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Income Tax Appellate Tribunal, PUNE“A” BENCH,
Before: SHRI S.S. GODARA & SHRI G. D. PADMAHSHALI
ORDER PER G.D. PADMAHSHALI, AM; The present appeal of the assessee for the assessment year [for short “AY”] 2015-16 is assailed against the first appellate order of National Faceless Appeal Centre, Delhi [for short “CIT(A) /NFAC”] dt. 08/09/2021 passed u/s 250 of the Income-tax Act,1961 [for short “the Act”] which emanated out of penalty order [for short “PO”] of Dy. Commissioner of Income, Circle-6, Pune u/s 271(1)(c) of the Act dt.28/06/2018 [for short “AO”] u/s.143(3) of the Act dt. 08.12.2017.
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In advancing the matter for adjudication, it is essential to reproduce grounds challenged by the appellant as under; “1. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty of Rs. 16,47,166/- levied u/s 271(l)(c) of the IT Act, 1961. 2. The learned CIT(A), NFAC, erred in law and on facts in confirming the levy of penalty for alleged furnishing inaccurate particulars of income. The learned CIT(A) ought to have appreciated that the appellant had not furnished any inaccurate particulars of income.
3. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty levied by the AO for alleged furnishing inaccurate particulars of income, by relying on Explanation-1 of section 271(1)(c) of the IT Act, 1961. The learned CIT(A) ought to have appreciated that Explanation- 1 is not applicable in case of "furnishing inaccurate particulars of income" and that the penalty is levied in a mechanical manner. 4. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty levied for addition on account of disallowance of provision for warranty. The learned CIT(A) failed to appreciate that the said provisions were written back in future years and offered to tax. 5. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty levied for addition on account of valuation of closing stock. The learned CIT(A) ought to have appreciated that the addition was uncalled for in first place and further, closing stock is carried forward to next year as opening stock, and hence, there is no tax arbitrage.”
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The sole issue under adjudication relates to survival of penalty levied u/s 271(1)(c) on the premise of erratic and undetermined allegation sought to be adjudicated by the present appeal.
After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 of the Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”], perused the copy of SCN issued u/s 274 r.w.s. 271(1)(c),case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to either parties.
In the light of judgement rendered by Hon'ble Supreme Court in “Dilip N Shroff Vs JCIT” reported at 291 ITR 519 (SC), and of Hon'ble Jurisdictional High Court of Bombay, in plethora of cases inter-alia “CIT Vs Samson Pericherry” reportedin 392 ITR 4, and recently in “Mohd. Farhan A. Shaikh Vs DCIT” reported at 434 ITR 1, we are on the considered view that, since the provision of section 271(1)(c) is calamitous, albeit commercial, consequences, and mandatory, hence brooks no trifling or dilution therewith, as a result in the instant case the SCN dt. 08/12/2017 was issued u/s 274 r.w.s. 271(1)(c) of the Act without specifying any limb or charge, is invalid and untenable in the eyes of law, consequently we set aside the first appellate order and quashed the order of penalty passed u/s 271(1)(c) of the Act, being bad in law. ITAT-Pune Page 3 of 4
Resultantly, the appeal of the appellant assessee is allowed in terms of aforestated observation. In terms of rule 34 of ITAT Rules, 1963 the order ispronounced in the open court on this Tuesday 01st day of December, 2022. -S/d- -S/d- -S/d- -S/d- S.S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 01st day of December, 2022. Ashwini आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to :
1. 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent.
3. The NFAC, Delhi (India) 4. The Pr.CIT(CPC) Bangaluru (Ka-India) 5. नवभधगऩय प्रनतनननध, आयकर अपऩलऩय न्यधयधनधकरण, पपणे “ए” बेंच, पपणे / DR, ITAT, Pune “A” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / BY Order, वररष्ठ ननजऩ सनचव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.
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