ASHOK MISRA,GHAZIABAD vs. DCIT, CIRCLE- 1, GHAZIABAD

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ITA 3492/DEL/2018Status: DisposedITAT Delhi25 November 2020AY 2012-135 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued under Section 271(1)(c) was bad in law as it did not specify whether the proceedings were for concealment of income or furnishing inaccurate particulars. Following the Delhi High Court's decision in Sahara India Life Insurance Corporation Ltd., the penalty was set aside.

What were the facts?

The assessee claimed deduction under Section 54 of the Income Tax Act for purchasing two flats after selling a house. The Assessing Officer (AO) disallowed the deduction for one flat and made other additions, leading to a penalty under Section 271(1)(c). The CIT(A) confirmed the penalty, though reduced it slightly.

What were the issues?

Whether a penalty under Section 271(1)(c) is valid if the notice issued does not specify the limb of the section under which proceedings are initiated. Whether penalty can be levied on a debatable issue.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 54

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI

Before: SHRI SUDHANSHU SRIVASTAVA & SHRI PRASHANT MAHARISHI

For Appellant: Shri Satyajit Goel, Adv, Shri Prateek Gupta, Adv
For Respondent: Shri Sanjay Tripathi, Sr. DR
Hearing: 10/11/2020Pronounced: 25/11/2020

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A), Ghaziabad dated 27.03.2018 for the Assessment Year 2012-13, wherein, the penalty levied by the ld AO as per order u/s 271(1)(c) of the Act dated 06.02.2017 of Rs. 1609686/- is confirmed. 2. The assessee has raised the following grounds of appeal:- “1. On the facts and circumstances of the case the order of Ld. CIT(A)is bad in both in the eyes of law and on facts.

2. That on the facts and circumstances of the case the Ld. CIT(A) has erred in law in partly upholding the order passed by Ld. A.O. u/s. 271(l)(c ) of the Income Tax Act, 1961.

3. That on the facts and circumstances of the case the Ld. CIT(A) has erred in law in imposing penalty before concealment of income on the disallowances of deduction claimed u/s 54 of the Act even when the very fact was disclosed in the Income Tax Return.

4. That on facts and circumstances of the case the Ld. CIT(A) has erred in law in. levying the penalty on account of disallowance of deduction amounting to Rs. 45,25,339/- claimed u/s 54 of the Income Tax Act, 1961. Page | 1

5. That on facts and circumstances of the cases the Ld. CIT(A) has erred in law in imposing penalty on a debatable issue and the same is untenable in the eyes of law.

6.

That on the facts and circumstances of the case the Ld. CIT(A) erred in law in upholding the penalty levied by the Ld. AO of Rs. 25,956/- on account of deemed income assessed u/s 24 of the Income Tax Act, 1961. 7. That on facts and circumstances of the cases the Ld. CIT(A) has erred in law in imposing penalty on deemed income which is discretionary in nature and the same is untenable in the eyes of law.” 3. The brief facts of the case show that assessee is an individual, doctor by profession, CMO, Lucknow. The assessee has filed his return of income on 01.03.2013 declaring income of Rs. 1353240/-. The case of the assessee was taken up for scrutiny. It was found that assessee has sold his house for a sale consideration of Rs. 2,01,85,000/-. Further, assessee has claimed the utilization of the above fund in purchasing another flat at Noida for Rs. 11793500/- and one more flat at Noida for Rs. 10898535/-. The assessee was asked that why income of one more self occupied house property should not be charged and accordingly addition of Rs. 84000/- was made. Further, the addition of Rs. 6 lakhs was made towards the construction expenses in the flat. Further, the disallowance u/s 54 with respect to two flats was disallowed considering only one flat being eligible, therefore, addition under the head capital gain was made of Rs. 4525339/-. Accordingly, the total income of the assessee was computed of Rs. 6108896/-. The assessment u/s 143(3) of the Act was passed on 23.12.2014. As there are substantial addition penalty was initiated by the ld AO u/s 271(1)(c) of the Act. Consequently, the show cause notice was issued along with assessment order. 4. The assessee filed an appeal against the quantum order wherein, the disallowance were confirmed by the first appellate authority. 5. IN Penalty proceedings , In response to show cause notice dated 22.12.2016 the assessee submitted a detailed reply on 28.12.2016. However, the ld AO levied a penalty u/s 271(1)(c) of the Act stating that assessee was found to have furnished inaccurate particulars of his income and penalty of Rs. 1609688/- as per order dated 23.12.2014. The Page | 2 assessee preferred an appeal before the ld CIT(A) who confirmed the same as per order dated 27.03.2018, however, he reduced the penalty on capital gain as rate of tax would have been 20% instead of 30% computed by the ld AO for levy of penalty. 6. The assessee aggrieved preferred appeal before us. 7. Coming to the first ground of appeal

the ld AR referring to his paper book submitted that notice u/s 271(1)(c) read with section 274 of the Act was issued by the ld AO on 22.12.2014 wherein the ld AO has not struck off any of the twin charges i.e. Concealment of income or furnishing inaccurate particulars of income and therefore, the penalty u/s 271(1)(c) is not at all leviable being the same is bad in law. For this proposition he relied upon the decision of Hon’ble Delhi High Court in case of Sahara India Life Insurance Corporation Ltd in dated 02.08.2019. He did not argue in any limb on the merits of the penalty.

8. The d DR on the merits relied upon the orders of the lower authorities. On the issue of notice he submitted that assessee was given proper opportunity of hearing, the notice issued is a non statutory notice therefore, non striking of relevant limb cannot invalidated the penalty proceedings.

9. We have carefully considered the rival contentions and perused the orders of the lower authorities. At the time of passing of the order u/s 143(3) of the Act the ld AO has not recorded satisfaction while making an addition that whether the assessee has concealed the income or furnished inaccurate particulars of income. The assessment order is silent on the same. In the penalty notice issued u/s 274 read with section 271(1)(c) dated 22.12.2014 furnished at page 1 of the paper book clearly shows that the ld AO has not struck off any of the twin charges i.e. concealment of particulars of income or furnishing accurate particulars of income. In the penalty order the ld AO has levied the penalty stating that assessee has furnished inaccurate particulars of income. In the present case the assessee was not made aware about the charge against the assessee and penalty was levied on one of the charges. Thus, the issue is clearly covered in favour of the assessee by the decision of the Hon’ble Delhi Page | 3

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