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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI C.N. PRASAD & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-2, Pune [in short ‘CIT(A)’] and arises out of the penalty levied u/s 271(1)(c) of the Income Tax Act 1961, (the ‘Act’).
Though the case was fixed for hearing on 26.11.2019, 18.02.2020 and 06.03.2020, neither the assessee nor his authorised representative appeared before the Tribunal on the above dates. As there is repeated non compliance by the assessee, we are proceeding to dispose of this appeal after examining the materials available on record and after hearing the learned Departmental Representative (DR).
The background fact is that the assessee had entered into a tripartite agreement for transfer of plot no. 159, admeasuring 449.9 sq.mtr. at Ulwe on 05.03.2010 with Mr. Jayant Vishwanath Vaidya, having residence at 703, 7th Floor, Paradise Height, near Prabhat Talkies, Shivaji Marg, Thane (W). The sale consideration of this plot is Rs.12,59,720/-. However, the assessee had not offered the above capital gain dof Rs.12,59,720/- to tax on the said transaction. The Assessing Officer (AO) completed the assessment u/s 144 r.w.s. 147 of the Act on 29.02.2016 on short term capital gains of Rs.12,59,720/-. Simultaneously, in the assessment order, the AO initiated penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars by the assessee and thereby concealing the taxable income.
Thereafter, the AO levied a minimum penalty of Rs.2,90,370/- u/s 271(1)(c) on the reason that it is a fit case for levy of penalty for concealing the particulars of income to the extent of Rs.12,59,720/- as short term capital gains.
Aggrieved by the penalty order, the assessee filed an appeal before the learned CIT(A). We find that vide order dated 03.04.2018, the learned CIT(A) dismissed the appeal filed by the assessee on the reason that:
“ By not disclosing the transaction to the department, the appellant is clearly liable for concealing the particulars of income with regards to capital gains income on transfer of CIDCO plot. No compliance whatsoever was made before the Assessing Officer either at the stage of assessment or at the stage of penalty proceedings. There can be some amount of sympathy with regard to the arguments taken on the point of advanced age and not being well conversant enough, however, such ignorance and reasons cannot be an excuse for not following the rule of law. Even persistent non compliance at the stage of the Assessing Officer shows that the appellant did not care about following the provisions of the Act and it did not have any regard to various proceedings under the IT Act. In the light of aforesaid facts and discussions, I hold that the appellant is liable for concealing the particulars of his income under the head STCG amounting to Rs.12,59,720/- and the Assessing Officer has correctly levied 271(1)(c) to the tune of Rs.2,90,370/-. The order of the Assessing Officer is accordingly confirmed and the appeal is dismissed.”
Before us the learned DR submits that the learned CIT(A) has rightly dismissed the appeal filed by the assessee as the appellant had earned STCG on sale of leasehold rights on the plot allotted to him by CIDCO and he had not disclosed his transaction to the Department. Not only that, he did not file any return of income and even after issuance of notice u/s 148 of the Act, the assessee failed to respond and no return of income was filed. It is stated by him that the assessee did not have any case on merit on the point of quantum addition and therefore, he preferred not to file any appeal. Thus the learned DR explains that by not disclosing the transaction to the Department, the assessee is clearly liable for concealing the particulars of income with regard to capital gains income on transfer of CIDCO plot.
On the ground raised by the assessee that the AO failed to specify the leg of explanation to section 271(1)(c) that whether the appellant had concealed the particulars of income or had furnished inaccurate particulars of income and instead stated both in the notice issued u/s 271(1)(c), the learned DR relies on the decision in CIT vs. Smt. Kaushalya (1994)
75. Taxman 549 (Bom) and CIT vs. Maharaj Krishna (2001) 115 Taxman 301 (Delhi).
We have heard the learned DR and perused the relevant materials on record. In the case of Smt. Kaushalya (supra), it is held that mere mistake in language used or mere non-striking off of inaccurate portion cannot by itself invalidate notice u/s 274. However, it is held therein that the vagueness and ambiguity in notice dated 28.03.1972 had prejudiced the right of reasonable opportunity of assessee since he was unaware of exact charges he had to face.
In Maharaj Krishna (supra), the issue related to penalty u/s 271(1)(a) for late filing of return. It is held therein that where there was a clear direction of the AO in assessment order for initiation of penalty proceedings for late filing of return by the assessee, mere fact that unnecessary portion in first notice was not deleted and subsequently second notice was issued, would not invalidate the first notice.
In CIT vs. Samson Perincherry (ITA No. 953, 1097, 1154 & 1226 of 2014), the Hon'ble Bombay High Court has held:
"Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(1)(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." As mentioned earlier, the Assessing Officer (AO) completed the assessment u/s 144 r.w.s. 147 of the Act on 29.02.2016 on short term capital gains of Rs.12,59,720/-. Simultaneously, in the assessment order, the AO initiated penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars by the assessee and thereby concealing the taxable income. Thereafter, the AO levied a minimum penalty of Rs.2,90,370/- u/s 271(1)(c) on the reason that it is a fit case for levy of penalty for concealing the particulars of income to the extent of Rs.12,59,720/- as short term capital gains. Thus in the instant case, the ratio laid down by the Hon’ble Bombay High Court in Samson Perincherry (supra) is squarely applicable. Following the same, we delete the penalty of Rs.2,90,370/- levied by the AO u/s 271(1)(c) of the Act.
In the result, the appeal filed by the assessee is allowed.