RAVNEET GILL,HYDERABAD vs. INCOME TAX OFFICER, WARD-12(5), HYDERABAD

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ITA 1111/HYD/2019Status: DisposedITAT Hyderabad25 November 2020AY 2015-164 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the penalty notice was not properly issued as the AO failed to strike off the irrelevant portions and did not record satisfaction for initiating penalty proceedings. Following Supreme Court and jurisdictional High Court decisions, the penalty order was set aside.

What were the facts?

The assessee appealed against a penalty levied under Section 271(1)(c) of the Income Tax Act. The assessee contended that the penalty notice was invalid as the Assessing Officer (AO) did not strike off the irrelevant portions and did not record satisfaction for initiating penalty proceedings.

What were the issues?

The primary issue was the validity of the penalty notice issued under Section 271(1)(c) due to the AO's failure to specify the limb of the offense and record satisfaction.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD

Before: SMT. P. MADHAVI DEVI

This is assessee’s appeal for the AY.2015-16, directed against the order of the Commissioner of Income Tax (Appeals)–1, Hyderabad, dated 16-05-2019, confirming penalty levied by the Assessing Officer (AO) u/s.271(1)(c) of the Income Tax Act [Act].

2.

The case is taken up for hearing on 24-11-2020 through video conferencing and both the parties were heard.

3.

The Grounds raised by assessee are as under:

“1. The order of the Ld.CIT(A) is erroneous both in law and on the facts of the case.

2. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in levying penalty an amount of Rs.2,27,204/- u/s.271(1)(c) of the I.T Act. Without considering the fact the Assessing Officer not mentioned in which limb the penalty u/s.274 r.w.s.271(1)(c) of the I.T.Act.

3. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in levying penalty an amount of Rs. 2,27,204/- u/s.271(1)(c) of the I.T Act without considering the facts of the case.

4.

Any other ground or grounds at the time of hearing with the leave of the Hon'ble Tribunal”.

4. As seen from the grounds, the assessee is challenging the validity of notice issued u/s.271(1)(c) of the Act, because the AO has not struck-off the irrelevant portion of the notice dt.28-12-2017 for levy of penalty u/s.271(1)(c) of the Act. He further submitted that the AO has not expressed his satisfaction either in the assessment order or in the notice u/s.274 r.w.s. 271(1)(c) of the Act for initiating the penalty proceedings. In support of his contentions, the ld Counsel for the assessee placed reliance upon the decision of the Hon'ble Supreme Court in the case of CIT & Anr. Vs. SSA’s Emerald Meadows (in SLP No. 11485/2016 dated 05-08-2016) reported in 2016 (8) TMI 1145 – Supreme Court, wherein the decision of the Hon'ble High Court of Karnataka in the case of CIT & Anr. Vs. Manjunatha Cotton & Ginning Factory [359 ITR 565] has been upheld. Further, he also placed reliance upon the decision of the jurisdictional High Court in the case of Pr.CIT Vs. Baisetty Revathi in of 2016, dated 13.07.2017.

5.

The Ld.DR, on the other hand, supported the order of the AO.

6.

Having regard to the rival contentions and material on record, I find that the assessment order was passed ex-parte and the CIT(A) and the AO have not mentioned any reason for initiating the penalty u/s.271(1)(c) of the Act. Further as seen from the copy of the notice issued u/s.274 r.w.s.271(1)(c) of the Act, the AO has not struck-off the irrelevant portion in the notice i.e., whether the penalty is being levied for concealment of income or for furnishing of inaccurate particulars or for both. In view of the same, respectfully following the decision of the Hon'ble Supreme Court in the case of CIT Vs. SSA’s Emerald Meadows (supra) and also the decision of the jurisdictional High Court in the case of Pr.CIT Vs. Baisetty Revathi (cited Supra), the penalty order passed by the AO is set aside. Accordingly, the appeal of assessee is allowed.

Order pronounced in the open court on 25th November, 2020

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