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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI WASEEM AHMED
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)-2, Rajkot, dated 10/11/2016 ( in short “Ld.CIT(A)”) arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") dt.28/05/2013 relevant to the Assessment Year 2008-09.
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The assessee has raised the following grounds of appeal:
The penalty order u/s.271(1)(c) is bad in law. 2. The learned Assessing Officer has erred in law as well as on facts in levying penalty of Rs.2,41,397/- u/s.271(1)(c) of the Act. The learned CIT(A) has erred in confirming the same. The appellant craves to add, alter, amend, delete or withdraw one or more grounds of appeal.
The issue raised by the assessee is that the learned CIT (A) erred in confirming the penalty levied by the AO under section 271(1)(c) of the Act for ₹2,41,397.00.
Briefly stated facts are that the assessee in the present case is an individual and engaged in the business of general store and insurance commission agency. The AO during the assessment proceedings found that the assessee has deposited cash amounting to ₹15,49,910.00 in the bank account bearing No. 087010100188296 maintained with Axis Bank Limited. But the assessee failed to explain the source of such cash deposited in the bank. Therefore the AO treated the peak amount of ₹8,00,870.00 as undisclosed income of the assessee in its assessment order framed under section 143(3) of the Act dated 29th December 2010. The addition made by the AO was subsequently confirmed by the learned CIT (A) and the ITAT.
In view of the above, the AO initiated the penalty proceedings under section 271(1)© of the Act on account of furnishing inaccurate particular of income and concealment of income. Accordingly, the notice under section
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274/271(1)(c) of the Act was issued to the assessee for initiating the penalty on account of concealment of the particulars of income and furnishing inaccurate particular of income. The assessee in response to such notice has not made any submission on merit. Therefore the AO levied the penalty of Rs. 2,41,397 being 100% amount of tax sought to be evaded.
The assessee carried the matter to the learned CIT (A) but failed to succeed.
Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. The Learned AR before us filed a paper book running from pages 1 to 128 and submitted that the AO had levied the penalty u/s 271(1)(c) of the Act without mentioning any specific charge. As such the AO in penalty order in Para No.8 has drawn his conclusion by levying both the charges, i.e. concealment of income and inaccurate particulars of income. Accordingly, the learned AR prayed that penalty without mentioning the specific charge cannot be levied upon the assessee.
On the other hand, learned DR before us submitted that the assessee had not raised the ground of appeal challenging the penalty that the AO has levied the penalty mentioning both the charges, i.e. concealment of income and inaccurate particulars of income. Therefore the assessee cannot be absolved from the penalty even the AO has specified both the charges in his penalty order. The learned DR vehemently supported the order of Authorities below.
We have heard the rival contentions and perused the material available on record. From the preceding discussion, we note that the penalty has been Page 3 of 6
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imposed by the AO u/s 271 (1)(c) without mentioning the specific charge in its penalty order dated 28/5/2013, whether, it was levied on account of concealment of income or furnishing inaccurate particulars of income. The relevant extract of the penalty order is reproduced as under: Taking into consideration the facts and circumstances of the case, I hold that the assessee has concealed the particulars of income and furnished inaccurate particulars of income to the extent of Rs.8,00.870/-
9.1 On perusal of above, it is clear 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 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- Page 4 of 6
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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."
9.2 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.
Regarding the argument of the learned DR, we note that the issue raised by the assessee can be covered in the ground No. 1 recorded in the grounds of appeal. Indeed the ground No. 1 raised by the assessee in the appeal appears to be of general ground but in our considered view that is sufficient to adjudicate the issue in hand. It is because the issue raised by the assessee does not require to refer to any other documents which were not available before the authorities below. As such all the necessary details connected with the issue raised by the assessee were arising from the orders of the authorities below. Accordingly, we are not impressed with the argument of the learned DR. Hence, we reverse the order of the ld. CIT-A and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed.
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
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discussed above; therefore, we are inclined to refrain ourselves from adjudicating the grounds of appeal of assessee raised on merits.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 26/04/2019 at Ahmedabad.
-Sd- -Sd- (Ms MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 26/04/2019 Manish
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