RAM KUMAR DAITAPATI,PURI vs. INCOME TAX OFFICER, WARD, PURI, PURI

Shri P.K.Mishra, P.K.Mishra, ld AR appeared for the assessee. Shri the assessee. Shri Sanjkay Kumar, ld CIT DR Kumar, ld CIT DR represented on behalf of the revenue. represented on behalf of the revenue.

At the outset, At the outset, it was submitted by ld AR that in this case, the penalty in this case, the penalty proceedings were initiated vide notice dated 6th September, 2017. In the proceedings were initiated vide notice dated 6 September, 2017. In the said notice, no charge said notice, no charge was specified by the Assessing Officer. For ready perusal, the n perusal, the notice issued by the AO u/s 271(1)(c) )(c) dated 6.9.2017 is reproduced as under : reproduced as under :- P a g e 1 | 5

It was the submission of ld AR that it is not clear from the said notice issued u/s.271(1)(c) of the Act by the Assessing Officer whether the show cause is issued to the assessee for concealment of particulars of income or for furnishing inaccurate particulars of income. Therefore, he requested for deletion of the penalty.

In reply, ld CIT DR supported the penalty order and the order of ld CIT(A). It was the submission that in the penalty order, the Assessing Officer has framed the charge of concealment of particulars of income and thus, the penalty leviable deserves to be upheld.

I have considered the rival submissions. A perusal of the penalty notice, it is seen that the Assessing Officer has not specified whether the penalty is initiated for concealment of particulars of income or for furnishing inaccurate particulars. In the assessment order, it is simply stated that the penalty proceedings u/s.271(1)(c) is initiated. Thus, no satisfaction was recorded at the time of initiation of penalty proceedings.

The penalty provisions of section 271(1)(c) of the Act are attracted where the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it was imperative for the Assessing Officer to strike- off the irrelevant limb so as to make the assessee aware as to what is the P a g e 3 | 5 charge made against him so that he can respond accordingly. The Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar) observed that the levy of penalty has to be clear as to the limb under which it is being levied. As per Hon'ble High Court, where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court held that the standard proforma of notice under section 274 of the Act without striking of the irrelevant clauses would lead to an inference of non- application of mind by the Assessing Officer.

Hon'ble Apex Court vide judgment in case of M/s. SSA's Emerald Meadows, (2016) 73 taxmann.com 248(SC) has held that Omission by the AO to explicitly specify in the penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate particulars or for concealment of income makes the penalty order liable for cancellation.

In view of above settled proposition, I am of the considered view that the Assessing Officer has not specified the charge for which the penalty proceedings have been initiated. This being so, the penalty levied by the Assessing Officer and confirmed by the ld CIT(A) stands deleted.

In the result, appeal of the assessee stands allowed.