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Income Tax Appellate Tribunal, DELHI
ORDER
PER ANIL CHATURVEDI, AM:
This appeal filed by the assessee is directed against the order dated 13.09.2016 of the Commissioner of Income Tax (A)-I, New Delhi relating to Assessment Year 2012-13.
The relevant facts as culled from the material on records are as under :
Aryahi Buildwell Pvt. Ltd. vs. ACIT A.Y. 2012-13 2 3. Assessee is a company stated to be engaged in the business of real estate. Assessee filed its return of income for A.Y. 2012-13 on 30.09.2012 declaring loss of Rs.24,39,27,832/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 11.02.2015 and the total loss was determined at Rs.24,37,52,866/- inter alia by making the disallowance of Rs.1,74,966/- u/s 14A r.w.r 8D. On the aforesaid disallowance u/s 14A, AO vide order dated 31.08.2015 levied the penalty of Rs.56,768/- u/s 271(1)(c) of the Act.
Aggrieved by the penalty order of AO, assessee carried the matter before the CIT(A) who dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds of appeal:
1. “That the order of the Commissioner of Income-tax (Appeals) - I, New Delhi, dated 15.11.16, is wrong on facts and bad in law; 2. That the Commissioner (Appeals) erred in confirming the levy of penalty under Section 271(1)(c) of the Act for disallowance of expenses under section 14Aof the Act; 3. That the Commissioner (Appeals) failed to appreciate that the provisions of Section 271 (1) (c ) of the Act were not applicable and the penalty order was void and illegal; 4. That the Commissioner (Appeals) failed to appreciate that there was neither any concealment nor furnishing of inaccurate particulars of the income. He failed to appreciate that all the facts in respect of the said income were disclosed and” on record; 5. That the Commissioner (Appeals) failed to appreciate that disallowance of expenditure under section 14A of the Act, could not be the sole basis for levying penalty under section Aryahi Buildwell Pvt. Ltd. vs. ACIT A.Y. 2012-13 3 271(1)(c ) of the Act, making a claim which is rejected would not make the Assessee company liable under section 271(1)(c) of the Act.
6. That the Commissioner (Appeals) failed to appreciate that in a case, where there are two views, the penalty under Section 271(1)(c) of the Act was not leviable.
7. That the Commissioner (Appeals) failed to appreciate that the Assessing Officer erred in holding that the Appellant by not disallowing any expenses pertaining to earning exempt income furnished inaccurate particulars of income.
8. That the Commissioner (Appeals) erred in holding that the Appellant deliberately avoided the provisions of Section 14A read with Rule 8D.
9. That the Commissioner (Appeals) failed to appreciate that the Assessing Officer erred in taking the tax sought to be evaded for the purposes of Section 271(1)(c) of the Act at Rs 56,768/-; 10. That the conclusions and inferences of the Assessing Officer and/or Commissioner (Appeals) are based on suspicions, conjectures, surmises and extraneous and irrelevant considerations; 11. That the penalty levied under Section 271(1)(c) of the Act may be deleted and the order of Assessing Officer and /or Commissioner (Appeals) may kindly be quashed, set aside or annulled or modified; 12. That the aforesaid grounds of Appeal
are without prejudice to each other;
13. That the Appellant craves leave to vary, alter, amend or add to the aforesaid Grounds of Appeal before or at the time of hearing of the above Appeal;”
On the date of hearing none appeared on behalf of the assessee though the notice date of hearing was issued to the assessee. In the absence of any representation on behalf of the assessee, we proceed to dispose of the appeal ex-parte qua the Aryahi Buildwell Pvt. Ltd. vs. ACIT A.Y. 2012-13 4 assessee after considering the matter on record and after hearing the Learned DR.
We find that though the assessee has raised several grounds but the sole controversy is with respect to levy of penalty u/s 271(1)(c) of the Act.
Before us, Learned DR submitted that disallowance under Rule 8D(2) worked out to Rs.46,93,155/- but it was restricted to the extent of expenses claimed of Rs.1,74,966/- and on such disallowance penalty u/s 271(1)(c) has been levied. He submitted that the AO has rightly levied the penalty and CIT(A) was justified in upholding the levy of penalty.
We have heard the Learned DR and perused the material on record. The issue in the present case is with respect to levy of penalty u/s 271(1)(c) of the Act. The aforesaid penalty u/s 271(1)(c) has been levied on the amount of disallowance of Rs.1,74,966/- u/s 14A r.w. Rule 8D of the I. T. Rules. In the present case, the perusal of the assessment order reveals that no clear satisfaction has been recorded by the AO as to whether it was a case of furnishing inaccurate particulars of income or it was the case of concealment of income. It is a settled law that while levying penalty for concealment, the AO has to record satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c) of the Act. The first step is to record satisfaction while completing the Aryahi Buildwell Pvt. Ltd. vs. ACIT A.Y. 2012-13 5 assessment as to whether the assessee had concealed its income or furnished inaccurate particulars of income. Thereafter, notice u/s 274 read with Section 271(1)(c) of the Act is to be issued to the assessee. The Assessing Officer thereafter has to levy penalty under Section 271(1)(c) of the Act for non-satisfaction of either of the limbs. While completing the assessment, the Assessing Officer has to come to a finding as to whether the assessee has concealed its income or furnished inaccurate particulars of income.
For the imposition of penalty u/s 271(1)(c) of the Act either concealment of particulars of income or furnishing inaccurate particulars of such income are since qua non. It is a settled law that penalty cannot be imposed for alleged breach of one limb of Section 271(1)(c) while penalty proceedings are initiated for breach of other limb of the section. Considering the aforesaid facts, we are of the view that no penalty can be imposed in the present case. We thus direct the deletion of penalty. Thus the ground of assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 16.12.2020