OPINDER SINGH MARWAH,NEW DELHI vs. ACIT, CIRCLE- 62(1), NEW DELHI

This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)–20, New Delhi, dated 26.09.2017 wherein the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 (the Act) of Rs.1,39,050/- by the ACIT, Circle 62(1) New Delhi, for order dated 28.09.2016 passed under Section 271(1)(c) of the Act was confirmed. The assessee is challenging the above levy of the penalty on several grounds relating to the issue of jurisdiction as well as on the merits of the case.

Brief facts of the case shows that assessee is an Individual engaged in the business of providing taxis on hire. On 25.09.2013 assessee filed its return of income of Rs.86,04,850/-. The case of the assessee was selected for scrutiny. The assessee has shown net profit of Rs.54,59,382/- on gross receipt of Rs.10.16 crores resulting into net profit ratio of Rs.5.37 % . Page | 1 During the course of assessment proceedings it was found that the assessee has deposited Rs 1839000/- in cash in bank account. Out of the above cash deposit assessee could not prove that Rs.4,50,000/- is received by the assessee on sale of car. Therefore, same was added to the total income of the assessee and order under Section 143(3) of the Act was passed making the above addition. The ld. AO in the assessment order at page No. 4 initiated the penalty proceedings under Section 271(1)(c) of the Act for concealment of income or furnishing inaccurate particulars thereof. Based on this a show cause notice was issued to the assessee under Section 274 of the Act on 4.03.2016 wherein the ld. AO did not strike off any of the twin charges of concealment of particulars of income or furnishing inaccurate particulars of such income. The penalty notice was replied by the assessee on 24.02.2016 justifying the cash deposit of Rs.4,50,000/- from explained sources. The ld. AO , on change of incumbent, also issued another notice on 6.06.2016 under Section 274 read with Section 271(1)(c) of the Act where also none of the twin charges was cancelled. On 14thJune, 2015 assessee replied the penalty notice. Subsequently, the AO passed an order under Section 271(1)(c) of the Act on 28.09.2016 levying a penalty of Rs.1,39,050/- holding that assessee has furnished inaccurate particulars of income leading to concealment and, therefore, is liable for penalty.

The assessee challenged the same before the ld. CIT (Appeals) who passed an order on 27-28.09.2017 on merits, confirming the penalty for concealment of income. After that on 27.07.2017 appeal against the quantum assessment order was also confirmed by the CIT (Appeals) on 28.07.2017. Therefore, the assessee aggrieved with the order of the ld. CIT (Appeals) confirming penalty of Rs.1,39,050/- is in appeal before us.

We have heard the rival contentions and perused the orders of the lower authorities on quantum proceedings as well as in penalty proceedings. We have also perused the notices issued by the ld. AO under Section 274 read with Section 271(1)(c) of the Act dated 4thMarch, 2016 and 6th June, 2016. On perusal of the assessment order it is apparent that the ld. AO has recorded satisfaction of penalty proceedings under Section 271(1)(c) of the Act mentioning both the charges. In the notices issued the ld. AO has not struck off any of the twin charges. In the penalty order the ld. AO has levied penalty mentioning both the charges. The ld. CIT (Appeals) confirmed the penalty holding that assessee has concealed the particulars of income. The ld. AO at the time of recording of the satisfaction did not show that how both the charges are tested for levy of penalty under Section 271(1)(c) of the Act. There may be certain circumstances where both the charges may sustain, but the ld. AO at the time of recording satisfaction must demonstrate that how both the charges are satisfied. Even in the penalty order, such exercise has not been carried out. The issue is squarely covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of SSA’s Emerald Meadows (2016) 73 taxmann.com 278 in favour of the assessee. Further the Hon’ble Delhi High Court also in the case of Sahara India Life Insurance Corporation has held in favour of the assessee in ITA. 475/Del/2019 dated 2.08.2019. In view of this the orders of the lower authorities with respect to the levy of penalty under Section 271(1)(c) of the Act of Rs. 1,39,050/- are not sustainable. Accordingly, we delete the penalty levied by the ld. Assessing Officer.

In the result, appeal of the assessee is allowed.