BHATABHAI SHANKAR PATEL,,NANDURBAR vs. INCOME-TAX OFFICER, WARD - 4,, DHULE

In one of the appeals i.e. ITA No.2494/PUN/2017, none appeared on behalf of assessee and there was delay of 24 days in filing the appeal late. In another appeal i.e. ITA No.1662/PUN/2018, there was delay of 10 days in filing the appeal late. However, the assessee in both the appeals has filed applications for condonation of delay and in view thereof, we find merit in the same and the delay of 24 and 10 days, respectively, is condoned.

On perusal of records and after hearing the learned Authorized Representatives, we find that in this bunch of appeals, the Assessing Officer while completing assessment proceedings had initiated penalty proceedings for concealment under section 271(1)(c) of the Act. In some of the assessment orders while recording satisfaction for initiating the aforesaid penalty proceedings, the Assessing Officer has failed to mention the limb on account of which the assessee was held to have erred i.e. whether it is concealment of income or furnishing of inaccurate particulars of income. In some of the cases, we note that the Assessing Officer while recording satisfaction has initiated penalty proceedings for the default of both i.e. furnishing of inaccurate particulars of income and / or concealment of income. In some of the cases, the Assessing Officer has mentioned that penalty proceedings need to be initiated for furnishing inaccurate particulars of income in

In such scenario, the question which arises is that where the Assessing Officer has failed to mention specific charge for initiating penalty proceedings and/or if he has recorded satisfaction for initiating penalty proceedings for non fulfillment of one of the limbs of section 271(1)(c) of the Act and while levying penalty either penalty is levied for the default of both the limbs or there is mention of none of the limbs or there is mention of contrary limb as to what it was initiated for, then whether penalty levied in such cases can be sustained in the eyes of law?

Different learned Authorized Representatives for the assessee have stressed that the issue stands covered by number of decisions of Pune Bench of Tribunal, wherein this issue has been decided in line with the ratio laid down by the Hon‟ble Bombay High Court in CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom). In respect of appeals filed by Revenue, the assessee - respondent has similarly pleaded. However, the learned Departmental Representative for the Revenue has placed reliance on the orders of Assessing Officer / CIT(A) and find justification in the aforesaid levy of penalty for concealment under section 271(1)(c) of the Act.

We find that we have already adjudicated this issue in number of cases in turn, relying on the ratio laid down by the Hon‟ble Bombay High Court in CIT Vs. Shri Samson Perinchery (supra), wherein it was held that where there is no proper satisfaction for initiating penalty proceedings and in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty. In the facts of the said case, the Tribunal had deleted penalty imposed under section 271(1)(c) of the Act by holding that initiation of penalty proceedings by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty was for concealment of income. The grievance of Revenue before the Hon‟ble High Court was that there was no difference between furnishing of inaccurate particulars of income and concealment of income. The Hon‟ble High Court held as under:- “6. The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in T. Ashok Pai v. CIT [2007] 292 ITR 11 (SC) [relied upon in Manjunath Cotton & Ginning Factory (supra)] – wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in section 271(1)(c) of the Act, carry different meanings/connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the assessee has no notice.”

The Hon‟ble Goa Bench of Bombay High Court in a latest decision in the case of Pr.CIT Vs. New Era Sova Mine & Ors. in Tax Appeals Nos.70, 69 of 2018 & 6 of 2019, judgment dated 18.06.2019 applying the ratio laid down in CIT Vs. Shri Samson Perinchery (supra) have also similarly held.

Applying the said principle laid down by the Hon‟ble Bombay High Court in CIT Vs. Shri Samson Perinchery (supra), it transpires that in cases of levy of penalty under section 271(1)(c) of the Act, the Assessing Officer should be clear as

Now, coming to present set of appeals, in such scenario, where the Assessing Officer has failed to mention specific charge as to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee and give proper show cause notice to the assessee in this regard, then the levy of penalty in such circumstances suffers from infirmity. Similarly where the Assessing Officer has recorded satisfaction in the assessment order as to both limbs of section 271(1)(c) of the Act and initiated penalty proceedings, such order also suffers from infirmity. Where no charge is mentioned in assessment order, then also for non recording of proper satisfaction, the initiation of penalty proceedings is not as per law and the penalty order passed in such cases thus, cannot be upheld. Where, in some cases, penalty has been levied for non fulfillment of both limbs of section 271(1)(c) of the Act and / or for one of the limbs for initiating, for other limb for levy and in some cases, no limb is mentioned, such orders levying penalty under section 271(1)(c) of the Act cannot stand in the eyes of law. We accordingly, delete penalty levied under section 271(1)(c) of the Act. Consequently, appeals filed by assessee in this

In the result, the appeals of assessee are allowed and appeals of Revenue are dismissed.