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Income Tax Appellate Tribunal, DELHI BENCH: ‘I(2
Before: MS SUCHITRA KAMBLE, & SHRI PRASHANT MAHARISHI
ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order dated 05/09/2017 passed by CIT(A)-12 for Assessment Year 2004-05
The grounds of appeal are as under:- 1. “On the facts and circumstances of the case the Ld.CIT(A) is wrong in levying penalty u/s 271(1)(c) of the Income Tax Act.
2. That the assessee did not file any inaccurate particulars of income or concealed particulars of income, the penalty levied by the Income Tax Officer was against the law and facts of the case and the Commissioner (Appeals) is wrong in confirming the same.”
3. The assessment u/s 143(3) was completed on 29/12/2006 determining the total taxable income of Rs. 30,45,125/- as against return income of Rs. 23,85,514/-. The penalty proceedings u/s 271 (1)(c) of the Income Tax Act, 1961 was initiated the penalty of Rs. 2,89,190/- was imposed on the addition on account of sale of shares and unexplained credit.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the notices u/s 274 read with Section 271 dated has not strike of the particular limb upon which the penalty was imposed. The Ld. AR further submitted that from the assessment order also. The particulars limb of initiation of penalty has not been mentioned. The penalty order is also harping that assessee has not furnished inaccurate particulars of income and thereby the console its income for the year under consideration. Thus, the Ld. AR submitted that the Assessing Officer was not specific whether the assessee furnishes inaccurate particulars of income or consoled its income. Therefore, at the threshold itself the penalty has to be deleted. The Ld. AR relied upon the decision of the Hon’ble Karnataka High Court in case of CIT(A) Vs. M/s Manjunatha and Ginni Factory and ors 359 ITR 565. The above principal was further affirmed by the Apex Court in case of CIT(A) Vs. M/s SSA’ Emerald Meadows.
The Ld. DR relied upon the decision of the Hon'ble High Court in the case of New Holland Tractors India Pvt. Ltd. Vs. CIT(A) 49 Taxman.com 573.
We have heard both the parties and perused the material available on record. There is no concealment in the present case. The Assessee has also filed all the details during the regular assessment proceedings. From the notices dated 23.12.2011 and 15.03.2016 produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon'ble Supreme Court in case of M/s SSA’ Emerald Meadows. The extract of the Hon’ble Karnataka High Court in M/s. SSA’ Emerald Meadows are as under which was confirmed by the Hon’ble Apex Court: “3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.” Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon’ble Karnataka High Court in the case of SSA’S Emerald Meadows (supra) where the SLP filed by the Revenue has been dismissed is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon’ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. (supra) will be applicable in the present case. The Hon’ble Delhi High Court held as under:
“21. The Respondent had challenged the upholding of the penalty imposed under Section 271(1)(c) of the Act, which was accepted by the ITAT. It followed the decision of the Karnataka High Court in CIT v. Manjunatha Cotton & Ginning Factory 359 ITR 565 (Kar) and observed that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1)(c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgment in the subsequent order in Commissioner of Income Tax v. SSA’s Emerald Meadows (2016) 73 Taxman.com 241(Kar), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by order dated 5th August, 2016.
On this issue again this Court is unable to find any error having been committed by the ITAT. No substantial question of law arises.”
Further, the case law referred by the Ld. DR that of New Holland Tractor India (supra) will not be applicable in the present case as in that case the particular charge of Section 271 (1)(c) that of concealment of income was mentioned, but in present case that is not the case. Thus, notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty so levied.
In result, appeal of the assessee is allowed. Order pronounced in the Open Court on 19th March , 2020.