RAMESH HARIBHAU GAWALI,,AHMEDNAGAR vs. INCOME TAX OFFICER,, AHMEDNAGAR

ORDER

PER D. KARUNAKARA RAO, AM:

by the assessee are as under :- “1. On the facts and in the circumstances of the case Ld.CIT(A) has erred in sustaining the penalty levied u/s 271(1)(c) disregarding the valid submission that the notice issued u/s 274 r.w.s. 271(1)(c) is defective in as much as the Assessing Officer has not struck off the inappropriate portion/part and therefore there is no specific charge/satisfaction leveled against the appellant and which is further evident as the penalty is levied on the ground that appellant has concealed the particulars of income and furnished inaccurate particulars of income and invoking Explanation 1 to sec 271(1)(c).

2. On the facts and in the circumstances of the case and without prejudice to the above and taking into consideration the disallowances made u/s 40A(ia) and 40A(3) no penalty should have levied as such disallowances do not partake the character of either concealment of income or furnishing inaccurate particulars of income.

3. On the facts and in the circumstances of the case the CIT(A) has erred in sustaining penalty w.r.t. the expenses incurred on marble of Rs 13,10,000/- and construction material of Rs 22,75,000/- holding that these are the bogus expenses.

4. On the facts and in the circumstances of the case the CIT(A) has erred in sustaining the penalty levied on disallowances of 10% of expenses of Rs 10,16,580/- overlooking the fact that the same represents adhoc disallowance. The above grounds of appeal may kindly be allowed to be amended, altered, or modified in the interest of natural justice.”

3. Briefly stated the relevant facts include that the assessee is a civil contractor. The assessee filed the return of income declaring total income of Rs.14,50,480/-. At the end of the assessment u/s 143(3) of the Act, the Assessing Officer assessed the total income of the assessee after making certain additions and determined the taxable income of the assessee at Rs.1,09,17,930/- against returned income. Further, the Assessing Officer initiated the penalty proceeding stating that “.......inaccurate particulars of income and thereby concealing his income.........” (Para 13 of page 20 of the assessment order).

4. In the penalty order, the Assessing Officer clearly stated that the levy of penalty is for the default of “………concealed the particular of his income and furnished inaccurate particular of income ........” (para 8 of the penalty order).

5. The CIT(A), relying on the judgement of the Hon’ble Delhi High Court in the case of CIT vs. Zoom Communication Pvt. Ltd., 327 ITR 510 (Dehli-HC), confirmed the penalty as levied by the Assessing Officer.

6. Aggrieved with the said decision of the CIT(A), the assessee is in appeal before the Tribunal with the above extracted grounds. 7. According to the ld. AR, the order of the CIT(A) shall have to be set- aside on the legal issue relating to the ambiguity in the mind of the Assessing Officer while dealing with the initiation and levy of penalty. Highlighting the legal requirement of making a specific reference to the specific limb of clause (c) of section 271(1) of the Act and relying on various binding judgments in the case CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom.) as well as the judgment of Hon’ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565, Ld. Counsel demonstrated that the penalty levied by the Assessing Officer is unsustainable in law and the same is wrongly upheld by the CIT(A). 8. On the other hand, ld. DR for the Revenue heavily relied on the orders of the authorities below. 9. We heard both the parties on this legal issue and also perused the material available on record. We find that this is a case where the Assessing Officer failed to record proper satisfaction while initiating and levying the penalty u/s 271(1)(c) of the Act. In this regard, we pursed the orders of the