Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-7, Pune dated 10.01.2017 for the assessment year 2008-09 as per the grounds of appeal on record.
The crux of the grievance of the assessee is with regard to the penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 ( hereinafter referred to as
2 ITA No. 896/PUN/2017 A.Y.2008-09
‘the Act’) and also that the penalty has been levied on disallowance made
u/s.14A of the Act.
At the time of hearing, the Ld. AR of the assessee vehemently argued
that both in the assessment order as well as penalty order, the limb for which
penalty is being imposed, has not been specified. Moreover, the notice u/s.274
r.w.s. 271(1)(c) of the Act is also not clear as to the limb on which penalty has
to be levied on the assessee. The ld. AR of the assessee relied on the present
judgment of the Hon'ble Jurisdictional High Court in the case of CIT Vs.
Samson Perinchery reported as 392 ITR 4 (Bom.) wherein the Hon'ble Bombay
High Court has followed the view of Karnataka High Court in the case of CIT
Vs. Manjunath Cotton & Ginning Factory reported in 359 ITR 565(Kar.)
wherein it was observed that the Hon'ble Supreme Court of India had held in
T. Ashok Pai Vs. CIT reported as 292 ITR 11 (SC) that act of ‘concealment of
income’ and act of ‘furnishing inaccurate particulars’ are two different things.
Since where the notice does not specify for what penalty is being initiated, the
levy of penalty was held to be invalid.
3.1 Furthermore, the Ld. AR contended that in so far as disallowance made
u/s.14A of the Act, there are various decisions where it has been held that
penalty cannot be imposed. Penalty is not leviable on disallowance made
u/s.14A of the Act. The Ld. AR of the assessee has placed reliance on the
decision in the case of M/s. 4A Financial Securities Limited Vs. DCIT in ITA
No.1036/Del/2018 for the assessment year 2013-14 decided on 26.07.2018.
On the other hand, the Ld. DR conceded to the judicial pronouncements
placed before us by the Ld. AR.
3 ITA No. 896/PUN/2017 A.Y.2008-09
We have perused the case records and heard the rival contentions and
have given thoughtful consideration to the judicial pronouncements on
records. That in the penalty notice, the Assessing Officer is not clear as to
which limb of section 271(1)(c) of the Act penalty to be imposed. The Ld. AR
has pointed out before us that the decision of Hon'ble Jurisdictional High
Court in the case of CIT Vs. Samson Perinchery (supra.) has held that
‘concealment of income’ and ‘furnishing of inaccurate particulars of income’ in
section 271(1)(c) carry different meanings/connotations and therefore, the
satisfaction of the Assessing Officer with regard to only one of the two
breaches mentioned u/s.271(1)(c) for initiation of penalty proceedings will not
warrant/permit penalty being imposed for the other. 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. Therefore, where the Assessing Officer initiated penalty
proceedings u/s.271(1)(c) for furnishing inaccurate particulars of income, the
order imposing penalty for concealment of income was not valid. Reverting to
the facts of the case the penalty notice is ambiguous so as it has not specified
as to the charge for which penalty u/s.271(1)(c) of the Act is levied. If the
notice does not specify the limb in which the penalty is being levied
u/s.271(1)(c) of the Act, in such scenario, the imposition of penalty shall be
void ab-initio.
Meaning thereby to our humble understanding, the assessee should be
ready with his defense for which penalty has been levied by the Revenue
Authority. It could not be generally done that for ‘concealment of income’ and
also for ‘furnishing inaccurate particulars of income’, penalty has been levied.
The limb for which penalty is levied, should be specific in the penalty notice
allowing opportunity to the assessee to get ready with his defense. Further,
4 ITA No. 896/PUN/2017 A.Y.2008-09
the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs.
Samson Perinchery (supra.) as stated by the Ld. AR is the present judgment
on the issue which is therefore, relevant.
5.1 Regarding imposition of penalty u/s.271(1)(c) of the Act on disallowance
made u/s.14A of the Act, we have considered the decision of Delhi Bench of
the Tribunal in the case of M/s.4A Financial Securities Limited Vs. DCIT
(supra.) wherein the brief facts of the case are that the assessee filed return
declaring total income of Rs.22,66,770/-. The Assessing Officer made addition
of Rs.3,01,220/- under section 14A of the Act read with Rule 8D. Another
addition of Rs.1,13,790/- was made towards claim for membership fees
amounting to Rs.14,484/- and interest on late payment Rs.99,306/-. These
two additions formed the bedrock of the edifice of instant penalty which came
to be affirmed in the first appeal. The Delhi Bench of the Tribunal has deleted
the penalty imposed on disallowance made u/s.14A of the Act by observing as
under:
“3. I have heard both the sides and perused the relevant material on record. It is evident from the discussion made above that such penalty has been imposed on making disallowance of certain expenses. But for that, there is nothing on record to show that the assessee lodged bogus claims in respect of these expenses. That apart, the expenses were claimed by the assessee in a bona fide manner. The mere fact that the above disallowances have been made do not bring a case within the parameters set out in section 271(1)(c) of the Act. The Hon'ble Supreme Court in CIT VS. Reliance Petro Products Private Ltd. (2010) 322 ITR 158 (SC) has held that a mere making of a claim which is not sustainable in law, by itself will not attract penalty 271(1)(c) of the Income-tax Act, when the assessee furnishes all the relevant particulars in his return which are not found to be inaccurate. There is no dearth of decisions holding that penalty under section 271(1)(c) cannot be imposed on disallowance of expenses, which were not otherwise bogus. I, therefore, set aside the impugned order and direct to delete the penalty.”
Respectfully, following the directions and ruling of the Hon'ble
Jurisdictional High Court, in Samson Perinchery (supra.) and decision of Delhi
5 ITA No. 896/PUN/2017 A.Y.2008-09
Bench of the Tribunal, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the penalty from the hands of the assessee.
In the result, appeal of the assessee is allowed. 6.
Order pronounced on 30th day of April, 2019.
Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 30th April, 2019. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-7, Pune. 4. The CIT-6, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.
6 ITA No. 896/PUN/2017 A.Y.2008-09
Date 1 Draft dictated on 29.04.2019 Sr.PS/PS 2 Draft placed before author 30.04.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order