SANDVIK ASIA PRIVATE LIMITED,PUNE vs. ASSISTANT COMMISSIONER OF INCOME TAX, PUNE

Before us, ld. Counsel for the assessee, at the outset, submitted that, out of the 8 additions originally made by the Assessing Officer, only three additions i.e. (i) interest on I.T. Refund for A.Y. 2001-02; (ii) depreciation on Plant & Machinery; and, (iii) repairs to factory and building, are confirmed by the CIT(A). There is requirement for recording satisfaction of Assessing Officer why the penalty is initiated for each of the addition and there is requirement for specific mentioning of the limb of clause (c) of section 271(1) of the Act. Considering the said additions and the satisfaction recorded by the Assessing Officer in the assessment order dated 30.03.2006, ld. Counsel for the assessee submitted that the Assessing Officer failed to record any satisfaction whatsoever while making the said three additions. The ld. Counsel, however, submitted that only satisfaction recorded by the Assessing Officer is at the end of the last page of the assessment order and the same is a general or common satisfaction recorded below the computation of total income. The ld. Counsel further submitted that the Assessing Officer merely mentioned “Initiate penalty proceedings u/s 271(1)(c) of the I.T. Act for furnishing inaccurate particulars of income” and there is no addition – specific satisfaction at all. The ld. Counsel submitted that the requirement of recording the individual satisfaction for each addition is expressly missing in the assessment order. The ld. Counsel further submitted that in the penalty order dated 27.03.2014, the penalty is levied by stating that “….. as the assessee company has furnished inaccurate particulars of income…..”.

On the other hand, ld. DR for the Revenue heavily relied on the orders of the revenue authorities. 5. On hearing both the sides on this issue and considering the above stated generic – satisfaction recorded in the assessment order, we are of the opinion that the penalty order of the Assessing Officer is unsustainable in law. It is a fit case for invoking the ratio laid down by the binding judgments in the case CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom.) as well as the judgment of Hon’ble Karnataka High Court in the case of CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565. 6. Therefore, considering the above referred binding judgments, we are of the view that such penalty is unsustainable in law legally. It is a settled legal proposition that the Assessing Officer is under obligation to specify the appropriate limb of clause (c) of section 271(1) of the Act at the time of initiation as well as at the time of levy of penalty. In view of the above deliberation on this issue, without going into the merits of the case, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the entire penalty imposed by him. Accordingly, the grounds raised by the assessee are allowed on legal issue. 7. Considering the relief on legal issue, the adjudication of other grounds on merits becomes an academic exercise only. Accordingly, the other grounds raised by the assessee are dismissed as academic.

In the result, the appeal of the assessee is partly allowed. Order pronounced on 26th day of August, 2019. Sd/- Sd/- (िवकास अव�थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �याियक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 26th August, 2019. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-13, Pune. 4. The CCIT, Pune. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.