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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM :
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-4, Pune dated 30-12-2016 for the assessment year 2008-09, confirming levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
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Shri Prayag Jha appearing on behalf of the assessee submitted that the assessee filed its return of income for the impugned assessment year on 25-09-2008 declaring total income of Rs.19,41,040/-. The assessee is engaged in the business of wind power generation and trading of land. The assessee is also engaged in land development activities. In return of income for the impugned assessment year the assessee had claimed deduction u/s. 80IA(4) in respect of income from power generation. The Assessing Officer in scrutiny assessment proceedings inter alia made disallowance qua excessive deduction claimed u/s. 80IA(4) of the Act. Apart from above disallowance of Rs.1,77,857/- u/s. 14A of the Act was also made. The Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act in respect of aforesaid disallowances. The Assessing Officer levied penalty of Rs.54,958/- u/s. 271(1)(c) vide order dated 05-03-2015 only in respect of disallowance u/s. 14A of the Act. No penalty was levied qua disallowance u/s. 80IA(4) of the Act.
2.1 The ld. AR further contended that while initiating penalty proceedings on disallowance u/s. 14A, the Assessing Officer mentioned both the limbs of section 271(1)(c) i.e. “furnishing inaccurate particulars of income” and “concealment of income”. Similarly, while levying penalty the Assessing Officer invoked both the charges of section 271(1)(c) i.e. “furnishing inaccurate particulars of income” and “concealment of income”. The manner in which penalty proceedings have been initiated and the penalty has been levied clearly indicates that there was ambiguity in the mind of Assessing Officer with respect to charge u/s. 271(1)(c) to be imposed for levy of penalty. The Hon‟ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory reported as 359 ITR 565 and thereafter, the Tribunal in various
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decisions have consistently held that levy of penalty u/s. 271(1)(c) where both the limbs of section 271(1)(c) are mentioned is not sustainable.
On the other hand Shri Pankaj Garg representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. DR submitted that the assessee in return of income failed to disclose interest income of Rs.1,77,857/- received from Patan Urban Co-operative Bank Ltd., therefore, penalty u/s. 271(1)(c) of the Act has been rightly levied.
We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The assessee has challenged levy of penalty u/s. 271(1)(c) on the ground of ambiguity in specifying the charge u/s. 271(1)(c) of the Act. A perusal of assessment order shows that penalty u/s. 271(1)(c) qua disallowance u/s. 14A has been initiated by mentioning both the limbs of section 271(1)(c). The relevant extract of the Assessing Officer where penalty has been initiated reads as under : “Further, in view of above discussion, penalty proceedings u/s. 271(1)(c) of the I.T. Act, 1961, are being initiated separately, for furnishing inaccurate particulars of income and concealing the income.”
Thereafter, while passing penalty order dated 05-03-2015 the Assessing Officer again mentioned both the limbs of section 271(1)(c). The relevant extract of penalty order reads as under : “I am, therefore, satisfied that the assessee fails to prove that all the facts and material relating to the computation of his total income have been disclosed by it, hence the amount of Rs.1,77,857/- so added in computing the total income is, for the purposes of clause (C) of sub-section (1) of section 271, deemed to represent the income in respect of which particulars have been concealed or inaccurately furnished.”
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The Hon‟ble Supreme Court of India in the case of T. Ashok Pai Vs. Commissioner of Income Tax reported as 292 ITR 11 has held, “Concealment of income‟ and „furnishing of inaccurate particulars” carry different connotations. Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi”.
Expression „concealment of income‟ and „furnishing inaccurate particulars of income‟ cannot be used interchangeably. „Concealment of income‟ connotes where there is escapment of income from tax net by virtue of assessee concealing information/documents etc. or non- furnishing of information about income earned in the return of income during the relevant period. On the other hand expression „furnishing inaccurate particulars of income‟ signifies where the assessee has furnished particulars of income but the information/documents furnished are false/wrong/incorrect or erroneous.
The Hon‟ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Manjunatha Cotton and Ginning Factory (supra) has held :
“61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujrat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind.”
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In the instant case, there was ambiguity and vagueness in the mind of Assessing Officer while recording satisfaction with respect to charge u/s. 271(1)(c) of the Act to be invoked. The same ambiguity persisted at the time of passing order levying penalty. The Assessing Officer has to be specific and categoric in mentioning the charge u/s. 271(1)(c) at the time of recording satisfaction, as well as at the time of levy of penalty. Where penalty provisions have been invoked in indistinct manner, penalty proceedings would fail the test of legal requirements. Accordingly, the impugned order is set aside and the appeal of assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on Monday, the 03rd day of June, 2019.
Sd/- Sd/- (डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 03rd June, 2019 RK आदेश की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-4, Pune 3. 4. The Pr. Commissioner of Income Tax-3, Pune ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “बी” बेंच, 5. ऩुणे / DR, ITAT, “B” Bench, Pune. गाडड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,
यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune