TRILOKCHAND TEJANDAS KALANI,MUMBAI vs. INCOME-TAX OFFICER,

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’).

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.

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.

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.

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.

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

// 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. *