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Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
ORDER
PER ANIL CHATURVEDI, AM:
This appeal filed by the assessee is directed against the order dated 08.06.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Year 2014-15.
Brief facts of the case as culled out from the material on record are as under :-
2 3. Assessee is an individual who is stated to be engaged in the business of export of cotton textile Made Ups etc. to European Countries. Assessee filed his return of income for A.Y. 2014-15 on 03.11.2014 declaring an income of Rs.4,35,890/-. The case of the assessee was selected for scrutiny assessment through CASS. Notice u/s 143(2) of the Act was issued and served upon the assessee and thereafter assessment was framed u/s 143(3) of the Act vide order dated 19.12.2016 by determining the total income of Rs.10,38,750/- by making disallowance of Rs.6,02,852/-. On account of aforesaid disallowances made by AO, AO levied penalty of Rs.66,834/- u/s 271(1)(c) of the Act vide order dated 28.03.2019.
Aggrieved by the penalty order of AO, assessee carried the matter before CIT(A) who vide order dated 08.06.2021 in Appeal No.CIT(A), Delhi-11/10023/2019-20 upheld the penalty levied by AO. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds:
1. “The action of the Ld AO in not specifying charge of penalty u/s 271(1)(c) in his first Notice dated 19.12.2016 renders the penalty illegal, null and void.
2. The action of the Ld CIT(A) in confirming the action of the Ld AO in imposing penalty u/s 271(1)(c) on disallowance of income of Rs.46,020/- is illegal, arbitrary, unwarranted and uncalled for an against the facts and circumstances of the case.
3. The action of Ld CIT(A) in confirming action of the Ld AO in invoking explanation (1) of Section 271(1)(c) is illegal arbitrary unwarranted and uncalled for and against the and circumstances of the case.
3 4. The action of the Ld CIT(A) in confirming the action of the Ld AO in not considering SC Judgment in Reliance Petro Products Pvt. Ltd. and levying penalty is illegal, arbitrary, unwarranted and uncalled for and against the facts and circumstances of the case.
The action of the Ld CIT(A) in confirming the action of the action of the Ld Joint Commissioner in giving approval mechanically u/s 274(2) and not disclosing the contents of the same is illegal, arbitrary, unwarranted uncalled and against the facts and circumstances of the case.
The appellant reserves the right to add, alter and withdrawal any grounds of appeal
7. That the above grounds of appeal are without prejudice to each other.”
5. Before us, at the outset, Ld. AR submitted that though the assessee has raised several grounds but the sole controversy is with respect to levy of penalty under Section 271(1)(c) of the Act.
6. Before us, Learned AR pointed to the notice issued by the Assessing Officer under Section 274 read with section 271(1)(c) of the Act dated 19.12.2016, wherein the Assessing Officer has mentioned “have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2, 3, 4 & 5”. He, therefore, submitted that the Assessing Officer was not sure as to for which limb of section 271(1)(c) of the Act, penalty has been initiated i.e. whether it is for concealment of income or for furnishing of inaccurate particulars of income. He, therefore, relying on the decision of Hon'ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance
4 Co. Ltd.(2021) 432 ITR 84 submitted that the show-cause-notice issued by the Assessing Officer were illegal and bad in law and, therefore, liable to be quashed.
Learned DR, on the other hand, did not controvert the submissions made by the learned authorized representative but, however, submitted that the levy of penalty has to be seen after considering overall conduct of the assessee. He, thus, supported the orders of the lower authorities.
We have considered the rival submissions and perused the material available on record. The issue in the present ground is with respect to levy of penalty under Section 271(1)(c) of the Act. In the present appeal, the show-cause notice dated 19.12.2016 which has been issued by the Assessing Officer under Section 274 read with section 271(1)(c) of the Act reveals that Assessing Officer has not recorded any clear cut satisfaction as to whether the penalty under Section 271(1)(c) of the Act has been levied for concealment of income or for furnishing of inaccurate particulars of income.
We find that Hon'ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del.), after considering the decision in the case of CIT vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar) & CIT vs.
5 SSA’s Emerald Meadows (2016) 73 Taxman.com 241 (Kar) [where the SLP filed by Revenue was dismissed and reported in (2016) 386 ITR (ST) 13 (SC)] has held that penalty u/s 271(1)(c) was not leviable when the notice issued by AO did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. The relevant portion of the findings of Hon’ble High Court in the case of Sahara India Life Insurance Co. Ltd. (supra) reads as under: 8. “21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA’s Emerald Meadows (2016) 73 Taxman.com 241(Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016. 9. 10.
On this issue again this Court is unable to find any error having been committed by the ITAT. No substantial question of law arises.”
Before us, Revenue has not placed any material to demonstrate that the aforesaid decision of Hon'ble Delhi High Court in the case of Sahara India Life Insurance Co. Ltd. (supra) has been stayed/set aside/overruled by higher judicial forum. Further, Revenue has also not placed on record any contrary
6 binding decision in its support. We, therefore, following the aforesaid decision in the case of Sahara India Life Insurance Co. Ltd. (supra) are of the view that the Assessing Officer was not justified in levying penalty under Section 271(1)(c) of the Act. We accordingly set aside the levy of penalty levied by Assessing Officer and that was confirmed by the learned Commissioner of Income-Tax (Appeals). Thus, the ground of the Assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 19.09.2022