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Facts
The assessee was levied a penalty of Rs.3,44,463 under Section 271(1)(c) by the AO, confirmed by the Ld. CIT(A), for alleged concealment/inaccurate particulars of income related to a capital gain addition of Rs.16,72,154 for Assessment Years 2011-12 & 2012-13. This capital gain addition stemmed from a property sale in A.Y. 2008-09, where the assessee's reported capital gain was lower than computed.
Held
The Tribunal set aside the penalty order, ruling that the penalty notice issued under Section 271(1)(c) read with Section 274 was invalid. This was because the notice did not specify the exact charge (concealment or inaccurate particulars), and the assessment order lacked a recorded satisfaction for initiating penalty proceedings.
Key Issues
Whether the penalty levied under Section 271(1)(c) for alleged concealment/inaccurate particulars was valid when the penalty notice was vague and no satisfaction was recorded in the assessment order for its initiation.
Sections Cited
271(1)(c), 274, 143(3)
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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI SONJOY SARMA
O R D E R Per Rajesh Kumar, AM : These are the two appeals filed by the assessee against the order both dated 24.04.2024 passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2011-2012 & 2012-2013. 2. In both the appeals, the assessee has raised the similar grounds of appeal
. Therefore, for the sake of convenience, we shall take into the grounds of appeal and facts mentioned in filed for A.Y.2011-2012 for consideration and outcome of the same shall also be applicable to the appeal filed by the assessee in for A.Y.2012-2013 as well.
3. The assessee has raised the following grounds in filed for A.Y.2011-2012 :-
1. 1. 1. That on the facts and circumstances of the case and in law, the Appellate Order passed by the Ld. Commissioner (Appeals)-NFAC, New Delhi, for being founded on superficial, arbitrary, fallacious view and judgment, is liable to be cancelled, reversed and declared unsustainable. (Tax Effect: Penalty of Rs.344463.00) 2. That on the facts and circumstances of the case and in law, the Ld. Commissioner (Appeals) - NFAC, New Delhi, was not justified in confirming the imposition of Penalty of Rs.344463.00, u/s 271(1)(c), in respect of addition of Rs.1672154.00 under the head "Capital Gain", as the same addition had been just in consequence of the Appellate Order, for preceding AY of 2010-11, whereby the taxability thereof in the current year had been adjudicated. (Tax Effect: Penalty of Rs.344463.00) 3. The Ld. Commissioner-Appeals (NFAC) while upholding the imposition of Penalty in respect of addition of Rs.1672154.00 ought to have appreciated the plea of the Appellant, that due to nullification of the same addition, effected in relation to in the prior Assessment Year, vide the Appellate Order, passed for such year, the Appellate decision as to taxability thereof in the current assessment year, rather than in prior year, the allegation of furnishing of inaccurate particulars could never be imputed to the Appellant. (Tax Effect: Penalty of Rs.344463.00) 4. That on the facts and circumstances of the case and in law, the Ld. Commissioner (Appeals) - NFAC, ought to have appreciated that mere non filing of Appeal against some income assessed, based on legal interpretation of law, does not, ipso facto and necessarily call for imputation of furnishing of "inaccurate particulars", unless some mala fide and evasive endeavour at the end of the Assessee/Appellant is evident.
5. Without prejudice to Ground No. 2, 3 and 4 above, the levy of Penalty under sec.271(1)(c) is not maintainable, as in the Penalty Notice, issued u/s 274, the allegation against the Appellant had been kept vague, open and indeterminate, due to not striking off the irrelevant portion, and in this regard, the judgment relied on by the Ld. Commissioner (Appeals)- NFAC, is fully distinguishable.
6. That the Appellant craves leave to go for additional grounds, modify / not press any one or more of the aforesaid grounds, either before or during the Appeal Hearing.
4. The only issue raised in this appeal is against confirming the penalty of Rs.3,44,463/- by the ld. CIT(A), which was levied by the AO u/s.271(1)(c) of the Act.
Facts in brief are that the assessment u/s.143(3) of the Act was made vide order dated 16.02.2016. During the course of assessment proceedings the AO noticed that the assessee has sold 2200 sq.ft. area for a consideration of Rs.45 lakhs in the assessment year 2008-2009 on which the capital gain was computed at Rs.43,76,198/-. The AO noted that since the capital gain shown by the assessee was at Rs.27,04,044/- and, therefore, balance amount of Rs.16,72,154/- remained to be added to the total income of the assessee and accordingly penalty proceedings u/s.271(1)(c) of the Act were initiated vide notice issued u/s.271(1)(c) r.w.s.274 of the Act dated 05.02.2016. However, while issuing notice, the AO specified that the assessee had concealed the particular of income or furnished inaccurate particulars of income and in the assessment order also there was no satisfaction recorded by the AO except mentioning that initiation of penalty proceedings u/s.271(1)(c) of the Act. In appeal the order of penalty was confirmed.
After hearing the rival contentions and perusing the material on record, we find that the said notice issued by the AO is without specifying the charge on which the penalty was proposed to be levied, particularly, when there is no satisfaction in the assessment order on which charge the penalty proceedings were initiated. In that scenario, the penalty notice issued u/s.271(1)(c) r.w.s.274 of the Act itself is bad in law, so also the