VILLOO'S GREENFIELD FARMS,,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -1 (1),, PUNE

ORDER PER PARTHA SARATHI CHAUDHURY, JM Both these appeals preferred by different assessee emanates from separate orders of the CIT(A)-11, Pune, dated 19-12-2018 and 04-07-2019 respectively for A.Y. 2012-13 as per the grounds of appeal on record.

3. The ld. Counsel further submitted that the only grievance of the assessee is imposition of penalty u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as “the Act” for short). He demonstrated with ample evidences that initiation of penalty u/s 271(1)(c) of the Act has been done for furnishing of inaccurate particulars of income whereas the imposition of penalty as per the penalty order has been done for concealment of income and notice u/s 274 r.w.s. 271(1)(c) for imposing penalty has been issued for both the limbs i.e. for furnishing of inaccurate particulars of income and concealment of income.

“2. Briefly stated, the facts of the case are that the assessee is an individual engaged in the business of petrol pump. A return was filed declaring certain income. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee earned remuneration of Rs.4 lakh from a firm, M/s. Ambarwadikar and Co., which was credited to the capital but not offered for taxation. On being called upon to explain the reasons for such non-disclosure of income in the return, the assessee offered the said amount for taxation. In the same manner, the assessee earned capital gain of Rs.9,92,38,664 on the transfer of certain lands to the Deogiri Nagari Sahakari Bank Ltd., but did not offer any capital gain in the return of income. When the assessee‟s attention was drawn to this fact, he again agreed for the addition. Thus, the AO made additions, inter alia, for the above amounts on the basis of admission by the assessee. Subsequently, penalty was imposed u/s 271(1)(c) of the Act after issuing notice u/s 274 of the Act. The ld. CIT(A) observed that the notice issued by the AO u/s 274 contained both the limbs viz., concealment of income and furnishing of inaccurate particulars of income and none of the two was struck off, as against the penalty order having been passed only for concealment of income. Relying on certain decisions, he deleted the penalty of Rs.2.26 crore imposed by the AO, against which, the Revenue has approached the Tribunal.

4. Turning to the facts of extant case, we find from the notice u/s 274 that the O did not strike out one of the two limbs though the penalty was imposed with reference to the first one only, namely, concealment of particulars of income. In such a panorama, the penalty order is bad in law. We, therefore, countenance the view taken by the Ld. CIT(A) in deleting the penalty”. 5. Respectfully following the aforesaid judicial pronouncements even without going into merits of the case just on the very legal premise that the notice issued u/s 274 r.w.s. 271(1)(c) of the Act i.e. in the penalty notice the inapplicable portions were not struck off the entire levy of penalty, therefore, is vitiated and is bad in law. We therefore, set aside the orders of the ld. CIT(A) and direct the A.O to delete the penalty from the hands of the respective assessees.