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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
PER Ms. MADHUMITA ROY - JM:
The instant appeal filed by the assessee is against the order dated 12.06.2017 passed by the Commissioner of Income Tax (Appeals) - Gandhinagar arising out of the order dated 21.03.2016 passed by the Income Tax Officer, Mehsana Ward – 5, Kadi under section 271(1)(c) of the Act, 1961 (hereinafter referred as to “The Act”) for the Assessment Year 2011-12.
The brief facts leading to the case is this that the assessee filed his return of income on 27.05.2011 through Electronic Media declaring total income at Rs.1,49,571/- which was processed u/s 143(1) of the Act. Upon scrutiny notice u/s 143(2) dated
- 2 - ITA No.1570/Ahd/2017 Dharmesh Dhulabhai Prajapati vs. ITO Asst.Year – 2011-12 17.08.2012 was served. The assessment was finalized on 30.12.2013 u/s 143(3) of the Act determining total income at Rs.8,06,200/- making an addition of Rs.6,56,629/- to the total income of the assessee on certain counts. Penalty proceeding u/s 271(1)(c) of the Act was also initiated by a notice u/s 274 dated 17.11.2011 directing the assessee to show-cause as to why penalty u/s 271(1)(c) of the Act should not be imposed for furnishing inaccurate particulars of income.
The quantum appeal filed by the assessee meanwhile failed and another opportunity was given to the assessee since order of the Learned AO was partly upheld by the Learned CIT(A). Finally, finally the Learned AO being satisfied that the assessee has filed inaccurate particulars of income to the tune of Rs.6,56,629/-, the minimum penalty i.e. 100% of tax evaded on the concealed income to the tune of Rs.98,736/- imposed as penalty upon the assessee. While doing so, Learned Assessing Officer observed as follows: “7. In view of the facts I am satisfied that the assessee has filed inaccurate particulars of income to the tune of Rs.6,56,629/-. The minimum penalty i.e. 100% of tax evaded on the concealment income comes to Rs.98,736/- and the maximum penalty i.e. 300% of the Tax evaded of the concealed income comes to Rs.2,96,208/-.”
In appeal, same was confirmed by the Learned CIT(A) hence, the appeal before us.
At the time of hearing of the appeal, the Learned Counsel appearing for the assessee submitted before us that the penalty does not fulfill the criteria laid down u/s 271(1)(c) of the Act. Further that, specific charge though required to be mentioned in the show-cause notice as to whether the show cause is for concealment of income or for inaccurate particulars of income as held by different High Courts has not been adhered to by the Learned AO while issuing the show-cause. According to the Learned Advocate, the show-cause notice suffers from vagueness or ambiguity and the notice prejudiced the
- 3 - ITA No.1570/Ahd/2017 Dharmesh Dhulabhai Prajapati vs. ITO Asst.Year – 2011-12 cause of the assessee and therefore the imposition of penalty is invalid. The Learned AO has neither specified the alleged guilt committed by the assessee by furnishing of inaccurate particulars of income or concealed income which is nothing but non- application of mind, according to the Learned AR. On this particular issue he has relied upon the judgment passed by the Hon’ble Apex Court in the case of Dilip and Shrof-vs- JCIT (2007) 291 ITR 519 (SC) where it was held while issuing the notice for initiating penalty proceeding u/s 271(1)(c) of the Act the AO should apply mind and make it clear as to whether he has proceeded on the basis that the tax payer has concealed his income or he had furnished inaccurate particulars of income which according to the Learned Advocate has not followed in the instant case by the Learned AO while initiating proceeding or in show-cause notice during the penalty proceeding, neither while imposing penalty against the assessee at the final stage. He further argued that in spite of several judgments placed by him during the appeal proceeding on this count no consideration, however, has been given by the Learned CIT(A) while confirming the order passed by the Learned AO in imposing penalty upon the assessee. He, thus prayed for quashing of penalty proceeding initiated against the assessee. On the other hand, Learned DR relied upon the order passed by the Authorities below.
We have heard the respective parties and perused the relevant materials available on record. We find that the order imposing penalty does not specify the guilty committed by the assessee for such penalty.
It appears from the penalty order that the AO has not levied the penalty on the specific charge as mandated u/s 271 (1)(c) of the Act. In such facts and circumstance the Hon'ble Jurisdictional High Court in the case of Snita Transport Pvt. Ltd. Vs. Assistant Commissioner of Income Tax reported in 42 taxmann.com 54 has held that penalty
- 4 - ITA No.1570/Ahd/2017 Dharmesh Dhulabhai Prajapati vs. ITO Asst.Year – 2011-12 cannot be imposed without mentioning the specific charge. The relevant extract of the order is reproduced below: 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."
The principles laid down by the Hon’ble Jurisdictional High Court in the above case are squarely applicable to the facts of the case on hand. The AO has not mentioned the specific charge in its penalty orders whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. The penalty, therefore is deleted. Hence, the ground of appeal of the assessee is allowed.
- 5 - ITA No.1570/Ahd/2017 Dharmesh Dhulabhai Prajapati vs. ITO Asst.Year – 2011-12
As we have deleted the penalty imposed by the AO & confirmed by the ld. CIT-A on the technical ground, i.e. no specific charge has been invoked as discussed above, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits.
In the result, assessee’s appeal is allowed. This Order pronounced in Open Court on 31/01/2019
Sd/- Sd/- ( WASEEM AHMED ) ( Ms. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 31/01/2019 Priti Yadav, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-Gandhingar. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 31/01/2019 (Dictation Pages 5) 2. Date on which the typed draft is placed before the Dictating Member 31.01.2019 3. Other Member…………. 4. Date on which the approved draft comes to the Sr.P.S./P.S …………… 5. Date on which the fair order is placed before the Dictating Member for pronouncement… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………