SHRI KASTURCHAND POPATLAL-HUF,AHMEDABAD vs. ITO, WARD-3(3)(2), AHMEDABAD

PER Ms. MADHUMITA ROY - JM:

The instant appeal filed by the assessee is directed against the order dated 28.08.2018 passed by the Commissioner of Income Tax (Appeals) – 3, Ahmedabad arising out of the order dated 27.03.2017 passed by the ITO, Wd-3(3)(2), Ahmedabad under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2014-15. 2. The brief facts leading to the case is this that the assessee filed its return of income for the A.Y. 2014-15 declaring total income at Rs. 7,49,290/- on 26.07.2014 which was finalized under section 143(3) of the Shri Kasturchand Popatlal-HUF vs. ITO Asst.Year –2014-15 Act on 28.09.2016 determining total income at Rs. 7,49,380/- after making addition to the tune of Rs. 19,79,419/- on account of long-term capital loss. In fact, during the course of assessment proceeding the assessee was asked to furnish the details of long-term capital loss of Rs. 42,10,057/-. However, the long-term capital loss was allowed to the tune of Rs. 22,30,368/- only for the relevant assessment year under review since there was a error in computing long-term capital loss. It is the case of the assessee that the error took place because of the particular reason that the property sold was purchased in phased manner i.e. shop No. 4 was purchased in F.Y. 1997-98 and the other two shops being No. 5 & 6 were purchased in F.Y. 2000-01. Inadvertently the purchased date of all shops was taken as if purchased in the F.Y. 1997-98. After accepting the error the assessee submitted the revised working of the indexed acquisition cost and revised long-term capital loss which was duly acknowledge by the authorities below. However, penalty proceeding was initiated under section 271(1)(c) by the Ld. AO for furnishing inaccurate particulars of income by claiming excess long-term capital loss which was otherwise not entitled. Finally the penalty proceeding was concluded by imposition of penalty of Rs. 4,07,761/- under section 271(1)(c) of the Act on the committed default on account of furnishing of inaccurate particulars of income/thereby leading to concealment. The same was, in turn, confirmed by the First Appellate Authority. Hence, the assessee is before us.

The Learned AR also relied upon the judgment passed by the Gujarat High Court in the case of CIT-vs-Jyoti Ltd. reported in [2013] 34 taxmann.com 65 (Gujarat), the order passed by the Hon’ble Tribunal, Ahmedabad Benches in the case of Dharmesh Dhulabhai Prajapati-vs-ITO in ITA No.1570/Ahd/2017 for A.Y. 2011-12 and also the matter of Smt. Ushaben Atulbhai Shah in ITA No.197/Ahd/2017 for A.Y 2012-13. 4. We have heard the respective parties, we have also perused the relevant materials available on record. We find that the order imposing penalty has not specified the guilt committed by the assessee for such penalty as already discussed by us while dealing with facts of the case Shri Kasturchand Popatlal-HUF vs. ITO Asst.Year –2014-15 hereinabove. The First Appellate Authority, however has not taken into consideration the particular aspect of the matter. The penalty order passed by the Ld. AO states as follows:-

“9. In view of the above, on the basis of the facts and circumstances of the case, I am satisfied that the assessee has committed default u/s 271(1)(c) of the Act by way of furnishing of inaccurate particulars of income/thereby leading to concealment. It is held that the assessee is liable for penalty under section 271(1)9c) of the Act, it is therefore directed that the assessee shall pay by way of penalty in addition to the amount of tax, a sum calculated as under: Rs.

“9. Regarding the contention that the Assessing Officer was ambivalent regarding under which head the penalty was being imposed namely for concealing the particulars of income or furnishing inaccurate particulars, we may record that though in the assessment order the Assessing Officer did Shri Kasturchand Popatlal-HUF vs. ITO Asst.Year –2014-15 order initiation of penalty on both counts, in the ultimate order of penalty that he passed, he clearly held that levy of penalty is sustained in view of the fact that the assessee had concealed the particulars of income. Thus insofar as final order of penalty was concerned, the Assessing Officer was clear and penalty was imposed for concealing particulars of income. In light of this, we may peruse the decision of this Court in case of Manu Engineering Works (supra). In the said decision, the Division Bench came to the conclusion that language of "and/or" may be proper in issuing a notice for penalty, but it was incumbent upon the Assessing Authority to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by them. If no such clear cut finding is reached by the authority, penalty cannot be levied. It was a case in which in final conclusion the authority had recorded that "I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income." It was in this respect the Bench observed that "Now the language of "and/or" may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi- criminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down."

The principles laid down by the Hon’ble Juri ictional High Court in the above case are squarely applicable to the facts of the case in hand. We, thus, find force in such submission made by the Ld. Authorised Representative. It is apparent on the face of it and AO has not mentioned the specific charge in its penalty order whether it was levied for concealment of income or for furnishing inaccurate particulars of income by the assessee. In that view of the matter, we find that the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable in the eye of law. The penalty, therefore, is deleted. Hence, the ground of appeal of the assessee is allowed. Shri Kasturchand Popatlal-HUF vs. ITO Asst.Year –2014-15 As we have deleted the penalty imposed by the Learned AO & confirmed by the Learned CIT(A) on the technical ground, i.e. no specific charge has been invoked as discussed above, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits.

आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.