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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI ANIL CHATURVEDI, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of CIT(Appeals)-2, Pune dated 12.08.2016 for the assessment year 2008-09 as per following grounds of appeal:
“Penalty levied u/s.271(1) (c) 1. On the facts and circumstances of the case, the learned CIT(Appeals) erred in confirming the validity of notice issued by the learned Assessing Officer u/s 274 r.w.s. 271(1)(c) and rejecting the plea of
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the appellant that the notice is void ab-initio and consequently the penalty proceedings deserve to be quashed at the threshold. 2. The learned CIT(Appeals) erred in not appreciating that when the specific charge that the appellant was expected to answer was not specified in the notice, the proceedings the levy of penalty in pursuance of the notice was ex-facie illegal. 3. On the facts and circumstances of the case and in law the learned CIT(Appeals) erred in confirming the penalty levied by the learned Assessing Officer of Rs.8,49,750/- in respect of disallowance of excise duty claimed by the appellant Rs.25,00,000/-. 4. On the facts and circumstances of the case and in law the learned CIT(Appeals) erred in confirming the penalty levied by the learned Assessing Officer of Rs.1,78,161/- in respect of disallowance of bonus u/s. 43B of the Act Rs.5,24,158/-. 5. On the facts and circumstances of the case and in law the learned CIT(Appeals) erred in confirming the penalty levied by the learned Assessing Officer of Rs.1,60,467/- in respect of disallowance of Repairs expenses u/s. 40(a)(ia) of the Act Rs.4,72,100/-. General grounds: 6. The learned CIT(A) erred in disregarding the judicial pronouncements in this regard. 7. The appellant craves leave to add, alter or amend any of the grounds of appeal at any time before the time of hearing.”
Though the assessee has preferred multiple grounds of appeal, the
grievance revolves around penalty levied u/s.271(1)(c) of the Income Tax Act,
1961 (hereinafter referred to as ‘the Act’). The first two grounds are legal
ground and ground No.3, 4 and 5 are grounds on merits. We proceed to
decide the issue first on legal grounds.
The Ld. AR of the assessee vehemently argued that the notice issued
u/s.274 r.w.s. 271(1)(c) of the Act did not specify on which limb penalty
u/s.271(1)(c) of the Act is levied. The ld. AR of the assessee relied on the
latest 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
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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. This view was
followed by the Karnataka High Court in the case of CIT Vs. SSA’s Emerald
Meadows, 73 taxmann.com 241( Kar.) against which Supreme Court rejected
the Revenue’s SLP. The Ld. AR further submitted that as of now so far as the
Hon'ble Jurisdictional High Court is concerned, the non-striking of irrelevant
portion of the limb is not just a procedural mistake but if such exercise is not
done and 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. The Ld. AR further contended that the decision relied
on by Ld. CIT (Appeals) for confirming penalty are of different High Courts
which are distinguishable in facts and are not applicable to the case of the
assessee.
On the other hand, Ld. DR for the Revenue has relied on the orders of
the Sub-ordinate Authorities.
We have perused the case records, heard the rival contentions and have
considered the judicial pronouncements placed before us. We have also given
considerable thought to the documents placed before us in paper book filed.
We notice that in Page No.1, show cause notice has been issued to the
assessee and para 4 therein, it is stated that the assessee has not furnished
the return of income for the assessment year 2008-09 as required under the
provisions of section 139(1) of the Act. The provisions of section 271(1)(c) of
the Act is therefore attracted in case of the assessee. Page 2 of the paper book
which is the reply of the assessee wherein, it is clearly stated that the
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assessee has e-filed its return of income for assessment year 2008-09 vide e-
filing acknowledgment No. 43968500300908 dated 30.09.2008. The assessee
has also submitted physical copy of ITR V with Asst. Commissioner of Income
Tax, Circle 11(2) on 13.10.2008. Thereafter, in Page 4 of the paper book, there
is notice u/s.274 r.w.s. 271 of the Act wherein, the limb for which penalty is
levied is not specific. 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.
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 allowing opportunity
to the assessee to get ready with his defense. Further, 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 latest judgment on the issue which is
therefore, relevant. The Ld. DR did not bring any decisions of any other
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Courts/ High Courts contrary to the decisions relied on by the Ld. AR on the issue.
Respectfully, following the directions and rule of the Hon'ble Jurisdictional High Court, we direct the deletion of penalty in the case of the assessee. Therefore, the order of the Ld. CIT(Appeals) is set aside and the legal grounds raised in appeal by the assessee are allowed.
That once the decision in legal grounds has been rendered in favour of the assessee, other grounds on merits i.e. ground Nos. 3, 4 and 5 become academic and infructuous and hence, are dismissed.
In the result, appeal of the assessee is partly allowed. 7.
Order pronounced on 20th day of February, 2019.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 20th February, 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)-2, Pune. 4. The Pr. 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.
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Date 1 Draft dictated on 19.02.2019 Sr.PS/PS 2 Draft placed before author 19.02.2019 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