SUPERFINE HOTELS PRIVATE LIMITED,JAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6,, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR

Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k
BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 1502/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2015-16

Superfine Hotels Pvt. Ltd.
2nd Floor, J-13, Lal Kothi Yojna,
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AALCS0201P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.L. Poddar, Adv. &

Shri Harsh Poddar, Adv.
jktLo dh vksj ls@ Revenue by : Shri P.P. Meena, CIT a lquokbZ dh rkjh[k@ Date of Hearing : 24/02/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 22/04/2025

vkns'k@ ORDER

PER: DR. S. SEETHALAKSHMI, J.M.

This is an appeal filed by the assessee against the order of ld.
CIT(A), National Faceless Appeal Centre (NFAC) Delhi dated
21.08.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2015-16. The assessee has raised the following grounds of appeal :-
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“1. In the facts and circumstances of the case, the Learned CIT(A) has erred in passing the ex-parte order without giving the sufficient opportunity of hearing to the assessee, which violated the principles of natural justice.

Director/Auth. Signatory

Deponent

VERIFICATION

I, Saumitra Singh S/o Ashok Kumar Singh verify the contents above 1
to 4 are true and correct to the best of my knowledge & belief. God Help me.

Date : 14.12.2024

For SUPERFINE HOTELS PVT.
LTD

Place: Jaipur.

Director/Auth. Signatory

Deponent “

Now the assessee has preferred this appeal before the Tribunal on the grounds reproduced herein above.
5. Before us, the ld. A/R of the assessee submitted his ground-wise written submissions which are being reproduced hereunder :

“Ground No.1
In the facts and circumstances of the case, the Learned CIT(A) has erred in passing the ex-parte order without giving the sufficient opportunity of hearing to the assessee, which violated the principles of natural justice.
It is submitted that as the assessee company was undergoing financial problems, therefore, the accountant of the company failed to bring the notices received from the Learned CIT(A) before the management and as such, there was no timely compliance. It is also submitted that time granted by the Learned CIT(A) was always less than 15 days in any of Superfine Hotels Pvt. Ltd., Jaipur
6
the notices. As pertechnical manual of the Department/standard operating procedure, the Learned CIT(A) was required to afford 15
days time in the normal course and a minimum of seven days in case the issues were urgent and time barring. In this case, the appeal was neither time barring, nor urgent. Therefore, the Learned CIT(A) was required to give 15 days time which was not given. In view of this, it is submitted that assessee could not furnish a cogent defence due to non-availability of adequate opportunity.
Ground No.2
In the facts and circumstances of the case the LearnedCIT(A) has erred in confirming the action of the Learned Assessing Officer in imposing penalty u/s 271(1)(c) of the IT Act, 1961 whereas there was no specific satisfaction in the assessmentorder of the Learned
Assessing Officer that whether it was a case of furnishing of inaccurate particulars of incomeor concealment of income.
The assessee is a company engaged in hotel business. In this case,return of income was filed on 30.09.2015 declaring loss of Rs.
15,24,86,880/-. A search was conducted on 30.10.2014 on the assessee group. The Learned Assessing Officer has completed the assessment u/s 153B(1)(b)/143(3) of the Income Tax Act, 1961 on 15.12.2016 determining total income at Rs. 75,620/- inter-alia making the addition of Rs. 15,25,62,502/- on account of disallowing the claim made by the assessee u/s 35AD of the Income Tax Act,
1961. In this case, the assessee company constructed a hotel building and applied to Central Government for approval as a three star hotel during F.Y. 2014-15, when the hotel building stood constructed. However, the approval was received later on on 16/03/2016 effective for the period 14/3/2016 to 13/3/2021 (five year period). As the assessee was under a bonafide belief and expected approval with effect from 1/4/2014 to 31/3/2015, so deduction u/s 35AD was claimed. However, since the approval was we.f.
14/3/2016, the Learned.AO disallowed the claim of deduction u/s 35AD and made an addition of Rs. 15,25,62,505/- to the income of the assessee.
The Learned Assessing Officer also initiated penalty proceedings u/s 271(1)(c) observing “ penalty u/s 271(1)(c) of the IT Act is being initiated separately for furnishing inaccurate particulars of income/concealed income". Subsequently a penalty of Rs.
5,18,55,995/- has been imposed u/s 271(1)(c) vide order dated
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27.03.2022. It is submitted that the very initiation of the penalty proceedings in the assessment is not in accordance with law.
Initiation of penalty on 15.12.2016 is not in accordance with law –

It is submitted that while completing the assessment proceedings the Learned Assessing Officer initiated penalty proceeding in a very careless and routine manner. In the assessment order the Learned
Assessing Officer observed as under for initiating the penalty proceedings: -

“The assessee has concealed the particulars of his true income and furnished inaccurate particulars of such income which is quite clear from the above discussed facts. In view of the above discussed facts, it is evident that the intention of the assessee has never been bona fide and as such penalty proceeding u/s 271(1)(c) of the IT Act, 1961 is being initiated separately for concealment of income and furnishing inaccurate particulars of income”.
(Last para of assessment order on Page No. 3)
"Penalty u/s 271(1)(c) of the Income Tax Act, 1961 is being initiated separately for furnishing inaccurate particulars of income/concealed income. (Last para of the assessment order dated 15/12/2016 on page 4).

In view of the aforesaid initiation of penalty proceedings the Learned
Assessing Officer issued notice dated 15.12.2016 scanned below: -
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It would be seen from the observations in the assessment order that the Learned Assessing Officer was not clear and certain in his mind whether it was a case of concealment of income or filing inaccurate particulars of income. He had initiated penalty proceedings on 15.12.2016 for both the limbs of the penalty i.e. for concealment of income as well as for filing of inaccurate particulars of income. This has vitiated the initiation of the penalty proceedings. The Learned
Assessing Officer was precluded in initiating penalty proceedings both for concealment of income as well as for filing inaccurate particulars of income. In such circumstances the assessee was not knowing on what issue to comply with a notice like that i.e. whether to reply for Superfine Hotels Pvt. Ltd., Jaipur
9
concealment of income or for filing inaccurate particulars of income.
The assessee had neither concealed the income, nor had filed inaccurate particulars of income. The assessee had claimed deduction u/s 35 AD under a bona fide belief that approval from the Central
Government for the hotel building would be received for the year under assessment also. In any case, the Learned. Assessing Officer defaulted in initiating the penalty proceedings simultaneously on both the limbs, i.e. concealment of income/filing inaccurate particulars of income whereas the Hon’ble Apex Court in the case of T. Ashoka
Pai Vs. CIT (292 ITR 0011) has held that “..concealment of income’
and ‘furnishing of inaccurate particulars’ carry different connotations. Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressioveri or suggestion falsi..”
The term “concealment” is direct and furnishing inaccurate particulars may be indirect.
Further, in the statutory notice issued on 15/12/2016 u/s 274 read with section 271(1)(c) along with the assessment order, there was no mention of the ground of satisfaction of the Learned. Assessing Officer for which penalty u/s 271(1)(c) was initiated. Then relevant notice has been scanned above. In the absence of specific mention of any charge of concealment, the satisfaction noted in the assessment order only persisted. It is further submitted that the Learned AO issued notices on 12/3/2020, 10/08/2021, 30/12/2021 and 12/1/2022 but has never mentioned the charge of concealment/limb of concealment on which reply of the assessee was sought. Copies of these notices are available on Paper Book Page No 1-9. In these circumstances, it is established on record that the satisfaction of the Learned Assessing Officer as mentioned in the assessment order, which has been quoted, above, was the only basis of initiation of penalty proceedings. The same being not in accordance with law, the very basis of initiation of penalty proceedings subsides. Therefore, levy of penalty is unlawful, illegal and unjust. The same deserves to be deleted.
In the assessment order as well as in the various show cause notices, the Learned Assessing Officer has not specified for what default i.e. for concealment of income or for filing inaccurate particulars of income reply of the assessee was required. In these notices, simply he has mentioned the earlier initiation of penalty proceedings and subsequently he has passed order levying penalty of Rs. 5,18,55,995/-
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holding that " it is crystal clear that assessee has committed default by furnishing inaccurate particulars of its income to the tune of Rs.15,25,62,502/- on account of issues discussed as above”.
The submission of the assessee is that whereas proceedings of initiation of penalty were illegal as the same were both for concealment of income and filing inaccurate particulars of income and subsequently in the penalty order the Learned Assessing Officer ultimately levied penalty for furnishing inaccurate particulars of income, thus the entire proceedings have been meshed-up by the Learned Assessing Officer.
At the stage of initiation there was satisfaction for levy of penalty for concealment for income/filing inaccurate particulars of income. At the stage of levy of penalty, there is satisfaction for levy of penalty for filing inaccurate particulars of income. It is settled position of law that Assessing Officer cannot levy penalty for a limb whereas notice was issued for both the limbs. The assessee was in a state of doldrums not knowing on which aspect reply was to be furnished. Although even both the aspects on which penalty proceedings were initiated were not applicable. Keeping in view the position of law, the Learned.
Assessing Officer was precluded in initiating penalty proceedings simultaneously on both the limbs. He was required to be specific while seeking reply of the assessee. The penalty could have been initiated by the Learned Assessing Officer either on the ground of concealment of income or for furnishing inaccurate particulars of income, but not on both the grounds together. By initiating penalty proceedings on both the grounds, the Learned. Assessing Officer has disclosed his mind that he was not sure whether there was any concealment of income in the case of the assessee or the particulars of income were inaccurate.
In view of this levy of penalty in this case is bad in law and deserves to be deleted.
Following case laws are quoted in support -

(i)
“It is clear from the aforesaid decision that on the facts of the present case that the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. In our view, the aforesaid defect cannot be said to be curable u/s. 292BB of the Act, as the defect cannot be said to be a notice which is in substance and effect in conformity with or according to the intent and purpose of the Act. Following the decision of the Hon’ble Karnataka
High Court, we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled.”
(iii)
OF GUJARAT) (2006) 202 CTR 0188 : (2006) 282 ITR 0642
: (2006) 155 TAXMAN 0513
Penalty under s. 271(1)(c)—Validity—Absence of specific finding—Addition vis-a-vis cash credit upheld by Tribunal—
There was no clear-cut finding in the penalty order or the order of the CIT(A) as to whether there was concealment of income or furnishing of inaccurate particulars by the assessee—
Tribunal too failed to appreciate this legal issue—Penalty not sustainable—Tribunal having failed to take into consideration and deal with decision of the juri ictional High Court, it committed an error in law—CIT vs. Manu Engineering Works
(1979) 8 CTR (Guj) 141 : (1980) 122 ITR 306 (Guj) followed.
It is also worthwhile to mention that subsequently the SLP was also dismissed by the Hon'ble Apex Court in the case of SSAS
Emerald Meadows in CC No. 11485 of 2016 order dated
05.08.2016 in which the same law was confirmed by approving the judgment of the Karnataka High Court.

(iv)
The Rajasthan High Court is also following the above judgments. The Latest judgment of the Rajasthan High
Court in the case of Sheveta Construction Company Pvt
Ltd in DB IT Appeal No. 534/2008 order dated 06.12.2016
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wherein it has been held that the Assessing Officer has to give a notice as to whether he proposes to levy penalty for concealment of income or furnishing inaccurate particulars. He cannot have both the conditions and if it is so he has to say so in the notice and record a finding in the penalty order, otherwise levy of penalty is illegal.
(v)
M/S. GANGA IRON & STEEL TRADING CO. vs.
COMMISSIONER OF INCOME TAX
(2022) 447 ITR 0743 (Bom), (2022) 286 TAXMAN
0021 (Bombay)

”Accordingly substantial question of law no. III is answered by holding that since the show cause notice dated 12.02.2008 does not indicate whether there was concealment of particulars of income or furnishing of incorrect particulars of such income, the same would vitiate the penalty proceedings.
Since it has been found that the show cause notice dated
12.02.2008 that was issued to the Assessee was vague and the penalty proceedings initiated on that basis were vitiated, it would not be necessary to answer substantial questions of law as framed at serial nos. I and II. This is for the reason that the said substantial questions pertain to the merits of the adjudication of the proceedings under Section 271(1)(c) of the said Act. Once it is found that the show cause notice dated
12.02.2008 issued to the Assessee was not in accordance with law, the orders passed thereon would automatic cease to operate.”
(vi)
PCIT Vs. BalsettyRevathi (ITTA No. 684/2016)Andhra
Pradesh High Court

“On principle, when penalty proceedings are sought to be initiated by the revenue under Section 271(1)(c) of the Act of 1961, the specific ground which forms the foundation therefor has to be spelt out in clear terms. Otherwise, an assessee would not have proper opportunity to put forth his defence. When the proceedings are penal in nature, resulting in imposition of penalty ranging from 100% to 300% of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or Superfine Hotels Pvt. Ltd., Jaipur
13
furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an or between the two, as in the present case. This ambiguity in the show-cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. We are therefore of the opinion that the order under appeal does not brook interference on any ground. We find no question of law, much less a substantial one, arising for consideration warranting admission of this appeal.”

(vii)
IN THE ITAT DELHI BENCH ‘A’
BHAVNESH SAINI, JM & B.R.R KUMAR, AM.
ITA.Nos., 434, 435, 436, 437, 438 & 439/Del./2017
91 ITR (Trib) 0565 (Delhi), (2021) 212 TTJ 0357 (Del), (2021)
203 DTR (Trib) 0249 (Del)(Trib)

After considering the rival submissions, we are of the view that no penalty is leviable in any of the assessment years under appeals. In assessment years under appeals since quantum addition have already been deleted by us on quantum appeals
(supra), therefore, no basis is left for levying of penalty under section 271(1)(c) of the I.T. Act. Further the show cause notices issued by the A.O. on 02.03.2015 prior to levy of the penalty, the A.O. has not mentioned therein specifically for which limb of Section 271(1)(c) of the I.T. Act, 1961, the penalty proceedings have been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of such income. therefore, show cause notices issued by the A.O.
are illegal and bad in Law and vitiate the entire penalty proceedings. Thus, no penalty could be levied against the assessee. In view of the above discussion, we set aside the Orders of the authorities below and cancel the penalty in all the assessment years under appeals.
Keeping in view the ratio of the aforesaid decisions ,which is fully applicable to the facts of the case, the penalty levied deserved to be cancelled. The Hon'ble Tribunal is accordingly
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requested to delete the penalty imposed by the Learned
Assessing Officer and confirmed by the Learned CIT(A).
Ground No.3
In the facts and circumstances of the case, the Learned CIT(A) has erred in confirming the penalty u/s 271(1)(c) of the IT Act, 1961
whereas it is a case where additions to income are as a result of disallowance of deduction u/s 35AD not attracting the provisions of Section 271(1)(c).
In the case of the assessee, facts do not warrant levy of penalty u/s 271(1)(c). It is submitted that in this case, the assessee , whose business is to run a hotel, constructed a new hotel building and the same was completed within the financial year 2014-15 relevant to A.Y.
2015-16. In view of this, the assessee moved application before the Secretary, Govt. of India, Ministry of Tourism, New Delhi, seeking approval for the hotel building as “three-star hotel”. The name of the hotel was Hotel Souvenir, GopalpuraByepass, Mansarovar, Jaipur.
This application was moved on 07/02/2015. The assessee was under a bonafide belief that the approval would be received from the Ministry of Tourism w.e.f. A.Y. 2015-16 and accordingly while filing return of income for the A.Y. 2015-16, the assessee claimed under section 35AD in accordance with law for Rs.15,25,62,502/-. However, the approval from the Ministry of Tourism was delayed and it was received on 16/3/2016 valid from 14/3/2016 to 13/3/2021 (five years). Copy of the certificate so received is available on Paper Book Page No. 10-11. In view of this, the claim of the assessee of deduction u/s 35 AD for Assessment Year 2015-16 became redundant. Accordingly, during the course of assessment proceedings, the assessee submitted letter dated
09/12/2016, the claim of deduction was withdrawn. In these circumstances and facts of the case, the action of the assessee in claiming deduction u/s 35 AD was a bona-fide and lawful claim and subsequent step of withdrawing the same was also bona-fide. It is a case where the claim made by the assessee u/s 35 AD was not sustainable because of delayed approval by the Ministry of Tourism.
All this was beyond the control of the assessee. The assessee cannot be blamed for making a claim u/s 35 AD. The claim was perfectly in accordance with law, had the approval from Ministry of Tourism was received in time. It is not a case where the deduction u/s 35 AD was made even when hotel was not completed. It is also not the case of the department that the hotel building was not complete during the assessment year 2015-16. It is by virtue of circumstances beyond the Superfine Hotels Pvt. Ltd., Jaipur
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control of the assessee that the approval of the Ministry of Tourism could not be received in time relevant to and applicable for A.Y. 2015-
16. In the facts and circumstances of the case, it is submitted that the mere fact that claim of deduction u/s 35 AD was not sustainable would not attract levy of penalty u/s 271(1)(c). The assessee had disclosed all the relevant facts regarding the claim of deduction u/s 35 AD. It is further submitted that the deduction u/s 35 AD is granted for a period of five years. Therefore, if the approval was granted for A.Y. 2015-16, same would have been up to 13/3/2020. By delayed approval, the same is applicable up to 13/3/2021. In other words, the deduction u/s 35 AD has just been postponed by one year. These facts establish beyond doubt thebonafides of the assessee. The assessee cannot be charged for concealment of income or for filing inaccurate particulars of income.. Every particular filed by the assessee was correct, but the deduction could not be sustained because there was delay on the part of the Ministry of Tourism, Govt. of India. This was beyond the control of the assessee. For this, no penalty can be levied u/s 271(1)©. The return of income was filed on 30/09/2015 earlier to the approval which was received on 16/3/2016. Had the approval been received before filing of return, then deduction u/s 35AD would have been claimed accordingly. The assessee seeks support from the following case-laws of various courts.
(1) COMMISSIONER OF INCOME TAX vs. INDIAN METALS &
FERRO ALLOYS LTD

HIGH COURT OF ORISSA
(1994) 117 CTR 0378, (1995) 211 ITR 0035
Penalty under s. 271(1)(c)—Concealment—Assessee making claims for deductions for development rebate, depreciation, interest and guarantee commission—Same disallowed by ITO—
Tribunal holding that claims of assessee, though rejected, were bona fide—Same finding of fact—No case for penalty for concealment is made out.
(2) COMMISSIONER OF INCOME TAX vs. RELIANCE
PETROPRODUCTS (P) LTD.
SUPREME COURT OF INDIA(2010) 36 DTR 0449, (2010) 230
CTR 0320, (2010) 322 ITR 0158, (2010) 189 TAXMAN 0322
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A glance at the provision of s. 271(1)(c) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. As per Law Lexicon, the meaning of the word
"particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word
"particulars" used in the s. 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Therefore, it is obvious that it must be shown that the conditions under s. 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income.—CIT vs. Atul Mohan Bindal (2009) 225 CTR (SC)
248 : (2009) 28 DTR (SC) 1 : (2009) 9 SCC 589 followed
Reading the words "inaccurate" and "particulars" in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous.
In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under s. 271(1)(c). A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was Superfine Hotels Pvt. Ltd., Jaipur
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not acceptable to the Revenue, that by itself would not attract the penalty under s. 271(1)(c). If the contention of the Revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under s. 271(1)(c). That is clearly not the intendment of the legislature. The Tribunal, as well as, the CIT(A) and the High
Court have correctly reached this conclusion.—Sree Krishna
Electricals vs. State of Tamil Nadu &Anr. (2009) 23 VST 249
(SC) applied; Reliance Petroproducts (P) Ltd. (judgment dt. 23rd
IN THE ITAT JAIPURITA No. 764/JP/2015(2017) 185 TTJ 0036
(Jp) ((UO))
Levy of Penalty u/s. 271(1)(c)—Deletion—AO levied penalty u/s 271(1)(c) in respect of disallowance of deduction claimed u/s 80IB by holding that assessee had made wrong claim of deduction u/s 80IB—
AO levied penalty u/s 271(1) (c) on ground of furnishing of inaccurate particulars of income by assessee— CIT(A) deleted penalty imposed by AO u/s 271(1)(c)—Held, AO passed order under section 271(1) (c) of I.T. Act, 1961 imposing penalty being 100% of tax leviable on following income treating same as concealed income of assessee—
Further AO also imposed penalty u/s 271AAA by passing separate order on alleged undisclosed income which she determined by treating land under JV as outright sale on income therefore on same income two different penalties were imposed one treating undisclosed income and other for concealment of particulars of income—It was noted from records that claims made by assessee were based on experts advice and backed by certification issued in Form 10CCB—It was also noted that revised return so filed was also valid return filed within stipulated time—High Court in case of Chander Pal Bagga &Harshvardhan
Chemicals Ltd held that no penalty could be imposed if exemption was claimed on basis of advice of advocate—Supreme Court in case of Price Waterhouse Coopers Pvt. Ltd held that inadvertent and bona fide error did not amount to concealment or furnishing of inaccurate particulars—It was also noted that assessee had furnished explanation that transaction was in name nature of commercial transaction and assessee received money from company against agreement to sale
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of land to company and assessee provided all evidence in support of her contention—Tribunal concurred with findings of CIT(A) on issue in question—Revenue’s appeal dismissed.
Held
Further the AO also imposed penalty u/s 271AAA of Income Tax Act,
1961 by passing a separate order on alleged undisclosed income which she determined by treating the land under JV as outright sale on income of Rs. 10,60,80,000/-, therefore on same income two different penalties were imposed one treating the undisclosed income and other for concealment of particulars of income. The assessee carried the matter before the ld. CIT(A) who cancelled the penalty vide his detailed order dated 31-08-2015. It is noted from the records that the claims made by the assessee were based on experts advice and backed by certification issued in Form 10CCB. It is also noted that the revised return so filed was also a valid return filed within the stipulated time.
The ld. AR relied on the decision of Juri ictional High Court in the case of Chander Pal Bagga & Harshvardhan Chemicals Ltd wherein it is held that no penalty can be imposed if exemption is claimed on the basis of advice of advocate. The Hon’ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd held that inadvertent and bona fide error does not amount to concealment or furnishing of inaccurate particulars. It is also noted that the assessee had furnished the explanation vide letter dated 27-03-2013 (pg 183 to 188) that transaction is in the name nature of commercial transaction and the assessee received money from the company against the agreement to sale of land to the company and assessee has provided all the evidence in support of her contention. Thus, in view of the above facts and circumstances of the case, Tribunal concur with the findings of the ld. CIT(A) on the issue in question. Thus, the appeal filed by the Revenue is dismissed.
(4) CHANDRA PAL BAGGA vs. INCOME TAX APPELLATE
TRIBUNAL & ANR.

HIGH COURT OF RAJASTHAN
(2003) 71 CCH 0124 RajHC
(2003) 182 CTR 0185, (2003) 261 ITR 0067, (2003) 128 TAXMAN
0632
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Penalty under s.
271(1)(c)—Concealment—Wrong claim for exemption—Although assessee disclosed the basic facts regarding the sale of house property he did not offer the capital gains for tax—Later, he annexed a note to the revised return stating that no tax is payable on the capital gain as it is long-term capital gain and he has purchased another property within 6 months out of the sale consideration—
Assessee was acting on the wrong advice of his advocate—Affidavit filed by said advocate admitting his mistake—Penalty not leviable
Held
Assessee has though brought to the notice of the Department that there was a transaction and assessee has sold the immovable property on 26th April, 1991, but on the advise of his advocate the assessee has claimed that capital gain is not liable to tax. An affidavit is given on oath by the advocate stating that in fact by his mistake the assessee has shown 'long-term capital gain' and claimed exemption, but the transaction has been disclosed in the return. That was his mistake and not the mistake of the assessee. When the assessee has disclosed the transaction which is the basis for capital gain tax and though wrongly claimed exemption from the capital gain tax, but that cannot be a case of penalty under s. 271(1)(c). If it has claimed any exemption after disclosing the relevant basic facts and under the ignorance of the provision of the Act, and not offered that amount for tax, in such cases, penalty should not be imposed. In such cases rather it is the duty of the AO to ask further details and tax income if it is liable to tax and that has been done in this case. In view of these facts on record, there is no reason to sustain the order of the Tribunal. The order of the Tribunal is set aside and penalty is cancelled.
(5) CIT v ChittorgarhKendriyaSahakari Bank Ltd (SLP – CC No(s).
8127/2014 dated 02.07.2014)
Supreme Court dismissed the SLP filed by Tax Authorities against the Rajasthan
High
Court ruling in the case of ChittorgarhKendriyaSahakari Bank Ltd [2014] 41 taxmann.com 11
Penalty under s. 271(1)(c)—Concealment—Wrong claim for set off of capital loss—It cannot be said that in every case where particulars of income are inaccurate, penalty must follow—Penalty is imposed only when there is some element of deliberate default and not a mere mistake—This being the position, the finding having been recorded on facts that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, the view taken by the Tribunal cannot be held to be perverse
(7) COMMISSIONER OF INCOME TAX vs. MS. SANIA MIRZA
HIGH COURT OF ANDHRA PRADESH
(2012) 80 CCH 0373 APHC(2013) 87 DTR 371 ((AP))
Penalty u/s 271(1)(c)—Concealment of income and furnishing of inaccurate particulars of income—Leviability—Assessee being renowned professional international tennis player filed return along with statement of affairs wherein she disclosed that she had received
Rs. 30,63,310/- as awards from Government and from other institutions—Said amount was not offered to tax—AO processed return u/s. 143(1) and accepted return—Later on, assessment was reopened by issuing notice to assessee and when assessment was reopened, she voluntarily offered
Rs.30,63,310/- for tax—Before
AO her
Advocate/Chartered Accountant stated that amount was shown in capital account and was not shown as capital receipt—But since issue had arisen, it was being offered as taxable income—AO accepted amount as taxable income and levied tax accordingly—However, in addition to levying tax, AO decided to impose penalty of Rs.10,14,582/- on ground that assessee had furnished inaccurate particulars of her income and concealed her income—CIT(A) upheld action of AO—
However, Tribunal held that assessee had not acted in mala fide manner and it was not case for imposition of penalty—Held, impugned amount of Rs.30,63,310/- was shown by assessee in return—Hence, it could not be said that there was any concealment—There was no dispute about fact that amount was correctly mentioned—Therefore, there was also nothing inaccurate in particulars furnished by her—
Only error committed was that it was not shown as capital receipt—
Superfine Hotels Pvt. Ltd., Jaipur
21
But as soon as it was pointed out, error was accepted and amount was surrendered to tax—Thus, it was not fit case for imposition of penalty—Revenue’s appeal dismissed
(8) COMMISSIONER OF INCOME TAX vs. LARSEN AND TOUBRO
LTD

HIGH COURT OF MUMBAI
(2014) 110 DTR 0324 (Bom), (2014) 272 CTR 0336
(Bom), (2014) 366 ITR 0502
Penalty u/s 271(1)(c)—Justification of imposition of penalty—
Deletion of—Held, tribunal deleted penalty imposed u/s 271(1)(c) on findings of fact that merely because assessee raised a claim which was eventually disallowed, does not mean that ingredients of s 271(1)(c) were satisfied or fulfilled so as to justify imposition of penalty—
Tribunal merely followed dictum of Supreme Court in several decisions and thus penalty was rightly deleted by Tribunal—Penalty has therefore been rightly deleted—Such a finding essentially based on facts and circumstances peculiar to assessee, does not raise any substantial question of law—Court directed that revenue officers to abide by Tribunal's findings which are based on settled principles of law—Merely because assessee is a leading Public Limited Company should not act as a deterrent for them to take a informed, rational decision and subserving larger Public Interest—Revenue’s appeals dismissed

(9) COMMISSIONER OF INCOME TAX vs. JAWAHAR KALA
KENDRA

HIGH COURT OF RAJASTHAN
(2015) 273 CTR 0522 (Raj), (2014) 369 ITR 0132 (Raj)
In our view, the Tribunal has rightly deleted the penalty for the reason that though the claim was disallowed by the AO, thereafter, partly allowed by the CIT(A) and further not pressed by the assessee, but the fact remains that the assessee-society was constituted as an autonomous body by an order dt.11/08/2003 issued by the Governor of Rajasthan to preserve and promote art and culture of Rajasthan and to contribute to the social and cultural development of the people of the State. It is also an admitted fact that subsequent to the said order of the Governor of Rajasthan, the assessee-society came to be formed and Superfine Hotels Pvt. Ltd., Jaipur
22
was registered under the Societies Registration Act, 1958 and the Commissioner of Income Tax has also granted registration u/s 12A to the assesseesociety.
(10)
(2014) 369 ITR 0255 (P&H)

Penalty—Deletion of penalty—Assessee filed return of income for A/Y
1977-78 claiming investment allowance and depreciation for installation and use of machinery—AO disallowed claim and imposed penalty u/s. 271(1)(c) for furnishing false information on ground that machinery was purchased but not installed—CIT(A) upheld decision of AO— ITAT had deleted penalty u/s. 271(1)(c) levied by AO on grounds of furnishing of false information in respect of investment allowance/depreciation claims—Held, Assessee produced report of ‘X’
through whom Assessee purchased machineries and who were responsible for erecting and commissioning of same—Purchase of machinery during AY 1977-78 was not doubted in view of bills, gate pass, freight charges paid etc—However, while disallowing depreciation and investment allowance, on basis of report of ‘Y’, it was recorded that machinery was not put to use during AY 1977-78—
Report of ‘Y’ was preferred over report of ‘X’ and addition was made on account of disallowance of depreciation and investment allowance was sustained during assessment proceedings—ITAT while deleting penalty had discussed plausibility of both reports.—Addition regarding disallowance of depreciation and investment allowance by preferring one set of evidence was sustained—ITAT was justified in deleting penalty—

(11)
PRINCIPAL COMMISSIONER OF INCOME TAX & ANR.
vs. BARODA UTTAR PRADESH GRAMIN BANK & ANR.

HIGH COURT OF ALLAHABAD
(2022) 113 CCH 0362 AllHC
(2022) 447 ITR 0218 (All),
Superfine Hotels Pvt. Ltd., Jaipur
23
In short, we hold that the appellant had made a legitimate claim for exemption under section 80P(2)(a)(i) which was purely a legal in nature and even on rejection of such a claim, no penalty is leviable.
The case of the 'appellant RRB' is even on a better footing as all the five appeals for the corresponding assessment years have been allowed by us on merits therefore, in terms ofour four separate orders of date".
Penalty under s. 271(1)(c)—Concealment—Wrong claim of deduction under s. 80-IA—Assessee had bona fidely made a claim for deduction under s. 80-IA, which came to be rectified by filing a revised return withdrawing the claim and as such there was no concealment or furnishing of inaccurate particulars of income on the part of the assessee—Moreover, the notice under s. 154 issued by the AO also does not remotely indicate anything to that effect—In the circumstances, CIT(A) was justified in setting aside the penalty imposed under s. 271(1)(c)
(14)
Penalty u/s. 271(1)(c)—Furnishing inaccurate particulars of income—Leviability—Assessee filed returns claiming loss—
Assessment was completed with reduction of loss on account of certain disallowances including contribution to pension scheme and interest on penal charges levied for alleged excess consumption of electricity—AO disallowed said disallowances and brought amounts to tax—CIT(A) affirmed order of AO, but observed that, assessee had furnished inaccurate particulars of income within meaning of Section 271(1)(c) read with Explanation 1 by claiming unfounded deductions and was liable to penalty u/s 271(1)(c) read with Section 4A thereto—Penalty was imposed on assessee—
Tribunal upheld disallowance but it deleted order imposing penalty holding that it was not case of furnishing inaccurate particulars of income, so far as contribution to pension scheme was concerned—Held, wrong claim was made for deduction and explanation was offered—In absence of finding that assessee had failed to prove such explanation as bonafide, no penalty could be imposed—Imposition of penalty is not automatic—It is only when there is attempt to evade tax by offering explanation which is found to be false or not bonafide penalty can be imposed—In present case imposition of penalty by lower appellate authority was not justified—Impugned order imposing penalty rightly set aside—Revenue’s appeal dismissed
(15)
Penalty u/s 271(1)(c)—Concealment of particulars of income—
Respondent-assessee had filed return for A.Y. 1994-95 claiming deductions u/s 80IA on ground that it had set up new plant and machinery—AO rejected same claim and also levied penalty @
300% u/s 271(1)(c)—CIT(A) dismissed claim of deduction u/s 80-
IA, however cancelled penalty—Tribunal upheld order of CIT(A)—Held, unit in question at Kundaim Industrial Estate was new industrial undertaking, manufacturing much wider range of products—Assessee was under bona-fide impression, that since more than 80% of cost at new factory was by installing new plant and machinery and only less than 20% of cost was towards transferring plant and machinery, it was entitled to benefit u/s 80-
IA—Assessee had not concealed any fact from authorities—
Tribunal observed that for attracting penalty, mensrea was necessary and also that neither there was suppression of fact or misrepresentation of fact by assessee and, as such, order of penalty was not sustainable in law.

(16)
Bombay ITAT Bench in the case of Robust Transportation
Private Limited vs. Deputy Commissioner of Income Tax on 23.08.2018 I.T.A. No. 3195/Mum/2018 held that Disallowance of a claim made by the assessee or a wrong claim by the assessee cannot by itself lead to levy of penalty u/s. 271(1)(c) of the Act

(17)
No.82 to 84/Ind/2017 held that Assessee claimed deduction u/s.
80IB(10) for reason that project approval certificate was filed and possession delivered, may-be technical formality of obtaining completion certificate was not satisfied, but, it would-not mean that assessee had claimed incorrect or false deduction. Mere non- satisfaction of condition of deductions would not mean that assessee had furnished incorrect return, which would make it liable for penalty. Lower authorities erred in levying penalty u/s.
271(1)(c) for disallowance of deduction u/s. 80IB(10) merely on technical ground
Superfine Hotels Pvt. Ltd., Jaipur
26
The ratio of the aforesaid decisions is fully applicable to the facts of the case of the assessee. In the case of the assessee also, the claim of deduction u/s 35 AD was bona fide and it was only postponed because of receipt of approval from Ministry of Tourism at a later stage effective from Assessment Year 2016-17. In view of this, the penalty deserves to be deleted. The Hon'ble Tribunal is humbly requested to delete the penalty imposed by the Learned Assessing Officer and sustained by the Learned CIT(A).
Ground No.4
In the facts and circumstances of the case the Learned CIT(A) has erred in confirming the penalty of Rs. 5,18,55,995/- u/s 271(1)(c) of the Income Tax Act, 1961 without considering that the assessee was eligible for depreciation otherwise and the deduction was claimed due to mistake of counsel which has been withdrawn during the assessment proceedings.

The discussion in ground No. 3 almost covers this ground. However, it is submitted that it is a case where deduction u/s 35 AD was claimed as the application of the assessee was pending for approval before the Ministry of Tourism. The assessee was under bonafide belief that the approval for the hotel building would be received and would be applicable for A.Y. 2015-16. However, the approval was delayed and was granted from A.Y. 2016-17. The claim was made on the advice of counsel of the assessee as he was sure that having met all the parameters, the approval from Ministry of Tourism was just a formality. There was no mistake on the part of the assessee. The claim of deduction u/s 35 AD was made under bonafide belief and on the advice of the counsel. It is submitted that there is no loss of revenue. The deduction is allowed for five years. Had it been allowed for A.Y. 2015-16, the same would have lasted upto 31/3/2020. Since the same has been granted in A.Y. 2016-17, the same would last up to 13/3/2021. In any case, deduction is available for a period of five years. So, there is no loss to revenue. In these circumstances, when approval was not in the hands of the assessee and the claim became redundant on account of delay in the approval, the assessee cannot be charged with concealment of income or for furnishing inaccurate particulars of income. The penalty levied deserves to be deleted.
Ground No. 5 -
The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.
Superfine Hotels Pvt. Ltd., Jaipur
27
Not pressed.
The Hon'ble Tribunal is requested to decide the appeal in favour of the assessee by considering the above submission and oblige.”

On going through the above chart, we find that the first notice was issued to the assessee on 16.11.2022 and thereafter two more notices were issued and the last notice was issued on 18.07.2024 fixing the date of hearing on 05.08.2024. During this period from 16.11.2022 to 05.08.2024 the assessee has neither made any compliance to the notices not even once nor submitted any adjournment application. All the notices were delivered in the e-mail Id given by the appellant. On the given facts and circumstances, the ld. CIT (A) passed the ex-parte order. Therefore, taking into consideration the facts narrated above, we find no force in ground no. 1 of the assessee. The same is dismissed.
Ground No. 2 relates to challenging the order of AO in imposing penalty u/s 271(1)(c) and confirmed by the ld. CIT (A) as there was no specific satisfaction in the assessment order that whether it was a case of furnishing of inaccurate particulars of income or concealment of income.
8. We have heard the rival contentions, perused the material on record and gone through the written submission submitted before us. A search was conducted on 30.10.2014 on the assessee group. The AO completed the assessment u/s 153B(1)(b)/143(3) of the Income Tax Act, 1961 on 15.12.2016 determining total income at Rs. 75,620/- as against returned
Superfine Hotels Pvt. Ltd., Jaipur
29
income of (-) Rs. 15,24,86,880/- inter-alia making the addition of Rs.
15,25,62,502/- on account of disallowing the claim made by the assessee u/s 35AD of the Income Tax Act, 1961. In this case, the assessee company constructed a hotel building and applied to Central Government for approval as a three star hotel during F.Y. 2014-15, when the hotel building stood constructed. However, the approval was received later on on 16/03/2016 effective for the period 14/3/2016 to 13/3/2021 (five year period). As the assessee was under a bonafide belief and expected approval with effect from 1/4/2014 to 31/3/2015, so deduction u/s 35AD was claimed. However, since the approval was w.e.f. 14/3/2016, the AO disallowed the claim of deduction u/s 35AD and made an addition of Rs.
15,25,62,505/- to the income of the assessee. Accordingly, the AO also initiated penalty proceedings u/s 271(1)(c) observing “ penalty u/s 271(1)(c) of the IT Act is being initiated separately for furnishing inaccurate particulars of income/concealed income". Subsequently a penalty of Rs. 5,18,55,995/- has been imposed u/s 271(1)(c) vide order dated 27.03.2022. 8.1
Before us, the ld. A/R has submitted that in the show cause notice issued under section 274 read with section 271 read with section 271(1)(c) of the IT Act the AO has not specified the ground for initiation of penalty proceedings whether it is for concealment of income or Superfine Hotels Pvt. Ltd., Jaipur
30
furnishing inaccurate particulars of income. The ld. A/R has referred to the notice at page 6 of the Written Submission and further notices issued under section 271(1)(c) as per Paper Book pages 1 to 9 and submitted that the AO has not specified the ground of initiation of penalty proceedings in the show cause notices and, therefore, in view of the various decisions on this point, the show cause notice issued by the AO is illegal and consequential order passed under section 271(1)(c) is also not sustainable in law as there was no specific satisfaction in the order of the AO whether it was a case of furnishing of inaccurate particulars of income or concealment of income. He has referred to the decision of Hon’ble
Karnataka High Court in the case of CIT vs. Manjunatha Cotton &
Ginning Factory, 359 ITR 565 (Kar.) as well as the decision of Hon’ble in the show cause notice, the proceedings initiated by the AO for levy of penalty are not valid and consequently the order passed by the AO under section 271(1)(c) is also not sustainable in law. Hence the ld. A/R has pleaded that the penalty order passed by the AO is liable to be quashed.

We thus find that the Assessing officer in the aforesaid show-cause notice dated 15.12.2016 has initiated the penalty proceedings without mentioning anything about the default of the assessee whether it is "for concealed the particulars of income or furnished inaccurate particulars of such income". Subsequently, while passing the penalty order, the Superfine Hotels Pvt. Ltd., Jaipur
33
Assessing officer has levied penalty for furnishing inaccurate particulars of income. We therefore find that though the Assessing officer has not initiated the penalty on any specific charge, however, while levying the penalty, the Assessing officer has levied the penalty for furnishing of inaccurate particulars of income.
8.3
If an addition is made by the AO then said action of the AO may lead to either furnishing of inaccurate particulars of income by the assessee or concealment of the particulars of income and therefore in such a situation if the AO proposed to initiate the proceedings u/s 271(1)(c) then he is required to specify whether the assessee has committed the default of concealment of particulars of income or furnishing inaccurate particulars of income. We find that the Assessing Officer has not specifically stated in the show cause notice as what default was committed by the assessee. The question of the specifying the default arises when the addition in the income of the assessee is made by the AO and consequently the AO proposed to initiate the proceedings for levy of penalty u/s 271(1)(c) in respect of such an addition made to the income of the assessee. It is the duty of the AO to specify such addition/disallowance resulting in increase of total income whether it was on account of concealment of particulars of income or due to furnishing
Superfine Hotels Pvt. Ltd., Jaipur
34
inaccurate particulars of income. The AO has to specify the default for which he proposed to initiate the proceedings for levy of penalty u/s 271(1)(c). It is pertinent to note that the addition made by the AO during the assessment proceedings may be either due to concealment of particulars of income or due to furnishing of inaccurate particulars of income. Since it is the action of the AO which resulted addition in the total income therefore, it is duty of the AO to specify the default of the assessee for which such addition in the total income is made and consequently the levy of penalty is proposed. This requirement of specifying the default or ground to initiate the proceedings for levy of penalty is not in dispute as held by the various Hon’ble High Courts in the decisions relied upon by the ld. AR of the assessee. The very object and purpose for specifying the default is to make the assessee known about the ground on which the penalty is intended to be imposed and to meet the case of the department that the conditions stipulated u/s 271(1)(c) do not exist. Therefore, specifying the default in the show cause notice is mandatory in the sense that the assessee must know which default he has committed and should have full opportunity to meet the case of the department. Thus there is no quarrel on the precedence as cited and relied upon by the ld. AR. The Hon’ble Rajasthan High Court in case of Shweta Construction Company Pvt. Ltd. in DB IT Appeal No.
Superfine Hotels Pvt. Ltd., Jaipur
35
534/2008 order dated 06.12.2016, has held that the Assessing officer has to give a specific notice while initiating the penalty proceedings itself. In the instant case, the show-cause notice is not specific as to the charge for levy of penalty which shows non-application of mind by the Assessing officer.
8.4
We, therefore, taking into consideration the above narrated facts and, respectfully following the decisions of various Hon’ble High Courts including the Hon’ble Juri ictional Rajasthan High Courtreferred above, and the coordinate benches of the Tribunal, the penalty order cannot be sustained and the penalty so levied is directed to be deleted.
9. Since we have deleted the penalty on the legal ground, we do not propose to go into the other grounds raised by the assessee.

In the result, appeal of the assessee is partly allowed.

Order pronounced in the open Court on 22/04/2025. ¼ jkBkSM+ deys'k t;UrHkkbZ ½

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(RATHOD KAMLESH JAYANTBHAI)

(Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur fnukad@Dated:- 22/04/2025
*Santosh
आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
Superfine Hotels Pvt. Ltd., Jaipur
36
1. vihykFkhZ@The Appellant- Superfine Hotels Pvt. Ld. Jaipur.
2. izR;FkhZ@ The Respondent- DCIT, Circle-6, jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत.
6. xkMZ QkbZy@ Guard File { ITA No. 1502/JPR/2024}

vkns'kkuqlkj@ By order

सहायक पंजीकार@Aेेज. त्महपेजतंत