VINEETA SEHGAL,G B NAGAR vs. ITO, WARD-4(3), NEW DELHI
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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’, NEW DELHI
Before: SHRI ANIL CHATURVEDI & SHRI NARENDER KUMAR CHOUDHRY
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘F’, NEW DELHI
BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER
ITA No. 6729/Del/2018 Assessment Year: 2014-15
Vineeta Sehgal, A-1/202, Vs. ITO, Ward-4(3), Tower No. 6, Purvanchal New Delhi. Heights, Sector-Geta-1, Gr. Noida, Sakirpur, Gautam Budh Nagar (UP)
PAN :ANXPS9638J (Appellant) (Respondent)
Appellant by Ms.Mansi Jain, CA Respondent by Shri Kumar Pranav, SR DR
Date of hearing 14.03.2022 Date of pronouncement 30.03.2022
ORDER PER ANIL CHATURVEDI: This appeal filed by the Assessee is directed against the order
of learned Commissioner of Income-Tax(Appeals)-2, New Delhi
dated 30.07.2018 in appeal No.10070/17-18.
Briefly the facts as culled out from the material on record are
as under:
‘Assessee is an individual who filed her return of income for assessment year 2014-15 on 15.10.2015, declaring total
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income of Rs.1,99,940. The case was selected for scrutiny and thereafter assessment was framed under Section 143(3) of the Income-Tax Act, 1961 vide order dated 26.12.2016 at a total income of Rs.22,19,940, inter alia, by making an addition of Rs.20,20,000 on account of unexplained cash deposits. On the aforesaid addition of unexplained cash deposits, Assessing Officer vide penalty order passed under Section 271(1)(c) of the Income-Tax Act, 1961 dated 29.06.2017 levied penalty of Rs.5,10,861 under Section 271(1)(c) of the Act’.
Aggrieved with the order of the Assessing Officer, assessee
carried the matter in appeal ( Appeal No. 10070/17-18 ) before the
learned Commissioner of Income-Tax(Appeals) who dismissed the
appeal of the assessee.
Aggrieved by the order passed by the learned Commissioner of
Income-Tax(Appeals), assessee is now in appeal before us and
raised the following grounds:
“1. On facts and circumstances of the case, the learned Commissioner of Income-Tax(Appeals) erred in upholding the order dated 29.06.2017 passed by the Income Tax Officer Ward 4(3) New Delhi under section 271(1)(c) of the Income-Tax Act which is bad in both the eye of law and on the facts.
On facts and circumstances of the case, the learned Commissioner of Income-Tax(Appeals) erred in upholding the order dated 29.06.2017 passed by the Income Tax Officer Ward 4(3) New Delhi under section 271(1)(c) of the Income-Tax Act which is barred by limitation in terms of section 275 of the Income-Tax Act.
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On facts and circumstances of the case, the learned Commissioner of Income-Tax(Appeals) erred in law and on facts in upholding the order dated 29.06.2017 passed by the Income Tax Officer Ward 4(3) New Delhi u/s 271(1)(c) of the Income-Tax Act which is void and ab-initio, as the penalty proceedings initiated by issue of notice u/s. 274 read with 271 of the Income-Tax Act without striking off of the irrelevant clause of the notice, meaning thereby the learned Assessing Officer has not apprised the Appellant about the specific charge under which Appellant has been held guilty of penal action that is whether she had concealed the income or furnished inaccurate particulars.
On facts and circumstances of the case, the learned Commissioner of Income-Tax(Appeals) erred in law and on facts in upholding penalty, notwithstanding that the Appellant had agreed to additions on the specific understanding that penalty would not be levied u/s 271(1)(c) of the Income-Tax Act by the learned AO.
On facts and circumstances of the case, the learned Commissioner of Income-Tax(Appeals) erred in upholding penalty of Rs.5,10,861 levied u/s 271(1)(c) of the Income-Tax Act.
The Appellant craves to leave, add, amend, modify, delete and/or change all or any of the grounds on/or before the date of hearing.”
Before us, at the outset, at the time of hearing, learned AR
submitted that though assessee has raised various grounds but the
sole controversy is with respect to levy of penalty under Section
271(1)(c) of the Act.
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Learned Authorized Representative submitted that Assessing
Officer had made an addition of Rs.20,20,000 on account of
unexplained cash deposits in the bank account. On the aforesaid
addition, he levied penalty under Section 271(1)(c) of the Act
amounting to Rs.5,10,861 and the penalty was upheld by learned
Commissioner of Income-Tax(Appeals). She submitted that in the
assessment order, no clear satisfaction has been recorded by the
Assessing Officer as to whether it was a case of furnishing
inaccurate particulars of income or it was a case of concealment of
particulars of income. She thereafter submitted that even in the
penalty order passed on 29.6.2017, the penalty has been levied on
both the limbs i.e. for concealment of income as well as furnishing
of inaccurate particulars of income. She, thereafter, pointed out to
the notice issued under Section 274 read with Section 271(1)(c) of
the Act dated 26.12.2016 which is placed at page 2 of the paper
book and from that she submitted that the notice does not indicate
as to what ground the penalty is sought to be imposed i.e. whether
it is for concealment of income or for furnishing inaccurate
particulars of income. She, therefore, submitted that in the absence
of proper satisfaction recorded by the Assessing Officer, no penalty
under Section 271(1)(c) of the Act is imposable and in support of
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her contention, she placed reliance on the decision of Hon'ble Delhi
High Court in the case of Sahara India Life Insurance Co. Ltd.
reported in (2021) 432 ITR 84 (Del.) and other decisions.
Learned Departmental Representative on the other hand
supported the orders of lower authorities & submitted that the
assessment order & penalty order have to be seen together & not in
isolation.
We have heard the rival submissions & and perused the
material on record. The issue in the present appeal is with respect
to the upholding of levy of penalty u/s. 271(1)(c) of the Act by
learned Commissioner of Income-Tax(Appeals). The Assessing
Officer has levied penalty u/s. 271(1)(c) of the Act on the additions
of unexplained cash deposits made by him. As per the provisions of
Section 271(1)(c), if the Assessing Officer or the learned
Commissioner (Appeals) or the Principal Commissioner or
Commissioner in the course of any proceedings under the Act is
satisfied that any person has concealed the particulars of his
income or furnished inaccurate particulars of such income, he may
direct such person shall pay by way of penalty, in addition to the
tax payable by him, a sum which shall not be less than but which
shall not exceed three times the amount of tax payable by him, the
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amount of tax sought to be evaded by reason of concealment of
particulars of his income or furnishing of inaccurate particulars of
such income. Thus the two key expressions which comprises of two
limbs for imposition of penalty u/s. 271(1)(c) of the Act are
“concealment of particulars of his income” & “furnishing inaccurate
particulars of such income”. 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 u/s. 271(1)(c) of the Act, namely, whether
the assessee has concealed the income or furnished inaccurate
particulars of income. Thus the first step is to record satisfaction
and come to a finding while completing the assessment as to
whether the assessee has concealed its income or furnished
inaccurate particulars of income. The Assessing Officer thereafter
has to levy penalty u/s. 271(1)(c) of the Act for non-satisfaction of
either of the limbs which gets attracted. Thereafter, notice u/s. 274
r.w.s. 271(1)(c) of the Act is to be issued to the assessee. The
aforesaid notice should specifically indicate on which ground
penalty is sought to be imposed, whether for concealment of income
or for furnishing inaccurate particulars of income. In the present
case, the perusal of assessment order passed by the Assessing
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Officer reveals that in the Assessment Order, no specific finding has
been recorded by the Assessing Officer as to whether it is a case of
concealment of income or a case of furnishing of inaccurate
particulars of income. Further in the notice dated 26.12.2016,
issued under Section 274 read with Section 271 of the Act, the copy
of which is placed at page 2 of the paper book, the inapplicable
portion or limb of Section 271(1)(c) of the Act has not been struck
off. It is a settled law that the two limbs i.e. “concealment of
particulars of income” and “furnishing of inaccurate particulars of
income” carry different connotations. Various High Courts have
held that Assessing Officer must indicate in the notice for which of
the two limbs he proposes to impose the penalty and for this the
notice has to be appropriately marked. If in a printed format of the
notice the inapplicable portion is not struck off thus not indicating
for which limb the penalty is proposed to be imposed, it would lead
to an inference as to non application of mind, thus vitiating
imposition of penalty.
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. SSA’s Emerald
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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 under Section 271(1)(c) was not leviable when
the notice issued by Assessing Officer 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) read as under:
“21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted b y the ITAT. It followed the decision of the Karnataka High Court in CIT vs. Manjunatha Cotton & Ginning Factory 359 565 (Kar) and observed that the notice issued by the Assessing Officer 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 CIT vs. SSA’s Emerald Meadows (2016) 73 Taxman.com 241 (Kar.), the appeal against which was dismissed by the Hon'ble Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016.
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
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in the case of Sahara India Life Insurance Co. Ltd. (supra) has been
stayed/set aside/overruled by higher judicial forum. Considering
the totality of the aforesaid facts and relying on the aforesaid
decision in the case of Sahara India Life Insurance Co. Ltd. (supra),
we 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 thus
the ground of assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 30th March, 2022
Sd/- Sd/- (NARENDER KUMAR CHOUDHARY) ( ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 30th March, 2022. Mohan Lal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
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Sl. No. Particulars Date 1. Date of dictation (Order drafted through Dragon software): 14.03.2022 2. Date on which the draft of order is placed before the Dictating Member: 3. Date on which the draft of order is placed before the 14.03.2022 other Member: 4. Date on which the approved draft of order comes to 14.03.2022 the Sr. PS/PS: 5. Date of which the fair order is placed before the Dictating Member for pronouncement: 6. Date on which the final order received after having been singed/pronounced by the Members: 7. Date on which the final order is uploaded on the 30.03.2022 website of ITAT: 8. Date on which the file goes to the Bench Clerk 30.03.2022 9. Date on which files goes to the Head Clerk: 10. Date on which file goes to the Assistant Registrar for signature on the order: 11. Date of dispatch of order:
