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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘C’
Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED
PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-7, Ahmedabad dated 21.10.2016 passed for the Asstt.Year 2008-09.
Though the assessee has taken five grounds of appeal, but its grievance revolves around a single issue viz. the ld.CIT(A) has erred in confirming the penalty by Rs.4,55,318/- imposed by the AO under section 271(1)(c) of the Act.
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The ld.counsel for the assessee at the very outset submitted that the issue in dispute is squarely covered in favour of the assessee by the decision of Hon’ble jurisdictional High Court in the case of Snita Transport P.Ltd. Vs. ACIT, (2014) reported 42 taxmann.com 54 (Guj). He pointed out that the AO has not specifically concluded that for which charge he has imposed the penalty. In other words, the AO has not concluded in the penalty order, whether he has levied penalty for concealing particulars of income or furnishing in accurate particulars of income. He drew or attention towards page no.6 of the assessment order which reads as under:
“6. In view of the above facts and legal position, I am satisfied and of the confirmed view that the assessee company has clearly committed a default u/s. 271(l)(c) of the Act by concealing the particulars of income/furnishing inaccurate particulars of its income to the tune of Rs. 39,11,404/-. The assesses company is therefore, liable for penalty U/s 271(1)(c) of the IT Act with reference to the addition of Rs. 39,11,404/-. Accordingly, the minimum penalty i.e.100% of the tax evaded on the concealed income comes to Rs.4,55,318/- and the maximum penalty i.e. 300 % of the tax evaded of the concealed income comes to Rs.13,65,954/-. Therefore, after considering the facts of the case, the minimum penalty i.e. 100% of the tax evaded on the concealed income comes to Rs.4,55,318/- is levied.”
With assistance of the ld.representatives, we have gone through the record carefully. In the case of Snita Transport P.Ltd. (supra), Hon’ble jurisdictional High Court has observed that while issuing notice under section 271(1)(c) r.w.s. 274 provide an opportunity to explain as to why penalty be not imposed. If an Assessing Officer used expression “or” in between the concealment of income/furnishing inaccurate particulars, then that show cause notice be not fatal to the proceedings, but while visiting the assessee with penalty the ld.AO ought to have
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recorded a specific finding, for which breach, he has visited the assessee with penalty i.e. whether he has visited the assessee with penalty for concealment of income or furnishing inaccurate particulars of income. In the penalty order he cannot use both the expression. The discussion made by the Hon’ble Court in para-9 is worth to note. It reads as under:
“9. Regarding the contention that the Assessing Officer was ambivalent regarding under which head the penalty was being imposed namely for concealing the particulars of income or furnishing inaccurate particulars, we may record that though in the assessment order the Assessing Officer did order initiation of penalty on both counts, in the ultimate order of penalty that he passed, he clearly held that levy of penalty is sustained in view of the fact that the assessee had concealed the particulars of income. Thus insofar as final order of penalty was concerned, the Assessing Officer was clear and penalty was imposed for concealing particulars of income. In light of this, we may peruse the decision of this Court in case of Manu Engineering Works (supra). In the said decision, the Division Bench came to the conclusion that language of "and/or" may be proper in issuing a notice for penalty, but it was incumbent upon the Assessing Authority to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by them. If no such clear cut finding is reached by the authority, penalty cannot be levied. It was a case in which in final conclusion the authority had recorded that "I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income." It was in this respect the Bench observed that "Now the language of "and/or" may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi-criminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down."
If the penalty order is perused in the light of the judgment of Hon’ble jurisdictional High Court, then it will reveal that the ld.AO was
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not specific in his finding for which he has visited the assessee with penalty. Therefore, this order is not in line of law laid down by the Hon’ble jurisdictional High Court, and hence not sustainable. The ld.CIT(A) has erred in upholding this order of the AO. We allow this appeal of the assessee and quash the penalty order.
In the result, appeal of the assessee is allowed. Pronounced in the Open Court on 8th April, 2019.
Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER