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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY
आदेश/ ORDER
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-26, Mumbai ( in short ‘the CIT(A)’) dated 24/12/2018 for the assessment year 2010-11 confirming levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 ( in short ‘the Act’).
The brief facts of the case as emanating from records are : The assessee is a Co-operative Housing Society. The assessee in its original return of income failed to disclose rental income from M/s. Amma Lines. The assessee thereafter, filed revised return of income albeit beyond the due date, disclosing rental receipts of Rs.33,60,000/- from M/s. Amma Lines. The Assessing Officer in assessment proceeding under section 143(3) of the Act initiated penalty under section 271(1)(c) of the Act for concealing the particulars of income. The assessment was completed under section 143(3) of the Act vide order dated 07/11/2012. Thereafter, the Assessing Officer levied penalty of Rs.7,45,000/- under section 271(1)(c) of the Act vide order dated 13/03/2013 for furnishing inaccurate particulars for non-disclosure of rental receipts. Aggrieved, by the penalty order dated 13/03/2013, the assessee filed appeal before the CIT(A). The CIT(A) vide impugned order dismissed the appeal of assessee and confirmed the levy of penalty.
Ms. Kavita P. Kaushik, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld.Departmental Representative submitted that the assessee failed to disclose rental receipts in the original return of income. It was only after passing of the assessment order in assessment year 2009-10 that the assessee revised its return of income for assessment year 2010-11 beyond time limit disclosing rental income from M/s. Amma Lines. The Assessing Officer was justified in levying penalty under section 271(1)(c) of the Act for non-disclosure of rental income.
The submissions made by ld.Departmental Representative and orders of authorities below considered. A perusal of the assessment order passed under section 143(3) of the Act dated 07/11/2012 reveal that penalty for non-disclosure of rental income in the return of income was initiated on the ground of concealing particulars of income. The relevant extract of the assessment order wherein the Assessing Officer has initiated penalty is reproduced herein below.
“ 5............. As the assessee has failed to disclose rental receipts i.e. licence fees received from M/s. Amma Lines to an extent of Rs.2,80,000/- x 12 months = Rs.33,60,000/- and Lawn/Garden Hire charges of Rs.1,21,000/- the same is required to be added to its total income. Since the assessee has concealed particulars of its income, penalty proceedings under section. 271(1)(c) is initiated separately.” Thereafter, the Assessing Officer passed order under section 271(1)(c) of the Act levying penalty dated 13/03/2013. In order levying penalty, the Assessing Officer in para-1 and para 5.1 observed that the penalty proceedings under section 271(1)(c) of the Act were initiated for furnishing inaccurate particulars. The relevant extract of para-1 and para 5.1 of penalty order are reproduced herein below:
“.............Penalty proceedings u/s 271(1)(c) were initiated for furnishing inaccurate particulars of income for non disclosure of rental receipts amounting to Rs.24,20,999/-“
Xxx xxx 5.1 In the assessment order itself penalty proceedings u/s.271(1)(c) were initiated on the ground of furnishing of inaccurate particulars of income and issued notice u/s .274 r.w.s. 271(1)(c) of the I.T. Act, 1961. For the sake of brevity the concluding paragraph of the assessment order is reproduced as Under:”
A perusal of the assessment order and the order levying penalty shows that the Assessing Officer was not clear as to under which limb of section 271(1)(c) of the Act penalty is to be levied. There was ambiguity in the mind of Assessing Officer for invoking the correct limb of section 271(1)(c) of the Act while initiating penalty proceedings and at the time of levy of penalty. The Hon'ble Supreme Court of India in the case of T. Ashok Pai vs. CIT, 292 ITR 11 has held that ‘furnishing of inaccurate particulars’ and ‘concealment of income’ are two different expressions having different connotations. The Hon'ble Jurisdictional High Court in the case of CIT vs. Samson Perinchery reported as 88 taxamann.com 413 has held that order imposing penalty has to be made only on ground for which penalty proceedings have been initiated. The relevant extract of the same is reproduced as under:-
“6. . The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in T. Ashok Pai v. CIT[2007] 292 ITR 11/161 Taxman 340 [relied upon in Manjunath Cotton & Ginning Factory (supra)] - wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(l)(c) of the Act, carry different meanings/connotations. Therefore. the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(l)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice.”
In the instant case, the Assessing Officer has initiated penalty for ‘concealment of particulars’ and has levied penalty for ‘furnishing inaccurate particulars’. The Assessing Officer has levied penalty under section 271(1)(c) of the Act, for the reason different from the reason for initiating penalty. The reason for initiating penalty and reason for levy of penalty has to be consistent. If there is ambiguity with regarding to limb for which penalty is initiated and levied, the penalty order is unsustainable. In the present case, the manner in which penalty has been levied is clearly in violation of the law expounded by the Hon'ble Supreme Court of India and the Hon'ble Jurisdictional High Court. Therefore, penalty levied under section 271(1)(c) of the Act is quashed.
In the result, the impugned order is quashed and appeal by the assessee is allowed.
Order pronounced on Tuesday the 24th day of November, 2020.