DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 8, PUNE vs. M/S. ADVIK HI-TECH PVT.LTD, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the Revenue is emanating out of the order of 1. Commissioner of Income Tax (A) – 6, Pune dt.17.10.2017 for the assessment year 2009-10.

Assessee is a company stated to be engaged in the business of manufacturing of Auto components, generation of wind power and trading in shares and securities. Assessee electronically filed its return of income for A.Y. 2009-10 on 31.10.2009 declaring total income at Rs. Nil by claiming

deduction of Rs.2,55,94,534/- u/s 80IB(3)(ii) of the Act. The case was

selected for scrutiny and thereafter assessment was framed u/s 143(3) of the

act vide order dt.03.12.2011 and the total income was determined at

Rs.6,89,76,670/- whereby the claim of deduction u/s 80IB(3)(ii) of the Act

was denied to the assessee and while denying the claim, AO recorded the

satisfaction about the filing of inaccurate particulars of income by the

assessee and therefore assessee being liable for penalty u/s 271(1)(c) of the

Act. On the aforesaid denial of claim, AO thereafter vide penalty order

dt.27.03.2014 levied penalty u/s 271(1)(c) of the Act on account of

concealment of income. Aggrieved by the order of AO, assessee carried the

matter before Ld.CIT(A), who vide order dt.17.10.2017 (in appeal

No.PN/CIT(A)-V/DCIT Cir-8/297/2014-15) on the merits of the case, 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 circumstances of the case and in law the Ld. CIT(A) was justified in deleting the penalty u/s 271 (1)(c) of the I. T. Act when the quantum addition u/s 80IB(3)(ii) has been upheld by the Hon'ble ITAT in ITA Nos. 1743 & 1744/PN/2012 dated 30.07.2014 ?

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.

supported the order of AO. Ld.A.R. on the other hand, submitted that

while recording satisfaction for penalty in the assessment order AO has

held that assessee had furnished inaccurate particulars of income but

while passing the penalty order has levied penalty for concealment of

income. He therefore submitted that on account of not recording of

proper satisfaction, no penalty u/s 271(1)(c) of the Act is leviable and

for the aforesaid proposition, he also placed reliance on the decision of

Hon’ble Bombay High Court in the case of CIT Vs. Samson Perinchery

reported in (2017) 392 ITR 4 (Bom).

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, penalty of Rs.1,04,66,833/- has

been levied on the alleged concealed income of Rs.3,48,89,443/-. The

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

assessment order AO had recorded satisfaction for furnishing of inaccurate

particulars of income but thereafter, in the penalty order passed u/s

271(1)(c) of the Act, AO had levied penalty for concealment of income. It is a

settled law that while levying penalty for concealment of income, 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 its

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 company has concealed its income or

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

in CIT Vs. Shri Samson Perinchery reported in (2017) 392 ITR 4 (Bom) 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.

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 it is not a fit case to impose penalty. We therefore uphold the order of Ld.CIT(A). Thus, the grounds of

Revenue are dismissed.

Order pronounced on 1st day of August, 2019.

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

पुणे Pune; �दनांक Dated : 1st August, 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 // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.