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Income Tax Appellate Tribunal, DELHI ‘SMC-2’ BENCH,
Before: SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] - 24, dated 23.01.2019 pertaining to assessment year 2010-11.
The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the penalty levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'].
Roots for levy of penalty lie in the assessment order dated 18.03.2013 framed u/s 143(3) of the Act.
The returned loss of Rs. 66.92 lakhs was assessed at a profit of Rs. 12.57 lakhs after making the following disallowances: a) Addition on account of share capital Rs. 20 lakhs a) Addition on account of unsecured loss Rs. 29.50 lakhs a) Addition on account of expenses Rs. 30 lakhs
Assessment was challenged before the ld. CIT(A) and the ld. CIT(A), vide appellate order dated 18.04.2016 deleted the addition of Rs. 20 lakhs, reduced the addition of Rs. 29.50 lakhs to Rs. 12.35 lakhs and addition of Rs. 30 lakhs was reduced to Rs. 5 lakhs, which was upheld by the ITAT.
Thereafter, penalty proceedings u/s 271(1)(c) of the Act were initiated and the Assessing Officer completed the proceedings by levying penalty of Rs. 5,36,115/- u/s 271(1)(c) of the Act.
The assessee carried the matter before the ld. CIT(A) but without any success.
8. Before me, none appeared on behalf of the assessee.
Notice issued by the Registry returned unserved. Therefore, I heard the ld. DR at length and having heard the ld. DR, I have carefully perused the orders of the authorities below and material available on record.
The notice u/s 274 of the Act which was issued and served upon the assessee is as under:
“To
M/s Vinayak Remedies Ltd. 1141/1,16 Behind Bagga Link service Station, Rithala, New Delhi-110086
Whereas in the course of proceedings before me for the assessment year 2010-11 it appears to me that you:-
I have without reasonable cause failed to comply with a notice u/s 142(1)/143(2) of the Income tax Act, 1961.
I have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1,2,3,4 and 5.
You are hereby requested to appear before me at 02.00 AM/P.M. on 29-08-2017 and show cause why an order imposing a penalty on you should not be made under section 271 of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under section 271.
Penalty u/s 271(1)(c)
Assessing Officer [Arindam Misra] Asstt Commissioner of IT New Delhi
A perusal of the aforementioned notice clearly shows that the Assessing Officer did not specify under which limb of the provision he has initiated the proceedings. Moreover, the penal proceedings are separate from assessment proceedings and while initiating penalty proceedings u/s 271(1)(c) of the Act, it is incumbent upon the Assessing Officer to demonstrate under which limb he is proposing levy of penalty.
On identical circumstances, the Hon'ble High Court of Delhi In the case of Sahara India Life Insurance Company Ltd of 2019 order dated 02.08.2019 has 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 inc me 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)