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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
आदेश / ORDER
PER SUSHMA CHOWLA, JM
The present bunch of appeals are filed by different assessees against the separate orders of CIT(A)-25, New Delhi 30.09.2016 against penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 (In short “Act”) relating to Assessment Years 2006-07 to 2012-13 respectively. One appeal is filed by the assessee against the order of CIT(A)-33, New Delhi dated 30.03.2016 against penalty levied u/s 271(1)(c) of the Act relating to Assessment Year 2007-08.
The only issue raised in the present bunch of appeals is against the levy of penalty u/s 271(1)(c) of the Income tax Act, 1961 (in short “Act”). The notice of hearing was sent at the address of the assessee for 30.10.2019 and even for the appointed date of hearing i.e 07.01.2020. However, none appeared on behalf of the assessee on both dates of hearing. Since the issue raised in the present appeals stand squarely covered, we proceed to decide the present bunch of appeals after hearing the Ld.DR for the Revenue.
The issue raised in the case of Satinder Pal Singh in to 6452/Del/2016 relating to Assessment Years 2006-07 to 2009-10 and Sandeep Singh Madhok in ITA Nos.6457, 6459 to 6462/Del/2016 relating to Assessment Years 2007-08, 2009-10 to 2012-13 are identical and hence, we proceed to decide the present bunch of appeals vide this consolidated order for the sake of convenience.
Even the issue raised in the case of The Installment Supply Ltd. in relating to Assessment Year 2007-08 is against the levy of penalty u/s 271(1)(c) of the Act and non-recording of satisfaction by the Assessing Officer while initiating the penalty proceedings and the same is also being decided alongwith this bunch of appeals.
On perusal of record and after hearing Ld.DR for the Revenue in the bunch of appeals, we find that the issue raised is against the non- recording of satisfaction while initiating the penalty proceedings u/s 271(1)(c) of the Act. In the bunch of appeals, the assessee is also aggrieved by the order of the Assessing Officer in levying aforesaid penalty for concealment, although in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act, the non-relevant portion was not struck off. The copy of the said notice is filed alongwith memo of appeal.
Penalty proceedings u/s 271(1)(c) of the Act are attracted where the assessee had either concealed its income or furnished inaccurate particulars of income. For default of either of the limbs of the said section, the assessee can be held liable for levy of penalty of concealment.
However, the Assessing Officer while initiating penalty proceedings has to come to a finding in this regard. The AO while completing the assessment has to record satisfaction in this regard, in order to show cause the assessee as to which limb to section 271(1)(c) of the Act has not been satisfied by it. This is the basic condition of the aforesaid section. On perusal of the assessment order passed for the instant assessment year reflects no proper satisfaction had been recorded. In the absence of the same, the assessee is not in a position to meet the requirements of the section. Merely, an order issuing notice u/s 274 r.w.s 271(1)(c) of the Act do not meet the conditions of the said initiation of penalty proceedings.
On the perusal of the assessment order, we find that the Assessing Officer has made the aforesaid addition in the respective years and as while making the aforesaid addition has observed as under:-
“Penalty proceedings, u/s 271(1)(c) of the Income Tax Act, 1961 are separately initiated.”
Even in the concluding para, similar observation was made by the Assessing Officer. In the absence of the Assessing Officer recording any proper satisfaction, there is no merit in the penalty order passed in the case. In this regard, we find support from the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom). We hold that in the absence of recording proper satisfaction, while initiating the penalty proceedings u/s 271(1)(c) of the Act, order passed u/s 271(1)(c) of the Act suffers from infirmity.
Now coming to the second aspect of the issue where the Assessing Officer while issuing the notice u/s 274 r.w.s. 271(1)(c) of the Act has failed to strike off the irrelevant portion of the said notice i.e. Assessing Officer has failed to show-cause the assessee as to whether he was initiating the penalty proceedings for concealment of income or for furnishing inaccurate particulars of income.
The Hon’ble Delhi High Court in Pr.CIT vs Sahara India Life Insurance Company Ltd. in have laid down that notice issued for imposing of penalty would be bad in law, if it does not specify under which limb of section 271(1)(c) of the Act, penalty proceedings had been initiated i.e. whether for concealment of income or for furnishing inaccurate particulars of income. In this regard, reliance was placed on the decision of Hon’ble Karnataka High Court in CIT vs Manjunatha Cotton Ginning Factory 359 ITR 565 (Karn.) and it was observed that the notice issued by the Assessing Officer would be bad in law if it did not specify which limb of section 271(1)(c) of the Act, penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particular of income; which was followed in the subsequent order in Commissioner of Income Tax vs SSA’s Emerald Meadows (2016) 73 Taxman.com 241 (Karn.).
Applying both the above said propositions to the facts of the case, we find no merit in the levy of penalty for concealment of income u/s 271(1)(c) of the Act in the bunch of appeals. On this preliminary ground itself, the issue is decided in favour of the assessee.
In relating to Assessment Year 2007-08, the only issue is not recording of satisfaction while initiating the penalty proceedings u/s 271(1)(c) of the Act. Following the ratio laid down in Shri Samson Perinchery (supra), we hold that the initiation of the penalty proceedings in the case suffers from infirmity and hence, consequent order passed u/s 271(1)(c) do not stand.
In the result, bunch of appeals filed by the assessee are allowed.
Order pronounced in the open court on 17th January 2020.