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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI MANOJ KUMAR AGGARWAL
PER MAHAVIR SINGH, VICE PRESIDENT
This appeal is filed by the assessee against the order of CIT(A)-7, Mumbai dated 23.01.2018 for assessment year 2009-10, which in turn has arisen from order of Assessing Officer passed under Section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) dated 30.03.2014.
At the outset, learned counsel for the assessee stated that this is a recalled matter and the Tribunal recalled this matter on the ground that assessee, on the very same date, sought adjournment on the ground that 2 Nishith M. Desai assessee was in the process of submitting the Paper Book and also filing additional grounds challenging the very levy of penalty under Section 271(1)(c) of the Act. The learned counsel drew our attention to the order in M.A No. 560/Mum/2019 for assessment year 2009-10 dated 11.11.2019, wherein the relevant para reads as under :-
“2. The learned counsel for the assessee submits that the assessee’s counsel, on the date of hearing, had sought adjournment on the ground that the assessee was in the process of submitting a Paper Book and was also in the process of filing additional grounds challenging the jurisdiction for levy of penalty. He further submitted that the Bench, on that date, relying upon the judgment in the case of Reliance Petroproducts Pvt. Ltd., 322 ITR 158, had orally pronounced that the penalty will be deleted. However, in the order so passed, the entire penalty has not been deleted.”
The learned counsel, in view of the above, stated that assessee has raised additional ground vide application dated 15.01.2020, which reads as under :-
1. The Asst. Commissioner of Income Tax grossly erred in levying penalty under section 271(1)(c) of the Income Tax Act, 1961 without specifying as to which limb of the section applies and has levied penalty in a vague manner on both counts i.e. concealment of income and furnishing of inaccurate particulars of income.
The learned counsel further stated that the notice issued by the Assessing Officer under Section 274 r.w.s. 271(1)(c) of the Act mentions both limbs, i.e. ‘concealment of particulars of income’ and ‘furnishing of inaccurate particulars of income’. He stated that the Hon'ble Jurisdictional High Court in the case of CIT vs Samson Perinchery, 392 ITR 4 (Bom.) held that the Assessing Officer shall specify the charge for levying of penalty under Section 271(1)(c) of the Act and that both limbs cannot be mentioned. Hence, the additional ground raised
3 Nishith M. Desai goes to the root of the matter and same should be adjudicated. He also stated that no new facts are to be brought on record and the entire material is available on the record of Assessing Officer and even the same is enclosed in assessee’s Paper Book. The learned counsel further stated that this being a legal issue can be raised before the Tribunal in view of the decision of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT, 229 ITR 383 (SC).
On the other hand, the learned Senior DR, Ms. Kavita P. Kaushik agitated the admission of additional ground and strongly stated that this ground was never raised before the lower authorities and facts are not available on record. When a query was put to her, what facts are required for adjudication which are not available on record, she could not answer. Hence, we are of the view that the relevant facts relating to the issue are available on record, i.e. the notices issued under Section 271(1)(c) r.w.s. 274 of the Act, which will determine the issue. This being a legal issue, we admit it and will adjudicate.
5. The learned counsel drew our attention to the notice issued under Section 274 r.w.s. 271(1)(c) of the Act dated 30.12.2011 wherein inappropriate words or paragraphs were not deleted. The relevant portion in the notice cited by the learned counsel reads as under :-
“*have concealed the particulars of your Income or ........................ furnished inaccurate particulars of such Income.”
6. The learned counsel further took us through the show cause notice no. F.No. ACIT-11(3)271(1)(c)/2013-14 dated 14.02.2014 issued under Section 271(1)(c) of the Act by ACIT-11(3), Mumbai wherein the Assessing Officer was “As per order u/s 143(3) dated 30/12/2011, notice u/s 271(1)(c) was issued for concealment of particulars of your income/furnishing inaccurate particulars for A.Y. 2009-10.”
He also drew our attention to the relevant portion wherein the penalty is levied, which reads as under :-
“The ground of appeal of promotion expenses depreciation claimed on furniture and the office equipments motor car expenses, electricity expenses, general office expenses, rent, rates and taxes and telecommunication expenses is held by the CIT(A), vide order CIT(A)-2/IT-309/2011-12 dtd. 11/01/2013.
In this connection you are required to show cause as to why penalty u/s 271(1)(c) should not be imposed.”
7. The learned counsel stated that penalty now remains only on two items, i.e. gift to Mrs. Shefali Garodia, C.A for payment made for purchase of Honda Civic car amounting to Rs.14,43,735/- and another amount of Rs.1,00,00,000/- on account of business promotion expenses.
The learned counsel further drew our attention to the assessment order wherein the penalty was initiated simpliciter under Section 271(1)(c) of the Act and assessee was not made aware of the specific charge. However, the CIT(A) restricted the penalty on the two items, i.e. gift of car to Mrs. Shefali Garodia being business promotion expense of Rs.14,43,735/- and payment of Rs.10,00,000/- to Aarusha Homes Pvt. Ltd. debited as business promotion expenses. The learned counsel stated that on the issue of jurisdiction, i.e. non-
5 Nishith M. Desai specification of charge for levy of penalty, whether the penalty is for ‘concealment of particulars of income’ or for ‘furnishing of inaccurate particulars of income’, the Assessing Officer must be sure and this proposition has been set-up by the Hon'ble Bombay High Court in the case of Samson Perinchery (supra). The learned counsel referred to the relevant findings of the Hon'ble High Court as under :-
“4. The impugned order relied upon the following extract of Karnataka High Court's decision in CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565 (Karn) to delete the penalty:—
"The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus, the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or it is as case of furnishing of inaccurate particulars. The apex court in the case of T. Ashok Pai v. CIT reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of CIT v. Manu Engineering Works [1980] 122 ITR 306 (Guj) and the Delhi High Court in the case of Virgo Marketing P. Ltd. [2008] 171 Taxman 156 (Delhi), has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind."
The grievance of the Revenue before us is that there is no difference between furnishing of inaccurate particulars of income and concealment of income. Thus, distinction drawn by the impugned order is between
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 (SC) [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(1)(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(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.
Therefore, the issue herein stands concluded in favour of the respondent- assessee by the decision of the Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra). Nothing has been shown to us in the present facts which would warrant our taking a view different from the Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra).”
When these facts were confronted to the learned Senior DR, she only stated that the issue has been deliberated by the Hon’ble Supreme Court in the case of MAK Data (P.) Ltd. vs CIT, 358 ITR 593 (SC) and hence, the decision of Hon'ble Bombay High Court cannot be followed.
We have heard the rival contentions and gone through the facts and circumstances of the case. Admitted facts from the above reproduced notices is clear; the Assessing Officer is not sure about the charge, i.e. whether notice under Section 274 r.w.s. 271(1)(c) of the Act is issued for ‘concealment of 7 Nishith M. Desai particulars of income’ or for ‘furnishing of inaccurate particulars of income’. Once the Assessing Officer himself is not sure, we note that the issue is clearly covered by the decision of Hon'ble Bombay High Court in the case of Samson Perinchery (supra). Respectfully following the decision of Hon'ble Bombay High Court, we allow the appeal of assessee.
In the result, appeal of assessee is allowed.
Order pronounced in the open court on 27th January, 2020.