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Income Tax Appellate Tribunal, DELHI
Before: SH. ANIL CHATURVEDI & SH. AMIT SHUKLA
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. AMIT SHUKLA, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA No.1741/Del/2017 Assessment Year : 2012-13 Philip Mercantile Pvt. Ltd., Vs. ACIT Akhilesh Kumar, Advocate, Circle – 2, Chamber No.206-207, Ghaziabad Ansal “Satyam”, RDC Raj Nagar, Ghaziabad PAN : AAECP 7625 H (APPELLANT) (RESPONDENT) Assessee by Shri Akhilesh Kumar, Adv. Revenue by Shri Govind Singhal, Sr. DR Date of hearing: 16/02/2021 Date of Pronouncement: 16/02/2021 ORDER PER ANIL CHATURVEDI, AM:
This appeal filed by the assessee is directed against the order dated 06.12.2016 of the Commissioner of Income Tax (Appeals)- Ghaziabad relating to Assessment Year 2012-13.
The relevant facts as culled from the material on records are as under :
ITA No.1741/Del/2017 Philip Mercantile Pvt. Ltd. vs. ACIT A.Y. 2012-13 2 3. Assessee is a company stated to be engaged in deriving income from trading of shares. Assessee filed its return of income for A.Y. 2012-13 on 21.09.2012 declaring loss of Rs.2,31,43,190/-. The case was selected for scrutiny and thereafter, assessment was framed u/s 143(3) of the Act vide order dated 20.03.2015 and the loss claimed by the assessee was disallowed by the AO for the reasons that the assessee could not substantial the claim of loss. On the aforesaid disallowance of loss, penalty of Rs.69,43,000/- was levied by the AO vide order dated 24.09.2015 u/s 271(1)(c) of the Act.
Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 06.12.2016 in Appeal No.270/2015-16/GZB dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds of appeal: 1. “Because, Learned Commissioner of Income Tax (A) eared in sustaining the order of penalty which is imposed on a/c of rejection of claim of loss duly disclosed in return with its full particulars against the ratio of Hon’ble Apex Court/ jurisdiction High Court, hence principles of judicial discipline defeated. 2. Because, Learned Commissioner of Income Tax (A) further erred in not appreciating the facts in the record that, neither any tax is imposed nor any revenue is involved in as much as that no c/f of claim was made in subsequent years and admittedly there could not be any intention to evade tax, and ratio of cases cited defeated on this issue also. 3. Because, without prejudice to above but only as an alternative, learned commissioner of income tax (A) firstly erred in not considering the fact that the disallowance of claim is based only on the basis of induced surrender which is not only against the
ITA No.1741/Del/2017 Philip Mercantile Pvt. Ltd. vs. ACIT A.Y. 2012-13 3 rule of fair play but also against the law pronounced by apex/ jurisdictional court. 4. Because, Learned Commissioner of Income Tax (A) also erred in not appreciating that neither specific default is mentioned in the order nor in printed notice, there is no satisfaction and penalty is mechanically imposed contrary to settled law. 5. Because, Learned Commissioner of Income Tax(A) erred in rejection the additional evidences without considering the reasons given by assessee and further erred in refusing to consider the merits by conducting enquiry etc. Therefore, it is prayed that penalty of Rs.69.63 lakhs sustained may kindly be quashed.”
Before us, Assessee is challenging the levy of penalty u/s 271(1)(c) of the Act. Before us, Learned AR submitted that in the assessment order no specific charge has been recorded by the AO as to whether it was the case of concealment of income or the case was of furnishing of inaccurate particulars of income but on the contrary has recorded it to be concealment of income and/or furnishing of inaccurate particulars of income. He thereafter pointed to the copy of the notice issued u/s 274 r.w.s 271(1)(c) dated 20.03.2015 which is placed at Page 50 of the paper book. From the aforesaid notice, he pointed that the AO has not specified the applicable limb for which the penalty has been levied. He therefore submitted that as the notice did not specify as to for which limb of Section 271(1)(c) of the Act, the penalty has been initiated, the notice issued is bad in law and for this proposition he relied on the decision of Hon’ble Delhi High Court
ITA No.1741/Del/2017 Philip Mercantile Pvt. Ltd. vs. ACIT A.Y. 2012-13 4 in the case of Sahara India Life Insurance Co. Ltd. and other cases.
The learned DR on the other hand supported the order of AO and CIT(A) and submitted that since assessee had failed to furnish the details and justification of loss claimed, the penalty was rightly levied.
We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to levy of penalty u/s 271(1)(c) of the Act. We find that in the present case in the assessment order, the AO has not recorded any satisfaction as to whether the penalty u/s 271(1)(c) has been levied for furnishing of inaccurate particulars of income or it was a case of concealment of income. The show-cause notice dated 20.03.2015 also does not specify as to for which limb of Section 271(1)(c) of the Act the penalty proceedings are initiated i.e. whether it is for concealment of the particulars of income or for furnishing of inaccurate particulars of income. Even in the penalty order, no specific charge i.e. whether it is a case of furnishing of inaccurate particulars of income or a case of concealment of the particulars of income has been indicated. It is a settled law that while levying penalty for concealment, 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
ITA No.1741/Del/2017 Philip Mercantile Pvt. Ltd. vs. ACIT A.Y. 2012-13 5 concealed its income or furnished inaccurate particulars of 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 has concealed its income or furnished inaccurate particulars of income.
We further find that the Hon’ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. (ITA No.475/2019 and other connected matters) order dated 02.08.2019 in similar situation upheld the order of ITAT whereby ITAT had deleted the penalty by observing as under: “21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax vs. SSA’s Emerald Meadows (2016) 73 Taxman.com 241 (Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016. On this issue again this Court is unable to find any error 22. having been commuted by the ITAT. No substantial question of law arises.”
ITA No.1741/Del/2017 Philip Mercantile Pvt. Ltd. vs. ACIT A.Y. 2012-13 6 9. In the present case following the aforesaid decision of Hon’ble Delhi High Court in the case of Sahara India Life Insurance Co. Ltd. (supra), we are of the view that since the basic condition for levy of penalty has not been fulfilled the penalty order cannot be upheld. We accordingly set aside the penalty order passed by AO. Thus the grounds of AO are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 16.02.2021
Sd/- Sd/- (AMIT SHUKLA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 16.02.2021 *Priti Yadav, Sr.PS*