DINESH CHANDRA JAISWAL,KANPUR vs. ACIT, NEW DELHI

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ITA 2224/DEL/2017Status: DisposedITAT Delhi03 February 2020AY 2010-115 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 under Section 271(1)(c) cannot be sustained if the show cause notice and penalty order do not specify on which limb of the section the penalty is initiated. The AO had not struck off either charge in the notice.

What were the facts?

The assessee's income was determined at Rs. 19,20,938/- after additions by the AO. The CIT(A) deleted an addition of Rs. 5,20,000/- but confirmed others. The AO initiated penalty proceedings under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars.

What were the issues?

Whether penalty under Section 271(1)(c) is valid when the show cause notice and penalty order do not specify the specific charge (concealment or inaccurate particulars) for levying the penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

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

Before: SHRI SUDHANSHU SRIVASTAVA & SHRI PRASHANT MAHARISHIShri Dinesh Chandra Jaiswal,

For Appellant: Shri M. L. Jain, Adv.;
For Respondent: Shri M. L. Jain, Adv.;
Hearing: 06/11/2019Pronounced: 03/02/2020

This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-28, New Delhi, dated 09.02.2017 for assessment year 2010-11 and assessee aggrieved has filed this appeal.

The only issue in this appeal is confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961 (the Act) amounting to Rs.2,12,130/-.

2.

The brief facts of the case is that assessee is an individual having income under the head ‘business’, filed his return of income on 30.03.2013 showing income of Rs.5,37,710/-. The case of the assessee was picked up for scrutiny. Page | 1 The assessment under section 144 of the Act was passed on 28.03.2013 wherein several additions were made and income of the assessee was determined at Rs.19,20,938/-. The Assessing Officer separately initiated the penalty under Section 271(1)(c) of the Act holding that the disallowance so made amounts to concealment of income / furnishing inaccurate particulars. Thus the penalty was initiated. Against the assessment order assessee preferred appeal before the learned CIT (Appeals) who deleted the addition of Rs.5,20,000/-. He, however, confirmed the other addition. The additions confirmed were as under:

(i) Rs.35,100/- on disallowance of depreciation; (ii) Rs.44,874/- on disallowance of 50% of the expenditure; (iii) Rs.5,22,787/- on account of un-disclosed business receipts.

2.1 After the order of the learned CIT (Appeals) assessee did not prefer any appeal at higher forum. Therefore, the Assessing Officer re-commenced the penalty proceedings, which was not replied by assessee. Therefore, the learned Assessing Officer passed penalty order under section 271(1)(c) of the Act on 18.03.2016 leaving a minimum penalty of Rs.2,12,130/-. In the penalty order the Assessing Officer has stated that it is clear that since the assessee has filed inaccurate particulars in his return of income with the clear-cut intention of concealment of income it is a fit case for levy of the penalty the assessee has concealed his income by way of furnishing of inaccurate particulars of his income.

2.2 The above order was challenged before the learned CIT (Appeals) who dismissed the appeal of the assessee on the merits of the addition and confirmed penalty order passed by AO.

The assessee aggrieved with the order of the learned CIT (Appeals) has preferred this appeal.

3.

The learned Authorized Representative submitted that in the order of the assessment, in the show cause notice issued under section 274 of the Act on Page | 2 28.3.2016 the learned Assessing Officer has not stuck off any of the twin charges and further in the penalty order also the Assessing Officer has not specified one of the charges of penalty under Section 271(1)(c) of the Act, thus penalty order confirmed by the learned CIT (Appeals) is invalid. He referred to the decision of Hon’ble Karnataka High Court in CIT Vs. M/s. SSA’S Emerald Meadows (2015) 11 TMI 1620 (Kar.) which was confirmed by the Hon’ble Supreme Court in (2016) 73 Taxman.com 248 (SC).

3.1 The learned Departmental Representative requested for the adjournment by filing the application. However, he was not present in the court to accept the date.

3.2 The learned [CIT]–DR also did not have any idea about the learned Senior Departmental Representative. The reasons for adjournment are also that as he has joined recently, he wanted some more time for the preparation of the case. As the issue involved is squarely covered in favour of the assessee by the jurisdictional High Court on this issue, we reject the adjournment application of the Revenue.

4.

On careful consideration of the notice issued under section 274 of the Act on 28.03.2013, it is apparent that the Assessing Officer has not stuck off any of the twin charges. In the assessment order also in para No. 12 (ii) the Assessing Officer has initiated penalty proceedings, for concealing the particulars of income as well as furnishing of inaccurate particulars of income. Further in the penalty order also he levied the penalty on both the charges, in the last para before the computation of total income. Though the above issue was raised before him, citing the decision of Hon’ble Bombay High Court, CIT (Appeals) did not adjudicate on it, but confirmed the penalty on the additions confirmed. The Hon’ble Delhi High Court after considering the decision of the Hon’ble Karnataka High Court in para No. 21 of its order in in Pr. Commissioner of Income Tax Vs. Sahara India Life Insurance Co. Ltd. Dated 02.08.2019 has held that such penalty cannot be sustained if the show cause notice did not specify on which limb of Section 271(1)(c) of the Act the penalty has been initiated. In view of this, we direct the learned Assessing Officer to cancel the penalty levied under Section Page | 3 271(1)(c) of the Act of Rs.2,12,130/-. The orders of the lower authorities are reversed and appeal of the assessee is allowed.

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