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आदेश/Order
PER N.K. SAINI, VICE PRESIDENT
This is an appeal by the Assessee against the order dt. 28/05/2019 of Ld. CIT(A)-2, Chandigarh.
2. Following grounds have been raised in this appeal:
1. That the Ld. CIT(Appeals)-2 Chandigarh has erred in upholding the order of the learned A 0 in imposing penalty of Rs. 17,242/- under Section 271(l)(c) of the Income Tax Act, 1961 which is below 100% of the tax sought to be evaded as per Section 271(l)(iii) of the Act and without prior approval of the learned Addl. CIT Range 6 Mohali under Section 274 of the Act.
2. That the Ld. CIT(Appeals)-2 Chandigarh has erred in upholding the order of the learned A 0 has in the notice under Section 271(l)(c) of the Income Tax Act, 1961 has stated that the assessee has concealed the particulars of income and furnished inaccurate particulars of income as well as in the body of the assessment order. The learned AO has no clear belief regarding under which limb mentioned in section 271(l)(c) of the Income Tax Act, 1961 the penalty is to be levied upon the appellant. Since the learned AO has no specific reasons to issue penalty notice no penalty can be levied.
That the Ld. CIT(Appeals)-2 Chandigarh has erred in upholding the order of the learned A 0 as the learned A 0 was satisfied that the appellant has furnished inaccurate particulars of income resulting in concealment of income for which no limb has been specified in Section 271(l)(c ) of the Income Tax Act, 1961 under which the penalty has been levied.
That the Ld. CIT(Appeals)-2 Chandigarh has erred in holding that Section 246A(q) is not applicable where request for rectification has been made under Section 154 of the Act.
5. That the appellant reserves the right to add, amend or delete one or more of the grounds of appeal before the appeal is disposed off.
3. Ground No. 2 was not pressed, therefore, the same is dismissed as not pressed.
4. The grievance of the assessee in this appeal relates to the sustenance of penalty of Rs. 17,242/- levied by the A.O. under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’).
Facts of the case as appearing in the penalty order dt. 30/03/2018 in brief are that the assessment in this case was completed vide order dt. 31/03/2014 at an income of Rs. 25,71,060/- against the returned income of Rs. 20,33,820/- by making the following addition:
Addition of Rs. 81,072/- on account of less income shown under the head Income from other sources".
2. Addition of Rs.3,15,213/-was made on account of assessee is claiming depreciation on the entire block of "Building and Plant & Machinery". 3. Addition of Rs. 1,40,955/ on account of disallowance of "Foreign Travelling expenses".
Proceedings under section 271(1)(c) of the Act were also initiated against the addition mentioned above. In the meantime the assessee filed an appeal before the Ld. CIT(A) who deleted the addition mentioned at Sl. No. 2 above . The A.O. asked the assessee as to why the penalty under section 271(1)(c) of the Act was not to be levied. In response the assessee submitted as under:
"1. That as regards addition of Rs.81,072/- on account of interest on FDR it is submitted that the assessee has already stated in assessment proceedings that it could not disclose the same as it has not received Form 16Afrom the respective deductors due to TDS on accrual of interest. As such the assessee has reasonable cause for non-disclosure of the same and has paid the income tax due in time. It is therefore prayed that the penalty proceedings may be dropped on this issue ." ………….. 3. That disallowance of 20% of the Foreign travelling is an agreed addition of Rs. 1,40,955/- . It is adhoc agreed addition subject to no penalty as such therefore prayed that the penalty proceedings may be dropped on this issue."
5.1 The A.O. was satisfied with the explanation of the assessee with respect to the disallowance of Foreign Travelling Expenses and therefore the penalty under section 271(1)(c) on account of the said addition was dropped. However the A.O. did not find merit in the reply of the assessee on the another addition of Rs. 81,072/- relating to the addition under the head “income from other sources”. The A.O. held that the assessee furnished the inaccurate particulars of income resulting in the concealment of income. Accordingly, the penalty under section 271(1)(c) of the Act amounting to Rs. 17,242/- was levied.
Being aggrieved the assessee, carried the matter to the Ld. CIT(A) who sustained the penalty levied by the A.O.
Now the assessee is in appeal.
Ld. Counsel for the Assessee submitted that the A.O. before levying the penalty under section 271(1)(c) of the Act did not obtain the approval from the Additional Commissioner of Income Tax which is mandatory as per the provisions of Section 274 of the Act which provides that no order imposing the penalty shall be made except with prior approval of the Joint Commissioner of Income Tax. It was submitted that the assessee sought information under RTI Act and received the order dt. 30/05/2019, copy of which is placed at page no. 16 & 17 of the assessee’s paper book wherein it has been mentioned that the net minimum penalty imposable was Rs. 25,051/- and that since the penalty levied was Rs. 17,242/-, approval under section 274 of the Act, which is required in case the amount of penalty under section 271(1)(c) of the Act is more than Rs. 20,000/- from Joint Commissioner of Income Tax was not sought.
It was further submitted that since the A.O. failed to obtain the approval from the Joint Commissioner / Additional Commissioner of Income Tax, he knowingly reduce the penalty to Rs. 17,242/- instead of Rs. 25,051/- which was the minimum penalty leviable on the concealed income, if any, of Rs. 81,072/-. It was further submitted that the A.O. in the notice under section 274 r.w.s 271(1)(c) of the Act did not mention as to whether there was a concealment of income or furnishing of inaccurate particulars of income. Our attention was drawn towards the copy of the aforesaid notice which is placed at page no. 14 of the assessee’s paper book. It was submitted that the A.O. was not sure as to whether there was a concealment of income or furnishing of inaccurate particulars of income, therefore the penalty levied under section 271(1)(c) of the Act was not justified. The reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Dilip N. Shroff Vs. JCIT reported at 291 ITR 591 and the decision of Hon'ble Karnataka High Court in the case of Manjunath Cotton & Ginning Factory & Others reported at 359 ITR 565.
In his rival submissions the Ld. Sr. DR strongly supported the impugned order passed by the Ld. CIT(A) and further submitted that since the penalty levied by the A.O. was less than Rs. 20,000/- there was no need of obtain the approval from the Joint / Additional Commissioner of Income Tax and as the assessee concealed the income of Rs. 81,072/- the penalty of Rs. 17,242/- under section 271(1)(c) of the Act was rightly levied by the A.O. and that the Ld. CIT(A) was fully justified in sustaining the above said penalty.
We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is noticed that the A.O. while framing the assessment under section 143(3) of the Act made three addition i.e; Rs. 81,072/- on account of less income shown under the head “income from other sources,” Rs. 3,15,213/- on account of excess depreciation and Rs. 1,40,955/- on account of disallowance of Foreign Travelling Expenses. Out of the aforesaid additions, the addition of Rs. 3,15,213/- was deleted by the Ld. CIT(A) vide order dt. 24/10/2016 in Appeal No. 149/2014- 15 and the A.O. herself dropped the penalty on the addition of Rs. 1,40,955/-, the only addition which remained intact for the purposes of levying penalty under section 271(1)(c) of the Act was Rs. 81,072/- . On the said addition the A.O. levied penalty of Rs. 17,242/-. However when the information was sought by the assessee under RTI Act relating to the amount of penalty to be levied and as to whether approval was taken from the Joint/Additional Commissioner of Income Tax before levying the penalty under section 271(1)(c) of the Act, the reply given vide letter dt. 30/05/2019 (copy of which is placed at page no. 16 & 17 of the assessee’s paper book) was as under:
“F.No:DCIT/Circle6(1)/Mohali/2019-20/178 Dated: 30.05.2019 To Sh. Ramesh Dudani C-104, I.A., Phase-7, Mohali. Sir, Sub: Calculation in respect of penalty u/s 271(1)(c) for the A.Y. 2011-12- Regarding- Kindly refer to the order u/s 19(1) of the Right to Information Act, 2005 passed vide no. dated 17/05/2019 in your case.
In connection with the above, Further, point wise information in respect of your office letter no. 934 dated 21.05.2019 is as under:-
i. Please provide the information as to in how the calculation of penalty amount of Rs.17,242/- has been made on 81,072/- stated to be the concealed amount. As per Income Tax Act, 1961, Calculation of the Penalty to be levied is equal to the tax sought to be evaded & calculation is as per the table given below:-
Sr.no Particulars Amount 1. Tax on the assessed income of Rs. Rs. 5,38,437/- 22,55,847/- (including concealed income of Rs. 81,072/-) 2. Tax on the income of Rs. 21,74,775/ (i.e. Rs. 5,13,386/- Assessed Income – Concealed Income of Rs. 81,072/-) 3. Minimum Penalty imposable @ 100% of the Rs. 25,051/- Tax sought to be evaded. 4. Maximum Penalty imposable @300% of the Rs. 75,153/-
Tax sought to be evaded. ii. Please provide the information the concealed amount on which the penalty has been imposed and how it has been calculated. As per the penalty order, penalty u/s 271(l)(c) has been levied on the addition of Rs. 81,072/- made under the head 'Income from Other Sources'. Further, reply to query no. 1 may be referred for the calculation of penalty. iii. Please provide the information whether any approval of the Addl. CIT/JCIT Mohali Range has been obtained before levy of penalty. Since penalty levied was at Rs. 17,242/-, approval from JCIT/Addl CIT was not sought as per Sec 274 of the Act. iv. If no.(iii) information is yes please provide a copy of the approval as requested in para (iii). Not Applicable This is for your information and further necessary action at your end.