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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI
Before: SH. R. K. PANDA & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order of the Commissioner of Income Tax [Appeals]-22, New Delhi dated 16.09.2016 for Assessment Year 2006-07.
The Grounds of appeal
are as under:- 1. “That the Ld CIT(A) has erred in confirming the penalty under section 271(1)(c) without properly appreciating the facts and in circumstances of the case. The appellant offered the income voluntarily which was due to the bonafide mistake and the Ld CIT(A) has not considered the explanation & has wrongly confirmed the addition.
2. That the penalty proceedings were initiated for furnishing of inaccurate particulars of income and the penalty has been imposed for the concealment of income. Thus, the penalty has been imposed against the provisions of the Income Tax Act & also without application of mind on the different reasons that were recorded hence deserve to be quashed. 3. The appellant craves leaves to, add, alter, amend or vary from the above grounds of appeal at or before the time of hearing.
4. Prayer:- that the above mentioned additions or disallowances may please be allowed.”
3. The assessee is a manufacturing unit of Tractors. The Assessing Officer made additions on various account in assessee’s case and computed the total income at Rs.139,15,65,418/-. Subsequently, the penalty u/s 271(1)(c) was issued and vide order dated 31.03.2015 the Assessing Officer imposed minimum penalty of Rs.60,77,367/- u/s 271(1)(c) of the Income Tax Act, 1961 which was later rectified vide order dated 26.12.2016 by imposing penalty of Rs. 2,54,300/-.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld AR submitted that the penalty notice u/s 274 has not given any limb under which the penalty u/s 271(1)(c) has been imposed. Thus, the penalty order itself is bad in law. The Ld. AR relied upon the decision of the Hon’ble Supreme Court in case of CIT vs. SSA’s Emerald Meadows (2016) 73 Taxman.com 248 (SC) and CIT v. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar). The Ld AR further submitted that the Hon’ble Delhi High Court in case of Pr. CIT Vs. M/s. Sahara India Life Insurance Company Ltd. (ITA No.475/2019 vide order dated 02.08.2019) held that notice issued by the Assessing Officer would be bad in law if it did not specify under which limb of Section 271(1)(c) the penalty proceedings had been initiated. Besides that the Ld AR submitted that on merit penalty has been imposed due to impugned disallowances of expenditure/claim on account of bonafide clerical human error. The assessee has shown a returned income of Rs.94.74 crores, against which penalty has been imposed on disallowances of 0.08 crores constituting only 0.08% of the returned income, which was only due to bonafide inadvertent human error while preparing data of ITR/ Tax Audit. The Ld AR relied upon the decision of the Hon’ble Supreme Court in case of Price Waterhouse Coopers (P.)
Ltd. vs. CIT, Kolkata 348 ITR 306 (SC). The Ld. AR relied upon the decision of the Hon’ble Apex Court in case of CIT vs. Reliance Petroproducts Private Limited (2011) 11 SCC 762: 322 ITR 158 wherein it is held that submitting incorrect claim in law does not tantamount to furnishing inaccurate particulars of income of assessee or concealment.
The Ld DR relied upon the assessment order, penalty order and order of the CIT(A).
We have heard both the parties and perused all the relevant materials available on record. The penalty notice dated 10.03.2008 has not mentioned the specific limb of Section 271(1)(c) as to whether the assessee furnished inaccurate particulars of income or concealed the income. Since in the instant case 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. Thus, the penalty order itself is void ab initio. Besides that as held in the cases of Price Waterhouse Coopers (P.) Ltd. (supra) and Reliance Petroproducts (supra) submitting incorrect claim in law does not tantamount to furnishing inaccurate particulars of income of assessee or concealment. Thus, the penalty order does not survive on merit as well. Hence, appeal of the assessee is allowed.
In result, appeal of the assessee is allowed. Order pronounced in the Open Court on 21st day of February, 2020.