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Income Tax Appellate Tribunal, ‘’ SMC’’ BENCH, AHMEDABAD
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-1, Vadodara dated 28/02/2017 (in short “Ld.CIT(A)”) arising in the matter of penalty order passed under s.271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") dt.22/02/2005 relevant to the Assessment Year 2002-2003.
The assessee has raised the following grounds of appeal.
On the facts and in the circumstances of the case the learned CIT(A) erred in confirming the act of invoking the provisions of section 271(1)(c) of the I.T Act 1961 and thereby confirming the penalty of Rs.2107500/- 2. The action of the CIT(A) being uncalled for and unwarranted. 3. Your appellant therefore in the interest of justice hereby prays that the penalty levied by the A.O be deleted. The appellant request leave to add to add to or later the grounds of appeal at or before the time of hearing of the appeal.
The assessee in all the grounds of appeal has challenged the imposition of the penalty levied u/s 271(1)(c) of the Act.
3. Briefly stated facts are that the assessee in the present case is a Limited Company and engaged in the business of grey knitwear fabric. The AO in his assessment order vide dated 22.02.2005 has made addition to the total income of the assessee of certain items as detailed under; i- Bogus Purchase Rs. 27,92,000/- ii- Unaccounted Purchase and Sales Rs. 30,64,758/- iii- Unsecured Loans Rs. 46,530/- 3.1 Subsequently, the AO issued a notice u/s 274 r.w.s. 271(1)(c) of the Act for levying the penalty on account of the addition of the items as discussed above.
3.2 However, the assessee submitted the disallowance/addition of certain expenditure does not lead to any concealment of income or inaccurate particulars of income.
3.3 The AO however observed that the assessee has furnished the same submission as made before the assessment/appellate proceedings. Thus in the absence of any reply from the assessee has levied the penalty of Rs. 8,55,200/- being 100% of tax sought to be evaded u/s 271(1)(c) of the Act.
Aggrieved, assessee preferred an appeal to learned CIT(A) who confirmed the order of the AO by observing as under: 4.4 During the course of the appellate proceedings, the appellant’s AR has gain reiterated the submissions before the AO and CIT(A) and CIT(A) in respect of the assessment proceedings. These submissions have already been found to be not acceptable. Thus, the additions/disallowance made by the AO clearly fall within the mischief of provisions of section 271(1)(c) . Thus, it is held that the penalty levied by the AO u/s.271(1)(c) of the Act is correct and the same is accordingly upheld.
Being aggrieved by order of Ld. CIT(A) assessee is in the appeal before us.
Learned AR before us submitted that the AO has levied the penalty u/s 271(1)(c) of the Act without mentioning any specific charge. As such the AO in Para No.8 in calculating the penalty has drawn its conclusion by levying both the charges i.e. concealment of income and inaccurate particulars of income. Accordingly, the learned AR prayed that penalty without mentioning the specific charge cannot be levied upon the assessee.
On the other hand, learned DR before us submitted that the assessee cannot be absolved from the penalty even the AO has specified both the charges in his penalty order. The learned DR vehemently supported the order of Authorities below.
We have heard the rival contentions and perused the material available on record. From the preceding discussion, we note that the penalty has been imposed by the AO u/s 271 (1)(c) without mentioning the specific charge in its penalty order dated 19/03/2015, whether, it was levied on account of concealment of income or account of furnishing of inaccurate particulars of income. The relevant extract of the penalty order is reproduced as under: “Amount of concealment/filed inaccurate particulars of income as discussed above”
7.1 On perusal of above, it is clear that the AO has not levied the penalty on the specific charge as mandated u/s 271(1)(c) of the Act. In such facts and circumstance the Hon'ble Jurisdictional High Court in the case of Snita Transport Pvt. Ltd. Vs. Assistant Commissioner of Income Tax reported in 42 taxmann.com 54 has held that penalty cannot be imposed without mentioning the specific charge. The relevant extract of the order is reproduced below: 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 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."
7.2 The principles laid down by the Hon’ble Jurisdictional High Court in the above case are squarely applicable to the facts of the case on hand. The AO has not mentioned the specific charge in its penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. Hence, the ground of appeal of the assessee is allowed.
7.3 As we have deleted the penalty imposed by the AO & confirmed by the ld. CIT-A on the technical ground i.e. no specific charge has been invoked as discussed above, therefore, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 20/01/2020 at Ahmedabad.