YASHWANT RAMAN CHOUDHARY,,NASHIK vs. INCOME TAX OFFICER,,

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-12, Pune dated 08.09.2016 for the assessment year 2006-07 as per following grounds of appeal on record:

“1. On the facts and in the circumstances of the case and in law, the Lower Authorities have erred in levying the penalty of Rs.19,033/- by invoking the provisions of section 271(1)(c) of the Income Tax Act, 1961 without considering appellant’s contention in this regard. The appellant craves for to leave, add, alter, modify, delete above grounds of appeal before or at the time of hearing, in the interest of natural justice.”

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the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

Para 6 of assessment order wherein it is mentioned that since the income of

Rs.2,18,300/- is declared by the assessee as result of search action, the

assessee has concealed the particulars of such income within the meaning of

Explanation 5A to section 271(1)(c) of the Act. Whereas, in the penalty order at

para 7, the Assessing Officer writes “ I am satisfied that the assessee has

without any reasonable cause, furnished an inaccurate particulars of income

and thereby concealed her income ………..”. The Ld. AR vehemently argued

that the limb in which penalty u/s.271(1)(c) has to be imposed, is not clear and

the Assessing Officer is ambiguous that on which limb penalty has to be levied

on the assessee. Highlighting the legal requirement of making a specific

reference to the specific limb of clause (c) of section 271(1) of the Act and

relying on various binding judgments in the case CIT Vs. Shri Samson

Perinchery (2017) 392 ITR 4 (Bom.) as well as the judgment of Hon’ble

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

Factory 359 ITR 565, Ld. Counsel demonstrated that the penalty levied by the

AO is unsustainable in law. Therefore, the Ld. AR prayed that penalty should

be quashed.

Authorities below.

specific legal issue, i.e. recording of proper satisfaction by the AO. We have

perused the order of the AO and on the issue satisfaction recorded by the AO

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for initiating of the penalty proceedings u/s.271(1)(c) of the Act is relevant for

extraction, therefore, the same is reproduced as under :

“06. ….Since the income of Rs.2,18,300/- is declared by the assessee as result of search action, the assessee has concealed the particulars of such income within the meaning of Explanation 5A to section 271(1)(c) of the I.T Act. Penalty proceedings u/s.271(1)(c) is separately initiated.”

the satisfaction recorded by the AO for levying the penalty u/s.271(1)(c) of the

Act is relevant for extraction. The said satisfaction reads as under:

“07. I am satisfied that the assessee has without any reasonable cause furnished an inaccurate particulars of income and thereby concealed her income to the extent of Rs.2,18,300/- on a/c of admittance of additional income………….”

From the above, it is evident that at the time of initiation of penalty

proceedings in the assessment, AO mentioned one limb of clause (c) of section

271(1) of the Act i.e. ‘concealed the particulars of income’. But at the time of

levying penalty, the Assessing Officer mentioned both the limbs of clause (c) of

section 271(1) i.e. furnished inaccurate particulars of income and thereby

concealed her income. This manner of recording of satisfaction suggests the

existence of ambiguity with reference to applicability of specific limb.

Therefore, we are of the opinion that considering the above referred binding

judgments such penalty order is unsustainable in law legally. AO is under

obligation to specify the correct limb at the time of initiation as well as at the

time of levy of penalty. In view of the above deliberation on this issue, we are of

the opinion that the penalty order is liable to be quashed on this legal issue.

Thus, the order of CIT(A) is set-aside and we direct the deletion of penalty.

Accordingly, the grounds of appeal raised by the assessee are allowed.

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In the result, appeal of the assessee is allowed. 7.

Order pronounced on 21st day of January, 2019.

Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 21st January, 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)-12, Pune. 4. The Pr. CIT, Central, Nagpur. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” 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 07.01.2019 Sr.PS/PS 2 Draft placed before author 08.01.2019 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