SH. MOHD. AQUIL,NEW DELHI vs. ITO, NEW DELHI

is directed against the order of Ld. CIT(A)-35, New Delhi dated 15.07.2016. The assessee has raised following grounds of appeal:-

1. “That the penalty order passed u/s 271 (1)(c) of the Act, for the Assessment Year 2007-08 as upheld by the Ld. CIT(A)-35, are perverse to the law and to the facts of the case, as the Assessing Officer has wrongly infer that the entire cash deposits in his bank account pertains to his income u/s 68 of the Act, for the said year.

2. That the penalty levied u/s 271(1)(c) he Act, is further not correct under the law as the assessee s already filed appeal before ITAT against the quantum of additions made while passing order and the same is still pending for adjudication as such, which the Ld. CIT(A)-35 ailed to appreciate while passing the Appellate Order on 15.07.2016.

3. That on the facts of the case the penalty levied is further wrong as not tenable because the cash deposits in the bank account declared, does not pertains I cover under the ambit of the provisions of law contained u/s 68 of the Income Tax Act, 1961, as the appellant was having sufficient cash in hand, which has already been declared and accepted by the Assessing Officer in the preceding years.

4. That the penalty imposed is further wrong on law and to the facts of the case, because the Assessing Officer has never said that the assessee ever failed to offer an explanation with regard to the deposit of cash in his bank account or the explanation given found to be false as contained under Explanation-1 of Section 271 (1 )(c) of the Act. 5. That the orders passed are also wrong because the Assessing Officer has never appreciated nor afforded proper and reasonable opportunity to the appellant and to adjudicate the material produced, filed and placed upon recorded lawfully, which does not infer about the furnishing of inaccurate particulars of his income, prior to hold him liable u/s 271(1)(c) of the Act. 6. That the penalty imposed u/s 271(1)(c) of the Act, is also not tenable because the additions made u/s 68 are itself not liable to be sustained under the law and to the facts of the case. 7. That penalty order passed are further not tenable in the eyes of law, because of the difference of opinion infer by the Assessing Officer and not specific whether the assessee has concealed his income or ever furnished its inaccurate particulars thereof under the law for he hold liable u/s 271 (1)(c) of the Act. 8. That the penalty order passed is illegal under the law as being unconstitutional also, therefore, the same could not be upheld.”

2. At the outset, Ld. Counsel for the assessee submitted that the penalty order and the penalty notice as issued by the Assessing Officer are bad in law.

He contended that on perusal of the notice issued by the Revenue did not 2 | P a g e specify specific charge. He therefore, contended that penalty deserves to be deleted on this ground alone. He drew our attention to the notice dated 22.12.2009 issued u/s 271(1)(c) r.w.s. 274 of the Income Tax Act, 1961 (“the Act”) to buttress his contention. Ld. Counsel for the assessee in support of the contention relied upon the decision of this Tribunal rendered in the case of M/s. M.G. Contractors Pvt.Ltd. vs DCIT in to 7038/Del/2014 vide order dated 19.09.2016 and the judgement of Hon’ble Karnataka High Court in the case of CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and the order of Hon’ble Apex Court in the case of CIT & Anr. vs M/s. SSA’s Emerald Meadows vide SLP No.11485 of 2016 by order dated 5th August, 2016.

“It is clear from the aforesaid decision that on the facts of the present case that the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Even The assessment order is also silent on this aspect. Therefore in the complete assessment proceedings as well as penalty proceedings against the assessee that whether it has furnished inaccurate particulars of income or has concealed particulars of income. The provisions of penalty proceedings cannot be distinctly applied in assessments related to search and other regular assessment. Therefore the principles laid down by the decision of Hon'ble Karnataka High Court also squarely applies to the facts of the present case even though exploration 5A of section 27l(l)(C) is invoked. Similar view has been taken by other coordinate benches in following decisions:- 1) DCIT Central circle versus Shaym Sundar Dhanuka 1869 - 1870/KOL/2013 2) Smt. Champa Goel Vs ACIT 3) Nisheeth Kumar Jain versus ACIT ITA 961 – 964/KOL/2013 4) Harishkumar Sarogi V DCIT ITA No 1222-1226/Ko1l2011 & 1496-1499/Kol/2011 Following the decision of the Hon'ble Karnataka High Court, we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled.”

Above decision was pronounced on conclusion of Virtual Hearing in the presence of both the parties on 08th June, 2021.