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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आयकर अपीलीय अिधकरण “ए” �यायपीठ पुणे म� । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE �ी डी. क�णाकरा राव, लेखा सद�य एवं �ी िवकास अव�थी, �याियक सद�य के सम� BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM आयकर अपील सं. / ITA No.2023/PUN/2016 िनधा�रण वष� / Assessment Year : 2012-13 ACIT, Circle-1, .......अपीलाथ� / Appellant Aurangabad. बनाम / V/s. M/s. Paresh Farms Pvt. Ltd., “Akash” Paithan Road, Aurangabad. ……��यथ� / Respondent PAN : AACCP3783C C.O. No.03/PUN/2019 (Arising out of ITA No.2023/PUN/2016) िनधा�रण वष� / Assessment Year : 2012-13 M/s. Paresh Farms Pvt. Ltd., “Akash” Paithan Road, Aurangabad. .......अपीलाथ� / Appellant PAN : AACCP3783C बनाम / V/s. ACIT, Circle-1, ……��यथ� / Respondent Aurangabad. Assessee by : Shri N. R. Agarwal & Shri Vijay Saboo Revenue by : Shri Sanjeev Ghai सुनवाई क� तारीख / Date of Hearing : 06.03.2019 घोषणा क� तारीख / Date of Pronouncement : 19.03.2019 आदेश / ORDER PER D. KARUNAKARA RAO, AM: The appeal in ITA No.2023/PUN/2016 is filed by the Revenue against the order of CIT(A)-1, Aurangabad dated 15.06.2016 for the
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Assessment Year 2012-13. The assessee has also filed a Cross Objection vide C.O. No.03/PUN/2019 defending the order of the CIT(A) with the delay of 157 days (128 days). ITA No.2023/PUN/2016 (By Revenue) 2. The effective ground raised by the Revenue in this appeal is as under :- “1. On the facts and in the circumstances of the case, whether the Ld. CIT(A) was correct in deleting the penalty by interpreting the provisions of section 271(1)(c) of the Act.” 3. Briefly stated the relevant facts include that the assessee is a company engaged in marketing of agricultural products. The assessee filed the return of income declaring the total income at Nil. In the assessment proceedings, the Assessing Officer made an addition of Rs.4,89,19,475/- determining the total income of the assessee as ‘capital gain’ and added the same in the hands of the assessee. Subsequently, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the act and imposed the penalty of Rs.97,83,895/- at the rate of 100% of tax sought to be evaded. In the first appellate proceedings, the CIT(A), relying on various judicial precedents on this issue, cancelled the said penalty of Rs.97,83,895/- as per discussion given by him in para 5 onwards of his order. 4. Aggrieved with the said decision of the CIT(A), the Revenue is in appeal and the assessee is in Cross Objection defending the order of the CIT(A).
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Before us, ld. AR for the assessee and ld. DR for the Revenue reiterated the submissions/arguments as made before the lower authorities. We have heard both the parties and perused the material available on record and find that this is a case where the Assessing Officer failed to record proper satisfaction while initiating and levying the penalty u/s 271(1)(c) of the Act. In this regard, we pursed the orders of the Revenue authorities. On perusal of para 6 of the assessment order, we find the following is the reasons for initiation of penalty proceedings :- “6. ........... Penalty proceedings u/s 271(1)(c) are initiated separately for furnishing inaccurate particulars of income.” 6. Further, we also perused the penalty order passed by the Assessing Officer on 28.09.2014. On perusal of para 7 of the penalty order, we find the following is the reasons for levy of penalty u/s 271(1)(c) of the Act :- “7. .......... Thus, there was no voluntary disclosure and thus concealment of income.” .......... .......... addition of concealed income after detection thereof and filed return in response to notice u/s 148 or 143(2) offering additional income, assessee cannot escape from penalty u/s 271(1)(c).” 7. Further, we also considered the fact in the computation zone of the penalty, where the Assessing Officer mentioned following lines at the time of initiating of penalty :- “Income in respect of which inaccurate particulars has been filed”.
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The above extracts reveal that the Assessing Officer suffers from ambiguity in his mind while recording the satisfaction at the time of initiation of penalty proceedings u/s 271(1)(c) of the Act. 9. According to the ld. AR, the appeal of the Revenue shall have to be dismissed on the legal issue. 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 Assessing Officer is unsustainable in law and the same is rightly deleted/cancelled by the CIT(A). 10. On the other hand, ld. DR for the Revenue heavily relied on the order Assessing Officer. 11. Considering the above, we are of the opinion that the legal requirement of making a clear cut reference to the applicable limb of clause (c) of section 271(1) of the Act is not met by the Assessing Officer while initiating and levying the penalty u/s 271(1)(c) of the Act. Thus, the satisfaction suffers from ambiguity in the mind of the Assessing Officer. Therefore, we are of the opinion that, considering the above referred binding judgments, such penalty order is unsustainable in law legally. It is a settled legal proposition that the Assessing Officer is under
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obligation to specify the appropriate limb of clause (c) of section 271(1) of the Act at the time of initiation as well as at the time of levy of penalty. In view of the above deliberation on this issue, without going into the merits of the case, we are of the opinion that the order of the CIT(A) is reasoned one on this legal issue. Thus, we do not find any infirmity in the order of the CIT(A) on this legal issue. Accordingly, the ground raised by the Revenue is dismissed. 12. In the result, the appeal of the Revenue is dismissed. C.O. No.03/PUN/2019 (By Assessee) 13. In the cross objection, the assessee raised the following ground :- “The learned A.O. erred in levying penalty u/s 271(1)(c) without recording satisfaction whether it is a concealment of income or inaccurate particulars of income and to that extent failed to strike off un-necessary limb in the show cause notice.” 14. As stated in the earlier paragraphs of this order, the cross objection filed by the assessee is with the delay of 157 days (128 days). The ld. Counsel for the assessee brought our attention to the said delay and in this regard filed an affidavit stating the reasons for condonation of such delay. For the sake of completeness, we proceed to extract the relevant para of the said affidavit :- “Form No.36A is delayed because company was not aware of limits in penalty proceeding u/s 271(1)(c). Assessee came to know this aspect only after consulting C.A. Mr. N. R. Agarwal who advised us to file Form No.36A immediately as substantial legal issue was involved.”
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Considering the above reasons given by the ld. Counsel for the assessee in the affidavit, we find it is a fit case for condonation of delay. Therefore, we condone the delay and proceed to adjudicate the cross objection of the assessee. 16. Referring to the issue raised in the cross objection, ld. Counsel for the assessee submitted that this is a case where the Assessing Officer demonstrated the ambiguity with reference to the satisfaction for initiating the penalty proceedings u/s 271(1)(c) of the Act. The ld. AR brought our attention to the contents of para 7 of the penalty order and submitted that no reference is made in limb of clause (c) of section 271(1) of the Act while levying the penalty. The ld. AR further submitted that the CIT(A) granted relief to the assessee on merits. Therefore, the order of the CIT(A) should be confirmed. He, however, submitted that once the issue is decided in favour of the assessee on the legal issue, there is no requirement of travelling to correctness of the order of the CIT(A). 17. The ld. DR for the Revenue, on the other hand, relied heavily on the order of the Assessing Officer and requested for reversing the order of the CIT(A). 18. Considering the above relief granted by the CIT(A) to the assessee on the legal issue, we find the order of the CIT(A) is reasoned one and it does not call for any interference. Therefore, the adjudication of the ground raised by the assessee in cross objection becomes academic
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exercise. Accordingly, the cross objection of the assessee is dismissed as academic. 19. In the result, the cross objection of the assessee is dismissed. 20. To sum up, the appeal of the Revenue as well as the cross objection of the assessee are dismissed. Order pronounced on 19th day of March, 2019. Sd/- Sd/- (िवकास अव�थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �याियक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 19th March, 2019. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-1, Aurangabad. 4. The Pr. CIT-1, Aurangabad. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.