ANKEET COTTAGE INDUSTRIES,AURANGABAD vs. INCOME-TAX OFFICER, WARD - 1 (3), AURANGABAD

The only issue is to be decided is as to whether the CIT(A) is justified in confirming the penalty imposed by the AO u/s. 271(1)(c) of the Act in the facts and circumstances of the case.

Heard both the parties and perused the material available on record. We note that the AO in its order dated 23-03-2016 recorded satisfaction of filing inaccurate particulars of the income. In consequence of which the AO issued notice dated 23-03-2016 u/s. 274 r.w.s. 271(1)(c) of the Act to the assessee on both the charges i.e. concealment of income and furnishing inaccurate particulars of income. The ld. AR submits that the AO initiated penalty proceedings and imposed penalty for concealment of income which is not maintainable. We note that the AO in consequence of notice imposed penalty of Rs.5,83,360/- for concealment of income vide Para No. 5 of the penalty order dated 19-09-2016 which is contrary to the finding recorded in assessment order. As discussed above, the AO recorded its satisfaction for furnishing inaccurate particulars of income and issued notice for both the charges and proceeded to impose penalty for concealment of income. Therefore, the order of AO is not justified under law for the reason that there was no satisfaction to the effect that the assessee concealed income in the assessment order. Thus, we hold that the order of CIT(A) in confirming the penalty imposed by the AO is not justified and it is set aside. Accordingly, the grounds raised by the assessee are allowed.

In the result, the appeal of assessee is allowed.