DEPUTY COMMISSIONER OF INCOME-TAX, PUNE vs. M/S. KSHITIJ ASSOCIATES, PUNE

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

The present appeal filed by the Revenue and the C.O. filed by the 1.

assessee are directed against the order of Commissioner of Income Tax (A)

– 6, Pune dated 10.01.2017 for the assessment year 2009-10.

under :-

Assessee is an individual stated to be engaged in the business as

builder and promoter. Assessee electronically filed his return of income

for A.Y. 2009-10 on 31.10.2009 declaring total income at Rs.96,28,370/-.

The case was selected for scrutiny and thereafter assessment was framed

u/s 143(3) of the Act vide order dt.26.12.2011 and the total income was

assessed at Rs.3,28,01,300/- inter-alia by making addition of

Rs.2,31,72,934/- on account of suppression of sales. On the aforesaid

addition, AO vide order dt.18.03.2014 levied penalty of Rs.76,47,068/-

u/s 271(1)(c) of the Act. Aggrieved by the order of AO, assessee carried

the matter before Ld.CIT(A), who vide order dt.10.01.2017 (in appeal

No.PN/CIT(A)-V/DCIT Cir-8/298/2014-15) deleted the penalty levied by

the AO. Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal

before us and has raised the following grounds :

“1. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) was justified in deleting the penalty levied of Rs. 76,47,068/- when the appellant's audit report clearly indicates that the sales are recognized on handing over the possession of flats, though the appellant had followed project completion method for recognition of revenue. The sales have been recognized contrary to asessee's own methodology of recognition of revenue.

the following effective ground.

“ The learned CIT(A) erred in law and on fact in not appreciating the fact that the initiation of penalty was on a limb different from the one for levy of penalty and as such the levy of penalty of Rs.76,47,068/- was not justified in law.”

the assessee is supporting the order of Ld.CIT(A) and if the appeal of the

Revenue is dismissed then the C.O. of assessee would be rendered

academic.

for A.Y. 2009-10.

various grounds but all the grounds are inter-connected and the sole

controversy is with respect to levy of penalty u/s 271(1)(c) of the Act.

has erred in deleting the penalty levied by the AO. On the issue of levy of

penalty, Ld.A.R. submitted that while passing the assessment order and

while recording satisfaction, AO was not clear as to whether the assessee

had furnished inaccurate particulars of income or concealment of

income. In support of his contention he pointed to para 3.4 of the

assessment order. Thereafter, he submitted that in the penalty order,

AO had levied the penalty for furnishing inaccurate particulars 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. He also supported the

order of Ld.CIT(A) on merits of deletion of penalty. He thus supported the

order of Ld.CIT(A).

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

u/s 271(1)(c) of the Act. Penalty of Rs.76,47,068/- u/s 271(1)(c) of the

Act has been levied on amount of Rs.2,31,72,934/- being the addition

made on account of suppression of sales. The perusal of assessment

order passed u/s 143(3) of the Act reveals that in the assessment order

AO had not recorded clear satisfaction as to whether assessee had

furnished inaccurate particulars of income or has concealed particulars

of income. Thereafter, in the penalty order passed u/s 271(1)(c) of the

Act, AO had levied penalty for furnishing inaccurate particulars of

income. It is a settled law that while levying penalty, the AO has to

record clear 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 his 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 case, the basic condition for levy of

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

non-exercising of jurisdiction power and therefore penalty order cannot be

upheld. We accordingly uphold the set aside the penalty order passed by

AO. We further find that Ld.CIT(A) on merits has also deleted the

penalty. Before us, no fallacy in the findings of Ld.CIT(A) has been

pointed by Ld. D.R. We therefore find no reason to interfere with the

order of Ld.CIT(A). Thus, the grounds of Revenue are dismissed.

for A.Y. 2009-10.

11.1. As far as C.O.No.15/PUN/2019 of assessee is concerned, in view of

Ld.A.R.’s submission noted hereinabove and since we have herein above

dismissed the appeal of Revenue, we find no reason to adjudicate the

grounds raised by the assessee in the C.O. Thus, the C.O. of the

assessee is dismissed.

Order pronounced on 16th day of October, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 16th 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)-6, Pune. 4. Pr. CIT – 5, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

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