018 passed under section 271(1)(c) of the Act, for the assessment year 2014–15.
In its appeal, the assessee has raised following grounds:–
Raghavraj Ashok Bagri ITA no.637/Mum./2020
“Ground 1- On the facts and circumstance of the case and in law, the Commissioner of Income-tax (Appeals) - 36, Mumbai (hereinafter referred to as "the Leamed CIT(A)") has erred in not considering that the notice issued under section 274 read with section 271 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") is void ab initio as its violative of the principle of natural justice. It is, therefore, prayed that the notice be treated as void ab initio and the proceedings be dropped. Tax Effect - Rs.9,56,601/- Without prejudice to the above Ground 1, the Appellant submits the following grounds- Ground 2- On the facts and circumstance of the case, the Learned CIT(A) has erred in confirming the penalty levied by the Income-tax Officer 24(3)(5), Mumbai (hereinafter referred to as "the Learned AO") under section 271(1)(c) of the Act without considering the fact that the assessee had made voluntary disclosure of the long term capital gains income while filing revised return of income and also during the course of assessment proceedings. It is, therefore, prayed that the penalty levied by the Learned AO be hereby deleted. Tax Effect - Rs.9,56,601/- Ground 3- On the fact and circumstances of the case, the Leamed CIT(A) has erred in confirming the penalty levied by the Learned AO under section 271(1)(c) of the Act on the notionally computed commission paid to eam the long term capital gains without establishing any fact that the assessee had actually paid any commission. It is, therefore, prayed that the penalty levied by the Learned AO be hereby deleted. Tax Effect - Rs.9,56,601/- The appellant craves leave to add, alter, modify or substitute any or all grounds of appeal.”
3. The only grievance of the assessee is against the levy of penalty under section 271(1)(c) of the Act.
Raghavraj Ashok Bagri ITA no.637/Mum./2020
Brief facts of the case, as emanating from the record are:– The assessee is an individual having source of income from remuneration and interest income. For the year under consideration, the assessee filed its return of income on 09/07/2014, declaring a total income of Rs.2,36,890. Pursuant to the information received from the Directorate of Investigation, Kolkata, proceedings under section 147 of the Act were initiated in assessee’s case. Vide order dated 11/12/2017, passed under section 143(3) r/w section 147 of the Act, the total income of the assessee was assessed at Rs.33,20,390.
Meanwhile, vide notice dated 11/12/2017, issued under section 274 r/w section 271(1)(c) of the Act, penalty proceedings in assessee’s case were initiated. Vide order dated 28/06/2018, passed under section 271(1)(c) of the Act, a penalty of Rs.9,56,601, was levied. In further appeal against the penalty order, the learned CIT(A), vide impugned order dated 29/11/2019, dismissed the appeal filed by the assessee and upheld the levy of penalty under section 271(1)(c) of the Act. Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned Authorised Representative (“learned A.R.”) submitted that neither any case was set out by the Assessing Officer nor any satisfaction was recorded in the assessment order whether there is furnishing of inaccurate particulars of income or concealment of particulars of income by the assessee. The learned A.R. further submitted that the penalty in the present case has been levied without specifying the head under which the same has been levied. The learned A.R. submitted that the Assessing Officer in the notice issued under section 274 r/w section 271(1)(c) of the Act has not Raghavraj Ashok Bagri ITA no.637/Mum./2020 specified whether the penalty has been levied for concealment of income or for furnishing inaccurate particulars of income.
On the other hand, the learned Departmental Representative (“learned D.R.”) vehemently relied upon the order of the authorities below.
We have considered the rival submissions and perused the material available on record. In the present case, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty of Rs.9,56,601. From the perusal of the notice dated 11/12/2017, issued under section 274 r/w section 271(1)(c) of the Act, we find that the Assessing Officer did not strike–off any of the twin charges i.e., concealment of particulars of income or furnishing of inaccurate particulars of income. The case of the assessee is squarely covered by the decision of the Hon'ble Jurisdictional High Court in Mohd. Farhan A. Shaikh v/s DCIT, [2021] 434 ITR 1 (Bom.), wherein the Larger Bench of the Hon’ble Court has held that the defect in the notice by not striking off the irrelevant matter would vitiate the penalty proceedings. Accordingly, respectfully following the aforesaid decision of the Hon'ble Jurisdictional High Court, we reverse the findings of the lower authorities and quash the penalty order passed under section 271(1)(c) of the Act. Accordingly, the Assessing Officer is directed to delete the penalty of Rs.9,56,601, levied under section 271(1)(c) of the Act. As we have quashed the penalty order for this short reason, we see no reason to deal with other issues raised in this appeal on merits. Those aspects of the matter are, as of now, academic and infructuous.
Raghavraj Ashok Bagri ITA no.637/Mum./2020
In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 06/01/2023