SHREE BALAJI PROMOTERS AND BUILDERS,PUNE vs. INCOME-TAX OFFICER, WARD - 3 (2), PUNE

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ITA 234/PUN/2019Status: DisposedITAT Pune26 March 2019AY 2006-075 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice and order were vague as they did not clearly specify the exact limb of Section 271(1)(c) for which the penalty was levied. This lack of specificity denied the assessee an adequate opportunity to defend themselves.

What were the facts?

The assessee appealed against a penalty levied under Section 271(1)(c) of the Income Tax Act. The penalty was confirmed by the CIT(Appeals). The assessee argued that the notice for penalty was vague, mentioning both concealment of income and furnishing inaccurate particulars.

What were the issues?

Whether a penalty under Section 271(1)(c) can be levied when the notice and penalty order are vague regarding the specific charge of concealment or furnishing inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “B” BENCH, PUNE

Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM

For Appellant: Shri Sunil Ganoo
For Respondent: Shri Pankaj Garg
Hearing: 25.03.2019Pronounced: 26.03.2019

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-3, Pune dated 28.12.2018 for the assessment year 2006-07 as per grounds of appeal on record.

2 ITA No. 234/PUN/2019 A.Y.2006-07

2.

The only grievance of the assessee is with regard to imposition of

penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred

to as ‘the Act’) by the Assessing Officer and the same being confirmed by the

Ld. CIT(Appeals) relying on the decision of the Hon'ble Bombay High Court in

the case of Smt. Kaushalya reported as 216 ITR 660.

3.

At the time of hearing, the Ld. AR of the assessee vehemently argued

that the notice issued u/s. 274 r.w.s. 271(1) of the Act did not specify the

exact limb/ charge for which penalty u/s.271(1)(c) is levied. The notice is

vague in nature since it mentions both the limbs of section 271(1)(c) of the

Act i.e. ‘concealment of income’ and ‘furnishing of inaccurate particulars of

income’. That further in the penalty order also, it is mentioned that penalty

u/s.271(1)(c) of the Act is levied for concealing and furnishing of inaccurate

particulars of income. The Ld. AR contended that it is settled principle of law

if the charge is not specific then the penalty u/s.271(1)(c) of the Act cannot be

levied. That in support of his contentions, the Ld. AR of the assessee relied on

the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs.

Samson Perinchery in ITA No.1154 of 2014 and the decision of Hon'ble

Karnataka High Court in the case of CIT Vs. Manjunath Cotton and Ginning

Factory reported as 359 ITR 565 wherein it has been held that the

satisfaction of the Assessing Officer with regard to only one of the two

breaches u/s.271(1)(c) of the Act for initiation of penalty proceedings would

not permit penalty being imposed for the other breach. Thus, the order

imposing penalty was to be made only on the ground on which the penalty

proceedings were initiated and it could not be a fresh ground of which the

assessee had no notice.

3 ITA No. 234/PUN/2019 A.Y.2006-07

4.

On the other hand, the Ld. DR vehemently argued that the Ld.

CIT(Appeals) has confirmed the penalty relied on the decision of the Hon'ble

Bombay High Court in the case of Smt. Kaushalya (supra.) and has placed

reliance on the order of the Sub-ordinate Authorities.

5.

We have perused the case records and analysed the facts and

circumstances of the case and have given considerable thought to the judicial

pronouncements placed before us. We observe that the Ld. CIT(Appeals) relied

on the decision of Smt. Kaushalya (supra.) which is an earlier decision and

have confirmed the penalty levied u/s.271(1)(c) of the Act. However, the law of

the land as on date should definitely be the law laid down by the Hon'ble

Bombay High Court in the case of CIT Vs. Samson Perinchery (supra.) which

is at a later date than that laid down in Smt. Kaushalya’s case and therefore,

is a present judgment on the subject. The Hon'ble Bombay High Court therein

had applied the findings of the Hon'ble Karnataka High Court in the case of

CIT Vs. Manjunath Cotton and Ginning Factory (supra). The binding

proposition, therefore, is that Assessing Officer should be clear as to which of

the two limbs under which penalty is imposable, has been contravened or

indicate that both have been contravened while initiating penalty

proceedings. This is to provide an opportunity to the assessee to prepare

himself for the defense as regards to the exact charge on which penalty is

imposed upon him u/s. 271(1)(c) of the Act. In the instant case, the charge is

vague and therefore, levy of penalty is not warranted.

In the totality of facts and circumstances, when notice of penalty is not

specific about the charge, when penalty order itself is not specific about the

exact limb/charge, both are vague in nature. In such circumstances, we set

4 ITA No. 234/PUN/2019 A.Y.2006-07

aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete penalty from the hands of the assessee.

6.

In the result, appeal of the assessee is allowed.

Order pronounced on 26th day of March, 2019.

Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 26th March, 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)-3, Pune. 4. The Pr. CIT-2, 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.

5 ITA No. 234/PUN/2019 A.Y.2006-07

Date 1 Draft dictated on 25.03.2019 Sr.PS/PS 2 Draft placed before author 26.03.2019 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

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