SUNA NATH,KORAPUT vs. ITO, JEYPORRE, JEYPORE

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ITA 96/CTK/2019Status: DisposedITAT Cuttack05 April 2019AY 2009-103 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer failed to record his satisfaction regarding concealment of income or furnishing of inaccurate particulars before initiating penalty proceedings. This was considered a jurisdictional defect.

What were the facts?

The Assessing Officer initiated penalty proceedings under Section 271(1)(c) for unexplained investment and agricultural income. The assessee's appeal challenged the CIT(A)'s confirmation of the penalty.

What were the issues?

Whether penalty proceedings under Section 271(1)(c) are valid if the Assessing Officer fails to record satisfaction in the assessment order. The validity of penalty initiation without proper satisfaction recorded by the AO.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

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Cases cited in this judgment(1)Show list

Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.

  • 300 ITR 40
    300 ITR 40 · 2008 · HC
    7 citing

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: SHRI CHANDRA MOHAN GARG

For Appellant: Shri P.K.Mishra, Adv
For Respondent: Shri Subhendu Dutta, DR
Hearing: 05/04

This is an appeal filed by the assessee against the order of the Commissioner

of Income Tax(Appeals)-1, Bhubaneswar dated 25.1.2019 for the assessment year

2009-10.

2.

The only issue raised in this appeal is against the order of the CIT(A)

confirming levy of penalty of Rs.54,100/- under section.271(1)(c) of the Act by the

Assessing Officer in respect to addition of unexplained investment in Firm and on the

addition of agricultural income as income from other sources.

ITA No. 96/ CTK/2019 Asse ssment Year: 20 09- 10

3.

At the outset, ld Counsel for the assessee first of all took me to the

assessment order and stated that the initiation of penalty proceedings by the

Assessing Officer was for furnishing of inaccurate particulars of income and also for

concealment of particulars of income. Ld Counsel referred to the followings as noted

by the Assessing Officer in the assessment order:

“Initiated Penalty proceedings under section.271(1)(c) of the I.T.Act 1961

separately”

4.

Ld Counsel took me through the penalty order dated 28.11.2017 under

section.271(1)(c) read with section. 274 of the Act, wherein, the Assessing Officer

has not recorded his satisfaction. Therefore, the penalty proceedings is without

jurisdiction. Ld counsel for the assessee relied on the decision of Hon’ble A.P.High

Court in the case of V.V.Projects and Investments Pvt Ltd., 300 ITR 40(AP).

5.

When these facts were pointed out by this Bench to ld Departmental

Representative, he only relied on the assessment order, penalty order and the order

of the CIT(A).

6.

I have heard the rival contentions and gone through the facts and

circumstances of the case. Admittedly, as noticed from the assessment order, I find

that no such satisfaction as contemplated u/s.271(1)(c) have been recorded by the

Assessing Officer while completing the assessment that in which limbs, the issue is

following. The Assessing Officer has simply mentioned that “penalty proceedings

u/s.271(1)(c) are initiated separately”. I find that Hon’ble A.P. High Court in the

case of V.V.Projects and Investments Pvt Ltd (supra) has held as under:

ITA No. 96/ CTK/2019 Asse ssment Year: 20 09- 10

“ The Assessing Officer has to form his own opinion and record his satisfaction of concealment of income or furnishing of inaccurate particulars of income before initiating penalty proceedings u/s.271(1)(c) of the I.T.Act, 1961. It is also clear that such satisfaction of the AO must be spelt out in the order of assessment itself and cannot be assumed from the issue of a notice u/s.271(1)(c) of the Act. Failure to record such satisfaction amounts to a jurisdictional defect which cannot be cured. It is also relevant to note that whether the assessee has concealed his income or has deliberately furnished inaccurate particulars thereof is essentially a finding of fact which has to be spelt out by way of recording the satisfaction of the AO as required u/s.271(1)(c) of the Act. Therefore, in the absence of such a finding in the assessment order no penalty proceedings can be initiated.”

Respectfully following the decision of Hon’ble A.P. High Court in the case of V.V.

Project and Investments P Ltd (supra) , I delete the penalty of Rs.54,100/- levied

by the Assessing Officer under section.271(1)(c) of the Act and allow the appeal of

the assessee.

8.

In the result, the appeal of the assessee is allowed.

Order pronounced on 05/04/2019. Sd/- (Chandra Mohan Garg) JUDICIALMEMBER Cuttack; Dated 05 /04/209 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant :

2.

The Respondent. 3. The CIT(A)- 4. Pr.CIT- Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order

Sr. Pvt. Secretary, ITAT, Cuttack

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