DR. SUBASH CHANDRA JENA,BHUBANESWAR vs. ACIT, CENTRAL CIRCLE, , CUTTACK

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री सी.एम.गगग, न्याययक सदस्य एवं श्री एऱ.ऩी.साहु,ऱेखा सदस्य के समऺ BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM आयकर अपीऱ सं./ITA Nos.40 to 45/CTK/2019 (नििाारण वषा / AYs. :2010-2011 to 2015-2016) Dr. Subash Chandra Jena, Vs. ACIT, Central Circle, Cuttack Plot No.5/52, Gajapati Nagar, Bhubaneswar-751001 स्थायी ऱेखा सं./PAN No. : ABRPJ 2247 E (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. यनधागररती की ओर से /Assessee by : Shri J.M.Pattnaik, Advocate राजस्व की ओर से /Revenue by : Shri Piyush Kolhe, CIT-DR सुनवाई की तारीख / Date of Hearing : 17/12/2019 घोषणा की तारीख/Date of Pronouncement : 08/01/2020 आदेश / O R D E R Per Bench : These are the appeals filed by the assessee against the two separate orders of CIT(A)-2, Bhubaneswar, i.e. one dated 11.12.2018 for the assessment years 2010-2011 & 2011-2012 and other dated 28.11.2018 for the assessment years 2012-2013 to 2015-2016. 2. First we shall take up appeals of the assessee for assessment years 2010-2011 & 2011-2012 in ITA Nos.40 & 41/CTK/2019, wherein the sole issue involved is with regard to confirming the penalty levied u/s.271(1)(c) of the Act. 3. Brief facts of the case are that the assessee was working in Government of Odisha as a Doctor and also engaged in private practice

2 ITA No.40-45/CTK/2019 in nursing home of his wife Smt. Ranjita Jena in the name of ‘Jena &

Jena Nursing Home’ and filed his original return of income on

17.08.2010 for the assessment year 2010-2011 disclosing total income

at Rs.5,82,150/- and for the assessment year 2011-2012 the assessee

filed his return of income on 26.08.2011 declaring total income at

Rs.7,37,250/-. A search and seizure action u/s.132 of the Act was

conducted against the assessee on 03.09.2015 in the business premises

of Companies at Cuttack and residential premises of the Directors at

Cuttack and Bhubaneswar and residential premises of above assessee

at Talcher. In consequence to that search, the AO issued notice

u/s.153A of the Act and in pursuance to the same the assessee filed his

return of income on 16.02.2017 disclosing total income of

Rs.5,82,279/- and revised return was filed on 21.11.2017 disclosing

total income of Rs.6,45,586/-. Similarly, the assessee in pursuance to

notice u/s.153A of the Act filed his return of income for the assessment

year 2011-2012 on 16.02.2017 disclosing his total income at

Rs.7,11,720/- and revised return was filed on 21.11.2017 declaring

total income at Rs.7,91,720/-. During the course of assessment

proceedings, the AO found that the assessee has disclosed additional

income of Rs.1,00,000/- under the head professional income as

compared to the income disclosed in the return filed u/s.139(1) of the

Act for A.Y.2010-2011 and Rs.54,470/- for the assessment year 2011-

3 ITA No.40-45/CTK/2019 2012. During the course of assessment proceedings, Rs.50,000/- was

discovered from the bank statement as unexplained investment also.

Accordingly, the AO completed the assessment u/s.153A of the Act

assessing total income of the assessee at Rs.6,95,590/- for the

assessment year 2010-2011 and Rs.7,91,720/- for assessment year

2011-20112. Consequently, the AO initiated penalty u/s.271(1)(c) of

the Act and penalty order was passed on 28.06.2018 levying penalty of

Rs.46,350/- for A.Y.2010-2011 and Rs.24,436/- for the assessment

year 2011-2012, respectively.

appeals before the CIT(A), however, the CIT(A) after considering the

submissions of the assessee and findings of AO, upheld the penalty so

levied by the AO u/s.271(1)(c) of the Act for both the assessment years

under consideration.

is in appeals before the Income Tax Appellate Tribunal.

penalty u/s.271(1)(c) of the Act on the ground that the assessee has

disclosed excess income over and above the income declared in the

original return, the same was not mentioned in the body of the show

cause notice issued by the AO. It was also the contention of ld. AR that

the assessee has challenged the penalty in both the appeals on two

4 ITA No.40-45/CTK/2019 grounds, firstly, when the assessee filed revised return and the return

filed by the assessee u/s.153A of the Act was accepted as such by the

AO and that income disclosed by the assessee u/s.153A of the Act was

higher than the income in the original return filed u/s.139(1) of the

Act, then such disclosure of additional income will not automatically

lead to penalty. In this regard ld. AR relied on the decision of Hon’ble

High Court in the case of Neeraj Jindal, (2017) 393 ITR 1 (Del).

Accordingly, ld. AR submitted that the penalty imposed in both the

appeals deserves to be deleted.

authorities below and submitted that in the returns filed in response to

notice u/s.153A of the Act, the assessee has claimed that additional

income has been received by him, which was not declared by him, in

the returns furnished before the date of search for A.Y.2010-2011 &

2011-2012, therefore, the provisions of section 271(1)(c) r.w.

Explanation 5A are applicable. It was also the contention of ld. DR that

the assessee has not given any reasonable cause as to why the

additional income was not disclosed earlier. Accordingly, ld. DR

submitted that the penalty imposed by the AO and confirmed by the

CIT(A) deserves to be upheld for the both the assessment years under

appeals.

5 ITA No.40-45/CTK/2019 8. After considering the submissions of both the parties and

perusing the entire material available on record, we find that in

consequence of search, the AO issued notice u/s.153A of the Act and in

response to which the assessee filed his return on 16.02.2017 declosing

total income of Rs.5,82,279/- and subsequently it was revised on

21.11.2017 disclosing total income of Rs.6,45,586/- for A.Y.2010-2011

and Rs.7,91,720/- for A.Y.2011-2012. During the course of assessment

proceedings, the AO found that the assessee has disclosed additional

income of Rs.1,00,000/- under the head professional income and

Rs.50,000/- as unexplained investment as compared to the income

disclosed in the return filed u/s.139(1) of the Act for A.Y.2010-2011

and Rs.54,470/- for the assessment year 2011-2012. It was also noted

by the AO that the assessee could not disclose the said additional

income u/s.139(1) of the Act, against which the AO initiated penalty

proceedings u/s.271(1)(c) of the Act for concealment of particulars of

income. In the appellate proceedings the CIT(A) observed that had

there been no search, the additional income would not have been

disclosed by the assessee. In this case, the date of search was

03.09.2015 and both the two previous years had ended before the date

of search. In the returns filed in response to notice u/s.153A of the Act

the assessee claimed that additional income has been received by him

and the same was not declared by him in the returns filed before the

6 ITA No.40-45/CTK/2019 date of search, therefore the CIT(A) has rightly observed that

provisions of Explanation 5A to section 271(1)(c) of the Act are

applicable on account of concealment of particulars of his income or

furnished inaccurate particulars of income, because all the conditions

laid down in Explanation 5A have been met and the deeming

provisions of section 271(1)(c) of the Act are clearly applicable to both

the cases of the assessee. In view of the above, it is established beyond

doubt that the assessee has concealed particulars of its income to the

extent of additional income received by him. Ld. AR before us also

could not bring any cogent material to controvert the above findings of

the authorities below. Accordingly, we do not see any good reason to

interfere in the orders of both the authorities below and, hence, we

uphold the same and dismiss both the appeals of the assessee for

A.Y.2010-2011 & 2011-2012, respectively. Thus, appeals of assessee

for A.Y.2010-2011 & 2011-2012 in ITA Nos.40&41/CTK/2019 are

dismissed.

years 2012-2013 to 2015-2016 in ITA Nos.42 to 45/CTK/2019.

erred in confirming the action of the Assessing Officer in levying

penalty u/s.271(1)(c) of the Act of Rs.34,427/- for A.Y.2012-2013,

7 ITA No.40-45/CTK/2019 Rs.50,540/- for A.Y.2013-2014, Rs.33,793/- for A.Y.2014-2015 and

Rs.15,207/- for A.Y.2015-2016, respectively.

other, except different in figure, therefore, with the consent of both the

parties, all the appeals are heard analogously and disposed off by this

consolidated order. For the sake of convenience, we shall take into

consideration the facts mentioned in ITA No.42/CTK/2019 for the

assessment year 2012-2013 for deciding all the appeals.

Government of Odisha as a Doctor and also engaged in private practice

in nursing home of his wife Smt. Ranjita Jena in the name of ‘Jena &

Jena Nursing Home’ and filed his original return of income on

21.09.2012 for the assessment year 2012-2013 disclosing total income

at Rs.7,43,880/-. A search and seizure action u/s.132 of the Act was

conducted against the assessee on 03.09.2015 in Cuttack Hospitals (P)

Limited and group of cases and residential premises of the above

assessee. In consequence to that search, the AO issued notice u/s.153A

of the Act and in pursuance to the same the assessee filed his return of

income on 16.02.2017 disclosing total income of Rs.8,74,000/- . During

the course of assessment proceedings, the AO found that the assessee

has disclosed his income of Rs.8,74,000/- in the return filed u/s.153A

of the Act, whereas the assessee has shown total income in the return

8 ITA No.40-45/CTK/2019 filed u/s.139(1) of the Act at Rs.7,43,880/-. Therefore, the AO added

the differential amount of Rs.1,30,120/- to the total income of the

assessee as undisclosed income as the assessee failed to disclose the

income before the proceedings u/s.153A of the Act and completed the

assessment u/s.153A of the Act determining total income of the

assessee at Rs.8,74,000/-. Consequently, the AO initiated penalty

u/s.271(1)(c) of the Act and penalty order was passed on 28.06.2018

levying penalty of Rs.34,427/- for A.Y.2012-2013, Rs.50,540/- for

A.Y.2013-2014, Rs.33,793/- for A.Y.2014-2015 and Rs.15,207/- for

A.Y.2015-2016, respectively.

appeals before the CIT(A), however, the CIT(A) after considering the

submissions of the assessee and findings of AO, upheld the penalty so

levied by the AO u/s.271(1)(c) of the Act for the above assessment

years under appeals.

is in appeals before the Income Tax Appellate Tribunal.

has simply initiated penalty proceedings stating therein that penalty

proceedings u/s.271(1)(c) of the Act has been initiated on the

differential amount disclosed in the return of income filed u/s.153A of

the Act, however, in the penalty order dated 28.06.2018, the AO has

9 ITA No.40-45/CTK/2019 used both the expression i.e. penalty is imposed by reason of

concealment of income or furnishing inaccurate particulars of such

income. It was also contended by the ld. AR that both assessment and

the penalty order do not specify as to on which limb the AO intends to

impose penalty u/s.271(1)(c) of the Act either for concealment of

particulars of income or for furnishing of inaccurate particulars of such

income. However, the CIT(A) without considering the above factual

aspect, has upheld the action of the AO. Therefore, penalty levied by the

AO and confirmed by the CIT(A) in all the appeals under consideration

deserves to be deleted.

authorities below and submitted that in the returns filed in response to

notice u/s.153A of the Act, the assessee has claimed that interest

income and long term capital gain/short term capital gain has been

received by him, which was not declared by him, in the returns

furnished before the date of search for the assessment years under

consideration, therefore, the provisions of section 271(1)(c) r.w.

Explanation 5A are applicable. It was also the contention of ld. DR that

the assessee has not given any reasonable cause as to why the bank

interest and long term capital gain/short term capital gain was not

disclosed earlier. Accordingly, ld. DR submitted that the penalty

10 ITA No.40-45/CTK/2019 imposed by the AO and confirmed by the CIT(A) deserves to be upheld

for the both the assessment years under appeals.

the entire material available on record, we find that the AO in the

assessment has initiated penalty u/s.271(1)(c) of the Act on the

differential amount disclosed in the return of income filed u/s.153A of

the Act by the assessee without mentioning either of the two limbs as

provided under the provisions of Section 271(1)(c) of the Act i.e. for

concealment of particulars of income or for furnishing of inaccurate

particulars of such income. Thereafter in the penalty order dated

28.06.2018, also the AO while levying penalty u/s.271(1)(c) of the Act

has used both the expression. For more clarification, we would like to

reproduce the relevant observations made by the AO for A.Y.2012-

2013 while passing the penalty order as under :-

“Under the provisions of section 271(l)(c) of the Income Tax Act, 1961, if the Assessing Officer in the course of any proceedings under this Act, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income he may direct that such person shall pay by way of penalty in addition to tax, if any, payable by him, a sum which shall not be less than, but which j shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Therefore, considering the above mentioned facts and in the circumstances of the case, I deem this as a fit and proper case for imposition of penalty under section 271(l)(c) of the Income Tax Act, 1961. Tax on the return filed u/s 153A of Rs.8,74,000/- - Rs.l,10,416 /- Tax on the return filed u/s 139(1) of Rs.7,43,880/- -Rs. 75,989/- Tax sought to be evaded - Rs. 34,427 /-

11 ITA No.40-45/CTK/2019 Minimum penalty imposable is 100% of tax sought to be evaded by reason of concealment of income or furnishing inaccurate particulars of such income, i.e. 100% tax Rs.34,427 /- Maximum penalty imposable is 300% Imposed penalty of Rs.1,03,281 /- under section 271 (i)(c) of the Income Tax Act, 1961 on the assessee. I hereby impose penalty of Rs.34,427/- (being 100% of tax sought to be evaded ) u/s 271(l)(c) of the I. T Act, 1961 on the assessee. This order is passed with the prior approval of the Joint Commissioner of Income Tax, Central Range, Bhubaneswar, Issued demand notice and copy of the order to the assessee.” 18. On perusal of the above, no doubt, it is clear that the AO is not

sure on which count he intends to levy penalty as per the provisions of

Section 271(1)(c) of the Act either for concealment of particulars of

income or for furnishing of inaccurate particulars of such income. Both

these situations are contradictory to each other. Neither the

assessment order nor the penalty order nowhere states the specific

charge of alleged concealment and/or furnishing of inaccurate

particulars of income. Therefore, in our opinion, the entire penalty

imposed by the AO and confirmed by the CIT(A) stands vitiated and,

therefore, is not sustainable. In this regard, we would like to place

reliance on the decision of Hon’ble Gujarat High Court in the case of

Snita Transport Pvt. Ltd., 42 taxmann.com 54, wherein it is held that

while passing final order, the AO has to record a specific finding

accepting the fact that penalty is being imposed for concealment of

particulars of income or for furnishing of inaccurate particulars of such

12 ITA No.40-45/CTK/2019 income. The relevant observations of the Hon’ble Gujarat High Court at

para 9 read as under:-

“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 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 quasicriminal 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."

has been accepted by the AO. Admittedly, it is also a fact that in the all

the cases, both returned income and the assessed income are same.

Therefore, when the revised return is accepted and the income is

assessed as per the revised return, there is no scope for penalty. In this

regard, we would like to place reliance on the order of the Delhi Bench

of the Tribunal in the case of M/s OSE Infrastructure Ltd., ITA Nos.5891

13 ITA No.40-45/CTK/2019 to 5895/Del/2016, order dated 14.08.2018, wherein the Tribunal in

para 15, 16 & 17, has held as under :-

“15. Be that as it may, as the facts indicate the entire dispute relates to the question whether the business is set up or not. Whether the assessee did any business or not is not relevant if the business is set up during the year under consideration. This is a debatable issue and was not finally decided by the AO because the assessee withdrew their claim by revising the return of income. As is held in the case of Neeraj Jindal (supra) and other cases relied upon by the assessee, the return of income filed pursuant to the notice u/s 153A takes the place of the return filed u/s 139(1) which was validly revised by the assessee even before any defect was pointed out by the learned AO. In such circumstances, in view of the decision in the case of CIT vs Reliance Petro Products P. Ltd. (2010) 322 ITR 158 (SC), no penalty could be levied. 16. Lastly, when the revised return is accepted and the income is assessed as per the revised income, there is no scope for penalty. In the case of Kirit Dahyabhai Patel vs ACIT, (2017) 80 Taxmann.com 162 (Guj), the Hon'ble High Court held that in view of specific provision of Section 153A, the return of income filed in response to notice u/s 153A is to be considered as return filed u/s 139, as the AO has made assessment on the said return and, therefore, the return has to be considered for the purpose of penalty u/s 271(1)(c) of the Act and the penalty is to be levied on the income assessed over and above the income returned u/s 153A, if any. Admittedly, in this matter both the returned income and the assessed income are nil. On this ground also, we cannot sustain the penalty order. 17. Viewing from any angle, we do not find any ground to sustain the penalty, as such, we find that the penalty proceedings have to be quashed. We do so accordingly.”

foregoing paragraphs as well as respectfully following the judicial

precedence, relevant observations of which reproduced above, we are

of the view that the penalty levied by the AO u/s.271(1)(c) of the Act

and confirmed by the CIT(A) is not sustainable in all the appeals under

consideration. Accordingly, we set aside the impugned order passed by

the CIT(A) and direct the AO to delete the penalty levied u/s.271(1)(c)

of the Act of Rs.34,427/- for A.Y.2012-2013, Rs.50,540/- for A.Y.2013-

14 ITA No.40-45/CTK/2019 2014, Rs.33,793/- for A.Y.2014-2015 and Rs.15,207/- for A.Y.2015- 2016, respectively and allow the sole ground raised in all the appeals under consideration. Thus, appeals of the assessee for A.Y.2012-2013 to 2015-2016 are allowed. 21. In the result, appeals of the assessee in ITA Nos.40&41/CTK/2019 are dismissed and ITA Nos.42 to 45/CTK/2019 are allowed. Order pronounced in the open court on 08/01/2020. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 08/01/2020 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1. प्रत्यथी / The Respondent- 2. आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, 5. Cuttack गार्ग पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रयत //True Copy// (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack