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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’, NEW DELHI
Before: SHRI O.P. KANT & SHRI KULDIP SINGH
ORDER PER O.P. KANT, AM:
These three appeals by the assessee are directed against three separate orders, each dated 30/01/2017 passed by the learned CIT (Appeals)-30, New Delhi [in short ‘the Ld. CIT(A)’] for assessment years 2005-06; 2009-10 and 2010-11 respectively, in relation to penalty levied under section 271(1)(c) of the Income- tax Act, 1961 (in short ‘the Act’). Identical grounds have been raised in all the three appeals in same set of circumstances. Accordingly, we heard all the three appeals together and disposed off by way of this consolidated order for convenience and to avoid repetition of facts. 2. Grounds of appeal in 2005-06 is reproduced as under:
1. Under the facts and the circumstances of the case, penalty order passed u/s 271(l)(c) of the Act by the Id. A.O. and confirmed by the Id. CIT(A) is invalid & bad in law as from the notice issued u/s 274 r.w.s 271(l)(c) of the Act it is not discemable as to whether the penalty proceedings was initiated for furnishing of inaccurate particulars of income or concealment of income and therefore, the impugned penalty order passed deserves to be quashed.
Under the facts and circumstances of the case, the Id. CIT(A) has grossly erred in passing the appellate order without affording adequate opportunity of being heard to the appellant. 3. Under the facts and circumstances of the case, the Ld. First Appellate Authority has grossly erred in upholding the action of ld. Assessing Authority imposing the penalty of' 41,23,947/- u/s 271(l)(c) of the Income Tax Act, 1961 which is highly injudicious, unwarranted, against the facts of the case and bad at law. 4. The appellant prays for leave to add, amend, alter or withdraw any grounds of appeal.
3. Identical grounds have been raised in remaining two appeals except change of amount of penalty levied.
4. Briefly stated facts of the case are that assessment in all the three assessment years are completed on 30/12/2011. The assessments in the year 2005-06, and assessment year 2009-10 are completed under section 153A of the Act, whereas the assessment for assessment year 2010-11 has been completed under section 143(3) of the Act. The Penalty proceedings under section 271(1)(c) of the Act were initiated in all the three assessment years. The additions made in quantum assessment proceeding all the three assessment years were confirmed by the first appellate authority. In view of the additions confirmed by the first appellate authority, the Assessing Officer levied penalty under section 271(1)(c) of the Act in all the three assessment years having amounts as follows:
S. No. Date of Amount of penalty For Assessment order levied Year 1 10.03.2015 41,23,947/- 2005-06 2. 09.03.2015 84,97,500/- 2009-10 3. 19.03.2015 50,98,500/- 2010-11 3.1 The assessee filed appeals before the Ld. CIT(A) against penalty in all the three assessment years and objected that the Assessing Officer has not specified reasons for levy of penalty under section 271(1)(c) of the Act in the notice issued while initiating the proceedings. The assessee also objected the penalty on ground of merit. The Ld. CIT(A) upheld the penalty on the ground that the assessee failed to provide the explanation and there was no error or infirmity in the penalty initiated by the Assessing Officer. The finding of the Ld. CIT(A) in AY 2005-06 is reproduced as under:
“From the above, it is clear that the appellant has not only failed to prove the source of alleged transactions of share capital/' share premium money received of Rs.1,12,14,949 in the assessment proceedings, appellate proceedings in quantum appeal and also in the penalty proceedings before the A.O. Besides this, even in the penalty proceedings u/s 271(1 Xc) of the Act, the appellant failed to furnish booafide explanation before the A.O., in order to overcome the deeming provision as per explanation of section 271(1Xc) of the Act. In these facts, it is clear that the A.O. has initiated penalty proceedings for concealing the particulars of income and therefore, there is a default committed by the appellant as per provisions of section 271(])(c) of the Act. In these facts, 1 do not find any infirmity in the reasons recorded by A.O for satisfaction, before initiating penalty proceedings u/s 271(11(c) of the Act. Accordingly, the objections raised bv the appellant through additional ground, arc not correct and therefore, the additional ground taken by the appellant, is dismissed. From the above, it is also clear that the appellant was repeatedly allowed adequate opportunities to prove the genuineness of the alleged transactions of share capital/ share premium money received, but failed to do so, during the assessment proceedings, appellate proceedings, penalty proceedings and also in the appellate proceedings against the penalty order u/s 271(1 )(c) of the Act, therefore, it is clearly established that these transactions relating to share capita! share premium money received, arc not proved to be genuine and the same is the undisclosed income of the appellant itself. Accordingly, it is clear that the appellant has not only concealed the income by furnishing inaccurate particulars, but has also deliberately given wrong verification in the return of income . filed for the A.Y. 2005-06. In these facts and circumstances of the case, it is clear that in all the proceedings, as indicated above, the appellant failed to prove the genuineness of the alleged transactions of share capital/ share premium money received, during the assessment proceedings, appellate proceedings, penalty proceedings and also in the appellate proceedings, against the penalty order u/s 271(1 )(c) of the Act.
In view of the above, I am of the considered opinion that the appellant has not only concealed income, but has also furnished inaccurate particulars of income deliberately by. filing wrong verification in the return of income, as well as in various income tax proceedings as indicated above. In these facts and circumstances. 1 do not find any infirmity in the findings of the A.O. in the penalty order and therefore, the submissions/arguments of the appellant arc not correct and same are hereby rejected.”
Before us, the Ld. Counsel of the assessee in support of Ground No.1 filed copy of notice issued by the Assessing Officer while initiating penalty proceedings in all the three assessment years and submitted that the Assessing Officer has nowhere specified that the penalty was either for concealment of income or for filing inaccurate particulars of income. He also referred to the assessment order and penalty order u/s 271(1)(c) of the Act in all the three assessment years and submitted it was not specified there also whether penalty has been levied for concealment of income or for filing inaccurate particulars of income. Extract of chart filed by the assessee for AY 2005-06 is reproduced as under: Income Tax Findings Page No. Authority A.O. order The Ld. AO has stated that: Para No. 13 of Page “I am satisfied that the No. 5 of the A.O. order assessee has concealed the particulars of its income and for that default penalty proceedings u/s 271(1)(c) of the Act are also being initiated.” Penalty Notice The Penalty notice states Para No.1 of Notice that: Dated 30.12.2011 “Whereas in the course of proceedings before me for the A.Y. 2005-06, it appears to me that you have concealed the particulars of your income or furnished inaccurate particulars of such income.” Penalty order u/s The A.O. held that: Para No. 13 of Page 271(1)(c) “having considered the No. 6 of the Penalty various arguments put forth order by the assessee, I hold the assessee in default for concealing its income by furnishing inaccurate particulars of its income. Accordingly, Penalty u/s 271(1)(c) of the Income Tax Act amounting to Rs. 41,23,947/- is being imposed.”
The learned counsel submitted that in view of decision of the Hon’ble Supreme Court in the case of SSA Emerald Meadows, (2016) 73 taxmann.com 248 (SC) and decision of the Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Karnataka), penalty cannot be sustained, if the ground for levy of the same is not specified in the notice issued for initiating the penalty. Accordingly, submitted that penalty levied on all the three assessment years might be deleted.
The learned Department Representative, on the other hand, relied on the order of the lower authorities and submitted that grounds of levy of penalty was quite apparent from the assessment order, therefore, the ratios of the decisions relied upon not applicable in the case of the assessee 7. We have heard rival submission and perused relevant material on record. We find that in the assessment order for all the three years the penalty has been initiated for concealment of income whereas in the notices issued for all the three years, penalty has been initiated for concealing the particulars of income or furnishing of inaccurate particulars of the income. We find that in the penalty order the Assessing Officer has held the assessee was liable for penalty for concealing its income by furnishing inaccurate particulars of the income. Thus, it is evident that the Assessing Officer is not certain on the charges the penalty has been levied whether it is concealment of income or furnishing of inaccurate particulars of income. The dictionary meaning of the word ‘conceal’ is ‘to hide, withdraw or remove from observation’; ‘cover or keep from sight’; ‘to avoid disclosing or divulging’. Thus, concealment of ‘particular of income’ means non-disclosure of particulars of income. On the other hand, where particulars are disclosed but such disclosure is not correct, true or accurate, it would amount to ‘furnishing of inaccurate particulars of income’. Thus, the two changes of levy of penalty are different.
The Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra) has cancelled the penalty where the Assessing Officer failed to strike out the specific reason of levy of penalty in the notice issued. The Hon’ble Supreme Court in the case SSA Emerald Meadows (supra) has also cancelled the penalty u/s 271(1)(c) in absence of charges of levy not clear in the notice issued. Further, the Hon’ble High Court recently in the case of Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd., 2019 (8) TMI 409 (Del.), following the decision of Hon’ble Supreme Court in the case of M/s. SSA Emerald Meadows (supra) confirmed cancellation of penalty. Respectfully following the decisions of the Hon’ble Karnataka High Court, Hon’ble Supreme Court and Hon’ble Delhi High Court referred earlier, the finding of the Ld. CIT(A) in all the three assessment years are set aside and the penalty levied u/s 271(1)(c) of the Act in all the three assessment years are cancelled.
In the result, all the three appeals of assessee are allowed. Order is pronounced in the open court on 30th January, 2020.