NATABAR NATH,KORAPUT vs. ITO, JEYPORE, WARD, JEYPORE

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.

confirming levy of penalty of Rs.2,31,130/- under section.271(1)(c) of the Act by

the Assessing Officer in respect to addition of bogus sundry creditors of

Rs.5,94,651/- and on the addition of agricultural income as income from other

sources of Rs.92,300/- and on addition of accrued interest on FD’s of Rs.34,400/-

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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”

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).

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

of the CIT(A).

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:

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“ 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.2,31,130/- levied

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

the assessee.

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 : Suna Nath, Gandhi Nagar, Po/Dist: Koraput.

Sr. Pvt. Secretary, ITAT, Cuttack