M/S. ETISHA FINANCE & INVESTMENT PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

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ITA 1585/DEL/2017Status: DisposedITAT Delhi16 October 2019AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer failed to record satisfaction as to which limb of Section 271(1)(c) was not fulfilled by the assessee. In the absence of such satisfaction and a proper show cause notice, the penalty levied is not justified.

What were the facts?

The assessee filed a return declaring NIL income. During assessment, an addition of Rs. 60 Lacs was made as unaccounted income. Subsequently, penalty proceedings were initiated under Section 271(1)(c) of the Act.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied without the Assessing Officer recording satisfaction regarding the specific limb of the section not fulfilled by the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: MS. SUSHMA CHOWLA & DR. B.R.R.KUMAR

For Respondent: Ms. Ashima Neb, Sr.DR
Hearing: 07.10.2019Pronounced: 16.10.2019

आदेश आदेश / ORDER आदेश आदेश PER SUSHMA CHOWLA, JM: The appeal filed by assessee is against order of CIT(A)-23, New Delhi, dated 14.02.2017 relating to assessment year 2009-10 against penalty levied u/s section 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Act’). None was present on behalf of the assessee.

ITA No:1585/Del/2017 Assessment Year: 2009-10

2.

The only issue raised in the present appeal is against the levy of penalty for concealment u/s 271(1)(c) of the Act.

3.

Briefly the facts and circumstances of the case are that the assessee had filed return of income declaring NIL income. Thereafter, assessment proceedings were initiated against the assessee and addition was made in respect of the alleged advance made of Rs.60 Lacs, which was added in the hands of the assessee as unaccounted income. The Assessing Officer made the addition in the hands of the assessee and initiated penalty proceedings observing as under:-

1.

“Penalty proceedings for furnishing inaccurate particulars of income and concealing the particulars of income are initiated under section 271(1)(c) of the Act separately.”

4.

Thereafter, penalty was levied at Rs.18,54,000/- u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. The said penalty was confirmed by the CIT(A), against which the assessee is in appeal.

5.

The limited issue which arises in the present appeal is whether where the Assessing Officer has failed to record the satisfaction in the assessment order as to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee, is the levy of penalty to be upheld in the case of the assessee.

6.

Penalty proceedings u/s 271(1)(c) of the Act are attracted where the assessee had either concealed its income or furnished inaccurate

ITA No:1585/Del/2017 Assessment Year: 2009-10 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. In the present case, we find that the Assessing Officer has failed to record the satisfaction as to which limb of the said section has not been fulfilled by the assessee. In the absence of the same i.e. where the assessee has not been given any show cause notice as to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee, the levy of the penalty in this circumstances is not justified. In this regard, we find support from the ratio laid down by the Hon’ble Bombay High Court in the case of CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom). Applying the said ratio, we delete the penalty levied u/s 271(1)(c) of the Act.

7.

In the result, the appeal of assessee is allowed.

Order pronounced in the open court on 16th day of October, 2019.

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