LT. SMT. JAMUNA DEVI,BHARATPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, BHARATPUR

“1 On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in confirming penalty of Rs. 1,28,128/- levied by Ld. AO U/s 271(1)(c) of the Income Tax Act, 1961, by ignoring the fact that penalty proceedings were initiated for furnishing inaccurate particulars of income whereas penalty was levied for concealment 2 ITA 676/JP/2017_Lt. Smt. Janu Devi Through L/H- Naresh Kumar Vs ACIT of income as well as for furnishing inaccurate particulars of income, which is not in accordance with law. It is therefore prayed that penalty levied u/s 271(1)(c) is not accordance with law and deserves to be deleted.

On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming penalty of Rs. 1,28,128/- levied u/s 271(1)(c) of the Income Tax Act, 1961 on the additions of Rs.4,14,652/- made by Ld. AO, alleging the same as unaccounted sales arbitrarily solely relying upon conclusions drawn in assessment proceedings though penalty proceedings are separate and distinct proceedings, thus the penalty so confirmed deserves to be deleted.

The appellant craves the right to add, delete or amend any of the grounds of appeal

Reliance was placed on the decision of the Hon'ble ITAT Amritsar bench, in the case of HPCL Mittal Energy Ltd. Vs. ACIT in & 555/ Asr/2014 dated 03.05.2018. wherein it has been held that where satisfaction of the AO while initiating penalty proceedings u/s 271(1)(c) of the I T Act is with regard to alleged 'concealment of income' by the assessee, whereas imposition of penalty is for 'Concealment/ furnishing inaccurate particulars of income', the levy of penalty is not sustainable.

The ld. AR has further argued that the estimated addition has been made for which no penalty is leviable. He further contended that the papers found during the course of survey contained rough

On the other hand, the ld DR has relied on the orders of the authorities below and contended that unaccounted sales so found during the course of survey in terms of incriminating material was confirmed by both i.e. by the ld. CIT(A) and the Hon’ble Tribunal, therefore, there is no infirmity in the order of the A.O. in levying the penalty U/s 271(1)(c) of the Act with regard to addition so made.

The ld. DR has also contended that the A.O. has correctly levied penalty with reference to the income concealed and inaccurate particulars furnished by the assessee, accordingly, the penalty so levied cannot be cancelled on technical ground. With regard to merit of the penalty so imposed, he contended that the penalty was not imposed with reference to any estimation of income but was on the basis of concrete material and incriminating documents found during the course of survey which lead to the precise amount of unaccounted sales made by the assessee out of books of account and on which the 6 ITA 676/JP/2017_Lt. Smt. Janu Devi Through L/H- Naresh Kumar Vs ACIT A.O. has computed profit which has escaped assessment by failure of assessee to file inaccurate particulars of income.

We have considered the rival contentions and carefully gone through the orders of the authorities below. We had considered the written submissions dated 26/03/2019 filed by the assessee wherein various judicial pronouncements were relied upon. We had deliberated upon all these judicial pronouncements with reference to the factual matrix of the case. With regard to illegality of the penalty imposed with reference to the observation made in assessment order vis a vis in the penalty order, the ld AR has relied on the decision of Amritsar Bench of the ITAT in the case of HPCL Mittal Energy Ltd. Vs ACIT (supra). As per the ld AR while initiating the penalty proceedings with regard to alleged “concealment of income” and imposing penalty for the other charge i.e. furnishing of inaccurate particulars/concealment, the levy of penalty is not sustainable.

We had carefully gone through the order of the Amritsar Bench of the ITAT in the case of HPCL Mittal Energy Ltd. Vs ACIT (supra) wherein the Tribunal have observed that after insertion of sub-section (1B) to Sec. 271 w.e.f. 01/4/1989, the A.O. need not specifically record in the quantum order as to whether each item of 7 ITA 676/JP/2017_Lt. Smt. Janu Devi Through L/H- Naresh Kumar Vs ACIT addition/disallowance is a case of concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal have further observed that deeming ‘satisfaction’ under clause (c) in terms of sub-section (1B) means deeming ‘proper satisfaction’ and ‘proper satisfaction means getting satisfied as to whether it is a case of concealment of particulars of income or furnishing of inaccurate particulars of such income.

With regard to levy of charge at the stage of initiation of penalty by issue of notice U/s 274 r.w.s. 271(1)(c) vis a vis charge levied in the penalty order U/s 271(1)(c) of the Act, the precise observation of the Tribunal was as per para 15 which reads as under:

The sum and substance of above decision is that the nature of specification of charge by the A.O. at the stage of issue of notice U/s 9 ITA 676/JP/2017_Lt. Smt. Janu Devi Through L/H- Naresh Kumar Vs ACIT 274 read with Section 271(1)(c) of the Act and at the time of passing the penalty order U/s 271(1)(c) should not be at variance. If there is any variance between the charge levied at the time of issuance of notice for levying the penalty and the charge levied at the time of imposition of penalty, the penalty order will be vitiated and penalty cannot be sustained. However, if the charge are same both in the notice issued for levy of penalty and the order passed U/s 271(1)(c) of the Act then no fault can be found with regard to defect in notice so as to hold that the penalty is not leviable.

Now we consider the facts of the instant case with reference to the judicial pronouncements discussed hereinabove, we found that for initiating the penalty the A.O. has issued notice U/s 274 r.w.s. 271(1)(c) of the Act on 20/12/2010 for “concealment and furnishing of inaccurate particulars of his income”. This fact has been mentioned by the A.O. at page 1 of penalty order dated 18/3/2015 and the same was not disputed by the ld AR by bringing any positive material on record. Thereafter considering the assessee’s contention, the A.O. has passed penalty order U/s 271(1)(c) on 18/03/2015 wherein the penalty was levied after having the following observation: “In view of the above discussion, the assessee has concealed his income and also furnished inaccurate particulars of his income.

It is clear from the above that both at the time of initiation of penalty by issuance of notice as well as at the time of imposing the penalty U/s 271(1)(c), the charge of the A.O. was same i.e. “concealment of income and also for furnishing inaccurate particulars of income”. Thus, there is no variation in the charge for levy of penalty and show cause notice issued for levy of penalty. Accordingly, the proposition laid down by the Coordinate Bench in the case of HPCL Mittal Energy Ltd. Vs ACIT (supra) will not help the assessee so as to persuade us to cancel the penalty so imposed. Accordingly, we hold that the penalty has been correctly levied in so far as the charge for initiation of penalty as well as charge while levying the penalty was same. Thus, we do not find any merit in the contention of the ld AR.

With regard to merit of penalty so imposed U/s 271(1)(c) of the Act, we found that there was survey at the business premises of the assessee wherein on the basis of incriminating documents so found, unaccounted sales of Rs. 13,37,586/- was worked out. Very reasonably the A.O. made addition with regard to profit earned on such unaccounted sales which has been confirmed by the ld. CIT(A) and the 11 ITA 676/JP/2017_Lt. Smt. Janu Devi Through L/H- Naresh Kumar Vs ACIT Tribunal. Thus, there is no dispute with regard to the concealment of income and furnishing of inaccurate particulars of income, in so far as the addition has been upheld up to the last extent. It has not been shown by the ld AR as to whether the order of the Tribunal in quantum appeal was challenged before the Hon’ble High Court and the Hon’ble High Court has accepted substantial questions of law so as to suggest that it is debatable issue.

We also observe that the penalty has been levied with reference to the incriminating material found during the course of survey which indicated exact amount of unaccounted sales. These unaccounted sales have been confirmed both by the ld. CIT(A) and the Tribunal. The A.O. has levied penalty only with respect to profit earned on these unaccounted sales which has not been disclosed in the return of income. Accordingly, it cannot be said that the penalty was levied with reference to estimation of income. Accordingly, we do not find any infirmity in the penalty so imposed.

Considering the totality of facts and circumstances of the case and the judicial pronouncements, we are inclined to agree with the ld DR Shri Ashok Khanna that the A.O. was justified in imposing penalty of Rs. 1,28,128/- U/s 271(1)(c) of the Act.