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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI SAKTIJIT DEY & DR. B.R.R. KUMAR
PER SAKTIJIT DEY, JM:
Captioned appeals by the assessee arise out of two separate orders of learned Commissioner of Income Tax (Appeals)-30, New Delhi, confirming the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Act’) for assessment years 2008-09 and 2009-10.
Briefly the facts are, the assessee is a resident company. A search and seizure operation under section 132 of the Act was carried out in case of the assessee and other group entities.
Pursuant to search and seizure operation, proceeding under section 153A of the Act was initiated against the assessee. Based upon certain incriminating materials alleged to have been found in course of search and seizure operation, the Assessing Officer proceeded to complete the assessment in both the assessment years under disputed by making certain additions. In assessment year 2008-09, the Assessing Officer made following additions, aggregating to Rs.5,04,00,000/-:
(i) Undisclosed profit in Vaishali Project : Rs. 30,00,000/- (ii) Unexplained investment in Ujjain & Indore Project : Rs. 4,74,00,000/- Total Rs.5,04,00,000/-
Whereas, in assessment year 2009-10, the Assessing Officer made total addition of Rs.2,88,00,000/- comprising of undisclosed investment in Raipur Project (Rs.2,68,00,000/-) and undisclosed profit in Vaishali Project (Rs.20,00,000/-). Against the assessment orders so passed, the assessee preferred appeals before learned Commissioner (Appeals). Insofar as assessment year 2008-09 is concerned, learned Commissioner (Appeals) sustained addition to the extent of Rs. 30 lakhs only. Whereas, in assessment year 2009-10, the entire addition made by the Assessing Officer was sustained. Based on the additions sustained by learned Commissioner (Appeals), the Assessing Officer initiated proceeding for imposition of penalty under section 271(1)(c) of the Act and ultimately passed orders under the said provision imposing penalty of Rs.9,27,000/- in assessment year 2008-09 and Rs. 97,89,120/- in assessment year 2009-10.
Penalty so imposed was also confirmed by learned Commissioner (Appeals).
Before us, learned counsel for the assessee raised a preliminary ground challenging the validity of the assessment order. Drawing our attention to the assessment orders, she submitted, while making additions, the Assessing Officer has recorded satisfaction that the assessee has concealed its income, however, in the penalty order, the Assessing Officer imposed penalty for furnishing inaccurate particulars of income. Further, drawing our attention to the show-cause-notices issued under section 271(1)(c) read with section 274 of the Act, she submitted, the show-cause-notices do not specify the specific charge for which the Assessing Officer intended to impose penalty under section 271(1)(c) of the Act. Therefore, she submitted, the imposition of penalty, being without proper recording of satisfaction and having done mechanically without proper application of mind, is in valid. In support of her contention, she relied upon the following decisions:
(i) PCIT Vs. M/s. Sahara India Life Insurance Company Ltd. (ITA No.426/2019) (Delhi High Court) (ii) SSA’s Emerald Meadows Vs. CIT, [2016] 73 taxmann.com 248 (SC) (iii) CIT Vs. Manjunatha Cotton & Ginning Factory, [2013] 359 ITR 565 (Karnataka High Court) (iv) M/s. Ochoa Laboratories Ltd. Vs. ACIT, (ITA No. 4967/Del/2016) (ITAT, Delhi) (v) Sanghavi Savla Commodity Brokers P. Ltd. Vs. ACIT (ITA No.1746/Mum/2011) (ITAT, Mumbai) (vi) Roadlinks India Pvt. Ltd. Vs. ACIT (ITA No.1485/Bang./2013) (ITAT, Bangalore) (vii) Suvaprasanna Bhatacharya Vs. ACIT (ITA No. 1303/Kol/2010) (ITAT, Kolkata)
Per contra, learned Departmental Representative submitted, the Assessing Officer has clearly recorded satisfaction while initiating penalty proceeding under section 271(1)(c) of the Act.
Drawing our attention to the observations of the Assessing Officer in the assessment orders as well as the penalty orders, he submitted, the expression ‘concealing the particulars of income’ and ‘furnishing inaccurate particulars of income’ are same. He submitted, since, the Assessing Officer has imposed penalty on the specific charge for which proceeding was initiated, the penalty order cannot be declared as invalid.
We have considered rival submissions and perused the materials on record. A reading of section 271(1)(c) of the Act would reveal that it speaks of two separate limbs for which penalty can be imposed. Penalty can either be imposed for concealing the particulars of income or for furnishing inaccurate particulars of income. Therefore, both these limbs cannot be said to be carrying the same meaning. On a perusal of the assessment orders leading to the imposition of penalty would make it clear that the Assessing Officer, in clear terms, has recorded satisfaction for imposition of penalty for concealing the particulars of income. Whereas, while ultimately imposing penalty under section 271(1)(c) of the Act, the Assessing Officer has observed that the assessee has furnished inaccurate particulars of income. Thus, it is very much clear that the penalty proceeding was initiated under one limb, whereas, ultimately penalty was imposed under a different limb of section 271(1)(c) of the Act. The matter does not end there. On a perusal of the show-cause- notices issued under section 271(1)(c) of the Act, which are in printed form, it is noticed that the Assessing Officer has not specified the exact limb of section 271(1)(c) of the Act, for which, he intended to impose penalty by striking out the inappropriate words. Thus, the show-cause-notices issued do not spell out the specific charge for which, penalty under section 271(1)(c) of the Act was sought to be imposed. Thus, the show-cause-notices issued are not only mechanical but reveal complete non- application of mind by the Assessing Officer. Therefore, applying the ratio laid down in the decisions cited before us, including, the decision of the Full Bench of the Hon’ble Bombay High Court in case of Mohd. Farhan A. Shaikh v. ACIT (2021) 125 taxmann.com 253 (FB) (Bom) (HC) it has to be held that not only the show- cause-notices under section 271(1)(c) read with section 274 of the Act are invalid but the penalty order passed consequent thereto also have to be declared as invalid. Accordingly, we do so.
Resultantly, the penalty imposed under section 271(1)(c) of the Act in both the assessment years under dispute are hereby deleted. Grounds are allowed.
In the result, the appeals are allowed, as indicated above.
Order pronounced in the open court on 15TH March, 2022