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Income Tax Appellate Tribunal, “A” 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 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.”
2 ITA No. 2859/PUN/2016 A.Y.2006-07
The main grievance is the levy of penalty of Rs.19,033/- u/s.271(1)(c) of
the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
At the time of hearing, the Ld. AR of the assessee appraised the Bench at
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.
On the other hand, the Ld. DR has placed reliance on the order of the
Authorities below.
We have perused the case record and heard the rival contentions on this
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
3 ITA No. 2859/PUN/2016 A.Y.2006-07
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.”
We have also perused the penalty order dated 23.05.2014 and find that
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.
4 ITA No. 2859/PUN/2016 A.Y.2006-07
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.
5 ITA No. 2859/PUN/2016 A.Y.2006-07
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