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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI ANIKESH BANERJEE
Per Chandra Poojari, Accountant Member:
These three appeals are filed by the assessee directed against common order dated 11.10.2022 of CIT(A) for the Assessment Years 2014-15, 2015-16 and 2017-18, wherein he has confirmed the levy of penalty under section 271(1)(c) of the Act. The facts in all these appeals are similar. We consider appeal in Assessment Year 2014-15. Since the issues in these appeals are common in nature, these appeals are clubbed together, heard together and disposed off by this common order for the sake of convenience.
Facts of the case in brief are that the assessee had filed his return of income for the A.Y. 2014-15 on 30.05.2014 declaring total income of Rs. 17,82,260/-. Further the assessee filed a revised return of income on 09.08.2015 declaring total income of Rs. 9,50,410/-. The case was re-opened u/s 147 of the Income Tax Act, 1961 by issuing notice u/s 148 of the Act on 04.05.2018. The assessee filed his return of income in response to the notice u/s 148 on 16.05.2018 declaring income of Rs. 17,85,710/-. Thereafter, the assessment was completed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 at assessed income of Rs. 17,85,710/- by making addition on account of claim of bogus loss on house property amounting to Rs. 9,65,520/-. Accordingly, penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 was initiated on 26.12.2019 for furnishing inaccurate particulars of income to the extent of Rs. 9,65,520/-. As the assessee could not submit satisfactory reply in respect of loss from house property Maimed. Further, penalty proceedings notice u/s 271(1)(c) of the I.T. Act, 1961 was issued on 31.05.2021and 02.09.2021 for furnishing inaccurate particulars of income to the extent of Rs. 9,65,520/-.
The AO issued a show cause notice under section 271(1)(c) of the Act for which the assessee has replied stating that there was no intention to conceal any particulars of income or furnishing any inadequate particulars of income. However the AO is of the opinion that the assessee furnished inadequate particulars of income in all these Assessment Years and the addition made by AO in assessment has not been challenged by the assessee by filing further appeals. In view of this, he levied penalty under section 271(1)(c) at 100% tax in these Assessment Years. Against this assessee is in appeal before us by raising the following grounds and there is only change in figures in other Assessment Years:
The order of the learned Commissioner of Income tax [Appeals] passed under Section 250 of the Act, in so far as it Is against the Appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant's case. 2. The Appellant denies himself liable for penalty imposed by the learned assessing officer under Section 271[1][c] of the Act amounting to Rs. 2,98,346/- and the same having been confirmed by the learned Commissioner of Income-tax [Appeals] under the facts and circumstances of case. 3. The learned Commissioner of Income tax [Appeals] erred in not adjudicating all the grounds raised
in appeal before him on the facts and circumstances of the case.
4. The learned Commissioner of Income tax [Appeals] erred in holding that the act of not contesting the quantum assessment goes on to prove the 'mens rea' on the part of the Appellant on the facts and circumstances of the case,
5. The learned Commissioner of Income tax [Appeals] failed to appreciate that the Appellant had no intention to defraud revenue or evade tax on the facts and circumstances of the case.
6. The learned Commissioner of Income tax [Appeals] failed to appreciate that the penalty proceedings are independent with that of the assessment proceedings and ought to have verified the facts of the case independently under the facts and circumstances of the case.
7. The learned Commissioner of Income tax [Appeals] failed to appreciate that the Appellant was misled by one Mr. Nagesh Shastri and the return of income claiming false deductions was filed by the said Mr. Nagesh Shastri without the knowledge of the Appellant on the facts and circumstances of the case.
8. The lower authorities failed to appreciate the fact that the Appellant had provided all. the details and co-operated in the assessment proceedings voluntarily and in good faith under the facts and circumstances of the case.
9. The learned Commissioner of Income tax [Appeals] failed to appreciate the fact that there was no concealment nor furnishing of inaccurate particulars of income warranting levy of penalty under the provisions of Section 271[1][c] of the Act under the facts and circumstances of the case.
10. The learned Commissioner of Income tax [Appeals] failed to appreciate the fact that the order passed by the learned assessing officer under Section 271[1][c] of the Act is without assumption of proper jurisdiction as the mandatory conditions for invoking the provisions of Section 271[1][c] of the Act has not been complied with under the facts and circumstances of the case.
The learned Commissioner of Income tax [Appeals] failed to appreciate that the levy of penalty is not automatic and the learned assessing officer ought to have exercised his discretion before levying penalty under the facts and circumstances of the case.
The learned Commissioner of Income tax [Appeals] failed to appreciate that proper satisfaction has not been recorded by the learned assessing officer in the order of assessment passed under Section 143[3] r.w.s. 147 of the Act dated 23/12/2019 and consequently in the absence of satisfaction recorded for the initiation of penalty proceedings the entire penalty proceedings is bad in law and void-ab-into under the facts and circumstances of the case.
The learned Commissioner of Income tax [Appeals] failed to appreciate that the learned assessing officer had concluded the penalty proceeding on mere surmises, conjunctures and suspicion without independent application of mind and not appreciating the submissions of the Appellant which is not tenable in law under the facts and circumstances of the case.
Without prejudice to the above, the penalty levied is highly excessive and liable to reduced substantially.
The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed and appropriate relief may be granted in the interest of justice and equity.
The assessee filed elaborate written submissions stating that the levy of penalty under section 271(1)(c) of the Act is not automatic and the AO has to examine the levy of penalty independently while passing the penalty order. It is also submitted that mere addition or disallowance in the assessment order does not automatically warrant levy of penalty. For this he relied on various judgments which is kept on record. Thus according to learned AR there is no default by the assessee on his own. He acted on bonafide belief that his affairs were rightly handled by his consultant Mr. Nagesh Shastri and only came to know about the reality of Mr. Nagesh Shastri after reading in the online news and portal by the Income Tax department. According to learned AR, the AO as well as the CIT(A) completely failed to appreciate these facts while levying penalty by AO and confirmed by CIT(A). He submitted that CIT(A) must have examined the facts of the case independently and deleted the penalty levied by AO. Further he relied on earlier order of the Tribunal in the case of Ravikiran Netla in dated 10.09.2020 wherein the Tribunal remitted to the file of the CIT(A) to re-examine the issue.
On the other hand, the learned DR submitted that entire claim of the assessee is fraudulent of refund of tax paid by way of TDS which was in full knowledge of the assessee and it cannot be said that it is handiwork of his consultant Mr. Nagesh Shastri.
We heard both the parties. In our opinion, similar issue came up for consideration before Tribunal wherein the Tribunal remitted the matter to the file of CIT(A) with the following observations:
“6. We have heard both the parties and perused the material on record. In the quantum appeal order dated 19.2.2018, the CIT(Appeals) recorded these facts in para 5 of his order that Mr. Nagesh Shastry was instrumental in fling the revised return. However, the same facts and arguments in the penalty proceedings are not considered by the CIT(Appeals). In our opinion, it is proper to examine whether Mr. Nagesh Shastry is instrumental in claiming fraudulent refund on behalf of assessee by indulging in malpractices. If Mr. Nagesh Shastry is found solely responsible for such fraudulent act and that assessee's act Is bonaflde, penalty cannot be levied. With these observations, we remand this Issue to the file of the CIT(Appeals) to consider all these facts and decide the issue afresh in accordance with law, after affording assessee opportunity of being heard.”
In view of the above, we are inclined to remit the entire issue in dispute to the file of CIT(A) on similar directions.
Further all other grounds raised by the assessee before us are kept open and without commenting on anything on merits on those grounds.
In the result, appeals of the assessee are allowed for statistical purposes.