RAHUL CABLES PRIVATE LIMITED,,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX,, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

These appeals filed by the assessee are emanating out of the 1. separate orders of Commissioner of Income Tax (A) – 8, Pune dt.12.01.2017 for the assessment years 2009-10 and 2010-11.

proceed to dispose of both the appeals by a consolidated order but

however, proceed with narrating the facts for assessment year 2009-10.

under :-

Assessee is a private limited company stated to be engaged in the

business of trading of wires and cables. Assessee filed its return of income

for A.Y. 2009-10 on 31.10.2009 declaring total income at

Rs.2,51,15,300/-. In this case assessment was re-opened u/s 147 of the

Act. Subsequently, the case was taken up for scrutiny and thereafter

assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order dated

06.06.2014 and the total income was determined at Rs.3,20,71,009/-

inter-alia by making addition of Rs.69,55,709/- on account of hawala

purchases. On the aforesaid addition of hawala purchases, AO vide order

dt.25.03.2015 levied penalty of Rs.23,64,244/- u/s 271(1)(c) of the Act.

For A.Y. 2010-11 the details of income offered by the assessee,

addition made and penalty levied are as under :

A.Y. Returned income Addition Total income Penalty levied assessed u/s 143(3)

2010-11 Rs.2,14,14,700/- Rs.42,09,223/- on Rs.2,56,23,933/- Rs.14,30,714/- account of hawala purchases

Aggrieved by the orders of AO levying penalty u/s 271(1)(c) of the

Act, assessee carried the matter before Ld.CIT(A), who vide separate orders

dt.12.01.2017 (in appeal No.PN/CIT(A)-8/DCIT, Circle-5, Pune/146 &

147/2016-17) dismissed the appeals of the assessee. Aggrieved by the

orders of Ld.CIT(A), assessee is now in appeal before us and has raised the

following grounds :

“1 The learned Dy. Commissioner of Income Circle-S, Pune has erred in levying penalty of Rs. 23,64,240/- u/s 271(1)(c) of the Income Tax Act, 1961even though we have disclosed all the related facts, submitted all the related documents and details with explanations and the Commissioner of Income Tax (Appeals)- 8, Pune has erred in confirming the same. 2. The learned Dy. Commissioner of Income Circle-S, Pune and the Commissioner of Income Tax (Appeals)- 8, Pune have not followed the principal of natural justice, hence their respective orders are bad in law.

2010-11.

4.1. Both the grounds being inter-connected are considered together.

order, AO with respect to addition on account of hawala purchases has

recorded that assessee had “concealed the particulars of income” to the

extent of Rs.69,55,709/- but while passing the penalty order u/s 271(1)(c)

of the Act on 25.03.2015 AO had levied penalty for both the limbs i.e., “for

furnishing inaccurate particulars of income” as well as for “concealment of

income”. He therefore relying on the decision of Hon’ble Bombay High

Court in the case of CIT Vs. Samson Perinchery reported in (2017) 392

ITR 4 (Bom) submitted that in the absence of proper show cause notice to

assessee, penalty u/s 271(1)(c) cannot be levied and therefore urged that

penalty levied by AO be deleted. Ld.D.R. on the other hand, supported the

order of lower authorities.

record. The issue in the present case is with respect to levy of penalty u/s

271(1)(c) of the Act. In the present case in A.Y. 2009-10, penalty of

Rs.23,64,244/- u/s 271(1)(c) of the Act has been levied on amount of

Rs.69,55,709/- being the addition on account of hawala purchases. In

A.Y. 2010-11, penalty of Rs.14,30,714/- u/s 271(1)(c) of the Act has been

levied on amount of Rs.42,09,223/- being the addition on account of

hawala purchases. The perusal of assessment orders passed u/s 143(3)

r.w.s. 147 of the Act reveals that in the assessment orders AO had

recorded satisfaction for “concealment of income” and thereafter, in the

penalty orders passed u/s 271(1)(c) of the Act, AO had levied penalty for

“furnishing of inaccurate particulars of income” as well as for

“concealment of income” i.e., for both the limbs. It is a settled law that

while levying penalty, the AO has to record satisfaction and thereafter

come to a finding in respect of one of the limbs, which is specified under

section 271(1)(c) of the Act. The first step is to record satisfaction while

completing the assessment as to whether the assessee had furnished

inaccurate particulars of income or concealed his income. Thereafter,

notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the

assessee. The Assessing Officer thereafter has to levy penalty under

Section 271(1)(c) of the Act for non-satisfaction of either of the limbs.

While completing the assessment, the Assessing Officer has to come to a

finding as to whether the assessee has concealed its income or furnished

inaccurate particulars of income. The Hon’ble Bombay High Court in CIT

Vs. Shri Samson Perinchery (supra) held that where initiation of penalty

is one limb and the levy of penalty is on other limb, then in the absence of

proper show cause notice to the assessee, there is no merit in levy of

penalty.

of Hon’ble Bombay High Court in the case of Samson Perinchery (supra),

we are of the view that in the present cases, the basic condition for levy of

penalty has not been fulfilled and that the penalty orders suffers from

non-exercising of jurisdiction power and therefore penalty orders cannot be upheld. We accordingly set aside the penalty orders passed by AO. Thus, the grounds of assessee are allowed.

Order pronounced on 30th day of October, 2019.

Sd/- Sd/- (S.S. VISWANETHRA RAVI) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 30th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-11, Pune. 4. Pr. CIT(Central), Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “A” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.