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Income Tax Appellate Tribunal, DELHI BENCH ‘S.M.C’, NEW DELHI
Before: MS. SUSHMA CHOWLA
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of CIT(A)-21, New Delhi, dated 20/08/2018, relating to assessment year 2014-15, against penalty levied under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).
The Ld. AR for the assessee pointed out that ground of appeal number 2 needs to be decided first.
3. The issue which is raised in the present appeal is against the levy of penalty u/s 271(1)(c) of the Act. The Ld. AR for the assessee pointed out that the Assessing Officer while recording the satisfaction for initiating penalty proceedings u/s 271(1)(c) of the Act has noted that the same is to be initiated for furnishing for inaccurate particular of income. However, in the notices issued u/s 274 r.w.s. 271(1)(c) of the Act, no specific charge is mentioned. Hence, the present penalty proceedings initiated are bad in law.
The Ld. AR for the assessee referred to the notices issued u/s 274 r.w.s. 271(1)(c) of the Act, which is placed at page 16 of the paper book. He further brought to our intention, specific issue raised before the CIT(A) in this regard in the written submissions, which are placed at pages 30 to 49 and referred to page 46 of the paper book in this regard. He further placed reliance on the ratio laid down by the Hon’ble Delhi High Court in the case of Pr. CIT vs M/s Sahar India Life Insurance Company Ltd. in judgment dated 02/08/2019 and Others.
The Ld. DR for the Revenue placed reliance on the ratio laid down by the Hon’ble Madras High Court in the case of Sundaram Finance Ltd. vs ACIT (2018) 93 taxmann.com 250 (Madras). The Ld. DR further pointed out that Special Leave Petition has been dismissed by Hon’ble Apex Court.
On perusal of the record and after hearing both the authorized representatives, the jurisdictional issue which arises in the present appeal is against the levy of penalty u/s 271(1)(c) of the Act. The AO in the assessment order, after making the addition in the hands of the assessee on account of income offered in the revised return of income, which was accepted as such by the Assessing Officer, was of the view that the assessee had furnished inaccurate particulars of income and hence satisfaction was recorded for initiating the penalty proceedings u/s 271(1)(c) of the Act.
While issuing the notice u/s 274 r.w.s. 271(1)(c) of the Act, the AO failed to strike out either of the limbs of section 271(1)(c) of the Act; however, the AO held the assessee liable for levy of penalty u/s 271(1)(c) of the Act. The assessee raised specific plea before the CIT(A) as to non-striking of the relevant portion in the notice issued u/s 274 r.w.s 271(1)(c) of the Act. But the CIT(A) has failed to deal with the same and confirmed the levy of penalty for concealment against the assessee.
7. Penalty u/s 271(1)(c) of the Act is leviable where the assessee had either concealed its income or furnished inaccurate particulars of income.
The Hon’ble Bombay High Court in CIT vs. Samson Perinchery (2017) 392 ITR 4 (Bom.) has laid down the proposition that it is incumbent upon the AO to show cause the assessee as to which limb was not fulfilled by the assessee, in order to attract the levy of penalty u/s 271(1)(c) of the Act. The failure to do so is fatal as far as passing an order levying penalty for concealment is concerned.
The Hon’ble Delhi High Court in Pr CIT vs Sahara India Life Insurance Company Ltd. (supra) have also 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.).
In these facts and circumstances of the case and applying the said propositions to the facts of the present appeal, there is merit in the plea of the assessee as far as initiation of penalty proceedings for concealment under section 271(1)(c) of the Act are concerned. The Ld. DR for the Revenue had placed reliance on the ratio laid down by the Hon’ble Madras High Court in the case of Sundaram Finance Ltd. vs ACIT (supra), wherein it was held that where the case against the assessee was that they had concealed its particulars of income and furnished inaccurate particulars of income, then the notice issued u/s 274 r.w.s. 271(c) of the Act was correct.
The plea of the assessee was rejected on the ground that the non-striking of notice was raised before the Hon’ble High Court after delay of 10 years and not before any of the authorities below. The SLP filed by the assessee against the said order of the Hon’ble Madras High Court was dismissed. But the Courts have held that mere dismissal of appeal do not lay down the rule of law. In such facts and circumstances, there is no merit in the reliance placed by the Ld. DR on the said decision of the Hon’ble Madras High Court in Sundaram Finance Ltd. vs ACIT (supra). In the paras above, reference is made to the decision of the jurisdictional High court in Pr. CIT vs M/s Sahara India Life Insurance Company Ltd. & Ors. (supra) and following the same, the issue raised in this appeal is decided in favour of the assessee on the jurisdictional ground itself. The ground of appeal is thus allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 31st day of December, 2019.