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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’, NEW DELHI
Before: SHRI SAKTIJIT DEY & DR. BRR KUMARR
ORDER PER SAKTIJIT DEY: JUDICIAL MEMBER: This is an appeal by the assessee assailing order dated 01.08.2015 of learned Commissioner of Income-Tax(Appeals)-29, New Delhi, confirming the penalty imposed under Section 271(1)(c) of the Income-Tax Act, 1961 for the assessment year 2009-10.
Briefly the facts are, the assessee is a resident company. For the assessment year under dispute, assessee filed its return of income on 30.09.2009 declaring loss of Rs.1,69,11,257.
Subsequently, assessee filed a revised return of income declaring loss of Rs.39,87,771. Assessee filed due more revised return of income on 02.09.2010 declaring loss of Rs.28,61,39,925.
After examining the latest revised return of 02.09.2010, the Assessing Officer noticed that the assessee has made additional claim for expenses for Rs.28,21,52,164 towards interest, which according to the assessee, was inadvertently not claimed on accrual basis while filing the return of income. After examining the claim of the assessee, the Assessing Officer disallowed the expenses claimed on account of interest and brokerage amounting to Rs.28,21,52,154. Further, he made a fresh addition of Rs.82,28,800, being payment of salary not recorded in the books of accounts. As a result, the income was determined at Rs.31,64,971 and after adjusting the brought forward losses of earlier years, the total income was determined at nil. However, based on the disallowance of expenditure claimed and the addition made on account of salary expenses not recorded in the books of accounts, the Assessing Officer initiated proceedings for imposition of penalty under Section 271(1)(c) of the Act. In course of penalty proceedings, Assessing Officer noticed that out of the addition of Rs.82,28,800, learned Commissioner (Appeals) sustained addition to the extent of Rs.20,95,200 and deleted the balance amount. Thus, on the addition sustained by the learned Commissioner (Appeals) amounting to Rs.20,95,200, the Assessing Officer proceeded to impose penalty of Rs.6,47,417 under Section 271(1)(c) of the Act alleging concealment of income. The penalty so imposed was also upheld by learned Commissioner (Appeals).
Learned counsel for the assessee submitted, in the show-cause- notice issued under Section 274 read with Section 271(1)(c) of the Act, the Assessing Officer has not specified the specific charge for which he intended to impose penalty, thus, he submitted, the penalty order passed without application of mind is invalid. In support of such contention, he relied upon the following decisions:
i) Principal CIT Vs. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Delhi) (HC); ii) Silicon Graphic System Indi Pvt. Ltd. vs. CCIT – Dated 10.03.2021;
As regards, the merits of the case, learned counsel for the assessee submitted that neither the assessee has concealed any income nor furnished inaccurate particulars of income. Therefore, there is no justifiable reason for imposing penalty.
Learned Departmental Representative submitted, Assessing Officer has clearly recorded his satisfaction for imposition of penalty and has also specified the charge for which he intended to impose penalty under Section 271(1)(c) of the Act. Thus, he submitted, assessee’s contention is not acceptable.
We have considered rival submissions and perused the material available on record. As could be seen the addition based on which the Assessing Officer initiated proceeding for imposition of penalty under Section 271(1)(c) of the Act is the unaccounted expenditure of Rs.82,28,800.
Undisputedly, the aforesaid addition has been substantially scaled down to Rs.20,95,200 by the first appellate authority. Now, coming to the satisfaction recorded by the Assessing Officer in the Assessment Order, it is observed that Assessing Officer has stated that assessee has furnished inaccurate particulars of his income by concealing the true particulars of his income. Whereas, in the show-cause-notice issued under Section 274 read with Section 271(1)(c) of the Act on 31.12.2010, the Assessing Officer has not specified the charge for which he intended to impose penalty under Section 271(1)(c) of the Act by striking off the inappropriate words.
Moreover, on a reading of satisfaction recorded in the assessment order of the Assessing Officer and the observations in the penalty order passed under Section 271(1)(c) of the Act, it is evident that the Assessing Officer himself was not sure what is the exact offence committed by the assessee. Thus, the ambiguity in the satisfaction recorded as well as the reasons on which the Assessing Officer imposed penalty coupled with the fact that the show-cause-notice issued in the printed format does not specify the exact charge for which penalty under Section 271(1)(c) of the Act was imposed, it has to be held that the order imposing penalty is not valid. This view of ours is supported by a catena of judicial precedents, including the decision of Hon’ble Bombay High Court in case of Mohd. Farhan A Shaikh Vs. DCIT (2021) 125 taxmann.com 253.
Accordingly, we delete the penalty imposed under Section 271(1)(c) of the Act.
In the result, the appeal is allowed.