VIJAY SHIVAJIRAO KOKATE,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME TAX, NASHIK

This appeal preferred by the assessee emanates from the order of the Ld. CIT(A)-1, Nashik, dated 01.02.2017, for the assessment year 2009-10.

The relevant facts as culled out from the material on record are as under :-

On the date of hearing, none appeared on behalf of the assessee nor any adjournment application was filed. However, the assessee has filed written submissions. We therefore, proceed to dispose of the appeal ex-parte qua the assessee basing on the material available on record and after hearing the Ld. DR.

Before us Ld. DR. supported the orders of Assessing Officer and CIT(A).

We have heard the Ld. DR and perused the material on record. The issue in the present case is with respect to levy of penalty u/s 271(1)(c) of the Act. In the present case, penalty of Rs.98,290/- has been levied on addition of Rs.2,89,166/- while finalizing the assessment. The perusal of assessment order passed u/s 143(3) r.w.s. 147 of the Act reveals that in the assessment order Assessing Officer had recorded satisfaction namely for concealment and furnishing of inaccurate particulars of income i.e. he has recorded satisfaction for both the limbs for levy of penalty. Thereafter, in the penalty order passed u/s 271(1)(c) of the Act, Assessing Officer held that assessee had furnished inaccurate particulars of income and has concealed the income and accordingly levied the penalty. It is a settled law that while levying penalty for concealment, the Assessing Officer has to record satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c) of the Act. The first step is to record satisfaction while completing the assessment as to whether the assessee had concealed his income or furnished inaccurate particulars of income. Thereafter, notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the assessee. The Assessing Officer thereafter has to levy penalty under Section 271(1)(c) of the Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed his income or furnished inaccurate particulars of income. The Hon‟ble Bombay High Court in the case of CIT Vs. Samson Perinchery reported in (2017) 392 ITR 4 (Bom) held that where initiation of penalty is one limb and the levy of penalty is on other limb, then in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty.

Considering the facts of the present case in the light of the decision of Hon‟ble Bombay High Court in the case of CIT Vs. Samson Perinchery (supra), we are of the view that in the present case, the basic condition for levy of penalty has not been fulfilled and that the penalty order suffers from non-exercising of jurisdiction power of Assessing Officer and therefore penalty order cannot be upheld. We accordingly set aside the penalty order passed by Assessing Officer. Thus, the grounds of assessee are allowed.

In the result, the appeal of the assessee is allowed.