MALOOK NAGAR,NEW DELHI vs. ACIT CENTRAL CIRCLE-15, NEW DELHI

ORDER Per Bench: The present appeals have been filed by the assessee against the orders of the ld. CIT(A)-XXVI, New Delhi dated 22.04.2019.

2. That the Ld. CIT(A) has grossly erred both in law and on facts in upholding levy of penalty of Rs 2,07,200/- u/s 271(1)(c) of the Act.

3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts & in law in upholding the levy of penalty u/s 271(1)(c) of the Act without appreciating the fact that there was no concealment or furnishing of inaccurate particulars of income by the appellant as contemplated u/s 271(1)(c) of the Act.

4. That on the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts & in law in upholding levy of penalty of Rs 2,07,200/- u/s 271 (1 )(c) of the Act on addition sustained on ad-hoc, estimated basis without bringing any material on record to prove that there was concealment or furnishing of inaccurate particulars of income on the part of appellant.

5. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred both on facts & in law in upholding levy of penalty of Rs 2,07,200/- u/s 271(1)(c) of the Act without considering the fact that explanation offered by the appellant was not acceptable to the Ld. AO would not itself amount to concealment or furnishing of inaccurate particulars of income by the appellant as contemplated u/s 271(1)(c).

7. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred both on facts & in law in upholding levy of penalty of Rs 2,07,200/- u/s 271(1)(c) of the Act, without appreciating the fact that AO explicitly fails to specify in the show cause notice issued u/s 274 r.w.s. 271 of the Act that under which limb of section 271 (1)(c), penalty proceedings has been initiated i.e. either for concealment of income or for furnishing of inaccurate particulars of income, which makes the penalty order passed without jurisdiction, which is bad in law and liable to be quashed.

8. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts & in law in justifying levy of penalty by arbitrary and mechanically applying the provisions of Explanation 5A of Section 271(1)(c) without appreciating the fact that no addition was made on the basis of any money, bullion, jewellery, other valuable article or document etc. found and seized during the search action carried under section 132 of the Act and therefore, provisions of Explanation 5A of Section 271 (1 )(c) are not applicable in the case of the appellant.”

4. In view of the above, I hereby hold that this is a fit case for levy of penalty as the assessee had furnished inaccurate particulars of income thereby concealing true particulars of such income.

1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only

5 to 5824/Del/2019 Malook Nagar through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in ITA No. 475 of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180]