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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
PER R.S.SYAL, VP :
This appeal by the assessee is directed against the order passed by the Commissioner of Income-tax (Appeals)-1, Nashik on 26-06-2014 confirming the penalty of Rs.45,20,741/- imposed by the Assessing Officer u/s.271(1)(c) of the Income-tax Act, 1961 (hereinafter called ‘the Act’).
Briefly stated, the facts of the case are that Kalani group of cases was subjected to search and seizure action u/s.132(1) of the Act. The assessee is part of the Kalani group. The AO completed
2 ITA No.1611/PUN/2014 A.Y. 2009-10
the assessment for the A.Y. 2009-10 at Rs.1,35,25,208/- as against
the returned income of Rs.1,32,50,079/-. Such returned income
included a substantial amount of income surrendered by the
assessee. Thereafter, penalty was imposed on the total assessed
income amounting to Rs.45,20,741/-, being, 100% of the amount
of tax sought to be evaded, which came to be affirmed in the first
appeal. Aggrieved thereby, the assessee has approached the
Tribunal.
The main contention put forth on behalf of the assessee is
that the AO failed to record proper satisfaction in terms of section
271(1)(c) in the assessment order as well as the notice and the
penalty order without clearly indicating whether it was a case of
concealment of income or furnishing of inaccurate particulars of
income and hence the penalty be quashed.
We have heard both the sides and gone through the relevant
material on record. The assessment order has been gone through in
which it is seen that the AO, at the end of the order, has given
direction for initiating penalty proceedings. After the insertion of
sub-section (1B) to section 271 by the Finance Act, 2008, with
retrospective effect from 1.4.1989, once the AO issues direction in
the assessment order to initiate penalty proceedings u/s.271(1)(c)
3 ITA No.1611/PUN/2014 A.Y. 2009-10
of the Act, the AO should be deemed to have recorded proper
satisfaction with reference to each of the addition/disallowance as
to concealment or furnishing of inaccurate particulars of income.
In that view of the matter, the contention of the assessee regarding
improper recording of satisfaction in the assessment order becomes
devoid of merit and is thus jettisoned.
We have perused a copy of notice issued by the AO
u/s.271(1)(c) r.w.s. 274 of the Act, which records that the assessee
has concealed particulars of income/furnishing of inaccurate
particulars of such income. Thereafter, penalty order came to be
passed on 24-09-2013. Para 18 of the penalty order is material for
our purpose, which states: “As per the reason described in the
assessment order for making the additions and also the same are
mentioned above, these amounts are in the nature of
concealment/furnishing inaccurate particulars of income for the
A.Y. 2010-11 ”. Thus, it is evident that the AO simultaneously
invoked both the limbs of the penalty section and proceeded
without specifying if it was a case of concealment of income or
furnishing of inaccurate particulars of income. Such an issue has
come up for consideration before various courts. The Hon’ble
Gujarat High Court in New Sorathia Engineering Company Vs.
4 ITA No.1611/PUN/2014 A.Y. 2009-10
CIT (2006) 282 ITR 642 (Guj.) has held that in the absence of a
specific finding in the penalty order as to whether there was a
concealment of income or furnishing of inaccurate particulars of
income, the penalty order u/s.271(1)(c) could not be sustained.
Recently, the Third Member Amritsar Bench of the Tribunal in
HPCL Mittal Energy Ltd. and Another Vs. ACIT and Another
(2018) 169 DTR 001 (Amritsar Tribunal) (TM) has also taken
similar view. In view of the fact that neither the penalty notice nor
the penalty order refer to a clear cut specific charge as to whether
the assessee concealed his income or furnished inaccurate
particulars of income, the penalty order has to be struck down. We
order accordingly.
In the result, the appeal is allowed.
Order pronounced in the Open Court on 04th October, 2019.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 04th October, 2019 सतीश
ITA No.1611/PUN/2014 A.Y. 2009-10
आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत आदेश आदेश
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-1, Nashik
The CCIT, Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “ए” / DR ‘A’, ITAT, Pune; 6. गाड� फाईल / Guard file. / True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
Date 1. Draft dictated on 03-10-2019 Sr.PS 2. Draft placed before author 03-10-2019 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *