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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-1, Ahmedabad in Appeal no. CIT(A)-1/ITO, Wd. 1(1)(2)/10059/2018-19 vide order dated 27/08/2019 passed for the assessment year 2012-13.
The assessee has raised the following grounds of appeal:-
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“1. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming penalty of Rs. 67,053/- levied by the Assessing Officer u/s. 271(1)(c) of the I.T. Act. 2. The appellant craves to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” Total Tax Effect 67,053”
The brief facts of the case are that for the assessment year under consideration, in quantum proceedings, three additions were made by the Ld. Assessing Officer: firstly, disallowance of claim under section 54 of the Act (� 1,58,12, 584/-), secondly addition under section 68 for cash deposit in bank account (� 1,10, 000/-) and thirdly, difference in salary income (� 7000). The addition in respect of claim of section 54F of the Act amounting to � 1,58,12,584/- was deleted by Ld. CIT(Appeals) in appeal, while the other two additions were confirmed. The assessee did not file appeal against the order of Ld. CIT(Appeals) due to the small quantum of additions confirmed. On merits, the assessee’s arguments in respect of addition under section 68 of the Act are that firstly, the amount in question does not relate to the impugned assessment year, as noted by the AO in the assessment order, wherein the Ld. Assessing Officer mentioned that the loan was received on 04-04-2014 and not during the year consideration and secondly, the assessee had furnished the identity of the creditor as well as the confirmation from the creditor and hence in the instant set of facts, no additions under section 68 of the Act is called for. Regarding the second addition of � 7000/-, the assessee submitted that it was an inadvertent mistake, which was suo moto corrected by the assessee before the AO, and
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further looking at the quantum, no adverse inference should be drawn against the assessee. On the above facts, the Ld. Assessing Officer initiated penalty proceedings by issuance of notice under section 274 r.w.s 271(1)(c) of the Act with remarks that the assessee have “concealed the particulars of income or…… Furnished inaccurate particulars of such income”. The Ld. Assessing Officer levied penalty u/s 271(1)(c) of the Act, with the following observations:
“As stated in the show cause notice at para (ii) it is observed that there are cash deposits in the bank account of the assessee with Ahmedabad District Co-op. Bank on various dates. The assessee was requested to explain the sources of such cash deposits vide above show cause notice.
The assessee by his letter dated 09-03-2015, has submitted the details of source of cash deposited in the bank account. The submission of the assessee has been considered, however the same is not fully acceptable as regarding cash deposit of Rs. 2,10,000/- the assessee stated in his submission that same has been received from Shri Ishwarbhai M. Desai, though vide show cause notice dt. 16-02-2015 vide para ii the assessee was to submit necessary confirmation letter along with necessary documents to prove the sources of income in case of above mentioned person, the assessee again fail to submit the same in his submission on 03/2015 and no confirmation along with supporting evidences to prove the creditworthiness/genuineness has been submitted.
On scrutiny of the details submitted it is seen that out of the above cash deposit Rs. 2,10,000/- is loan taken from Ishwarbhai M. Desai on 04- 04-2014, it is not clarified whether the said amount was received in cash or by cheque. The assessee has not submitted anything to prove the genuineness and creditworthiness of the person from whom loan taken except that of a copy of Election Identity Card of Ishwarbhai. Since the assessee has not submitted any cogent supporting proof, it is presumed that the cash of Rs. 2,10,000/- deposited in bank are of assessee’s own funds from unexplained sources and added u/s. 68 of the I.T. Act to the income disclosed for the year under assessment. The addition in this respect comes to Rs. 2,10,000/-. Penalty proceedings u/s. 271(1)(C) of the I.T. Act is
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being initiated for filing of inaccurate particulars of income thereby concealing the income.”
The Ld. CIT(Appeals) confirmed the penalty under section 271 (1) (c) the Act.
The assessee is in appeal before us against the order of the Ld. CIT(Appeals) confirming the penalty under section 271(1)(c) of the Act imposed by the Ld. Assessing Officer. At the outset, counsel for the assessee submitted that there is no specific charge by the AO while initiating penalty proceedings, wherein it is mentioned assessee have “concealed the particulars of income or…… Furnished inaccurate particulars of such income”, which is indicative that penalty has been initiated by way of non application of mind and the Ld. Assessing Officer was unsure whether the assessee has concealed the particulars of income or has furnished inaccurate particulars of income. Further, the counsel for the assessee submitted that even on merits, since the quantum of additions was very low, the assessee decided not to file appeal against the order of the Ld. CIT(Appeals). However, in the instant set of facts, penalty is not sustainable since the assessee has furnished proof of both the identity of the creditor as well as filed confirmation of the creditor before the revenue authorities. Also, in respect of shortfall of � 7000/-in respect of salary income, the assessee has himself submitted the same before the A.O. that it was an inadvertent mistake on the part of the assessee. However, looking at the quantum of addition, no adverse inference should be drawn against the assessee. The Ld. Departmental Representative in response relied upon the observations of the Ld. CIT(Appeals) and the Ld. Assessing Officer.
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We have heard the rival contentions and perused the material on record. It is well-settled law on the subject as held by various Courts and Tribunals that Section 271(1)(c) penalty order is not sustainable if AO has not mentioned the specific charge in respect of which i.e. whether the penalty is being levied for “concealment of income” or “for furnishing inaccurate particulars of income”, which are distinct and separate offences. The Supreme Court in the case of CIT v. SSA'S Emerald Meadows[2016] 73 taxmann.com 248 (SC) held that where Tribunal, relying on a decision of Karnataka High Court, allowed appeal of assessee holding that notice issued under section 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated and High Court, on appeal, held that there was no substantial question of law arising for determination, SLP was to be dismissed. The Gujarat High Court in the case of New Sorathia Engineering Company v. CIT 155 Taxman 513 (Gujarat) held that where penalty order and order of Commissioner (Appeals) showed that no clear-cut finding had been reached as to whether penalty under section 271(1)(c) was being levied for concealment of particulars of income by assessee or whether any inaccurate particulars of income had been furnished, order of penalty could not be sustained. Again, the Ahmedabad Tribunal in the case of Pradeep Sugamchand Kawadiya Vs ITO (ITAT Ahmedabad)ITA No. 110/Ahd/2018 held the penalty is not sustainable when the same has been initiated and levied without specifying the alleged guilt committed by the assessee either for concealment of income or furnishing of inaccurate particulars of income. The Raipur Tribunal in the case of Deepak Kumar
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Patel v. ITO in ITA No. 173/RPR/2018 held that Section 271(1)(c) penalty is not sustainable if specific charge is not specified. In the facts of this case, we note that while initiating penalty proceedings, in the notice issued under section 274 r.w.s. 271(1)(c) of the Act, the AO has mentioned that assessee have “concealed the particulars of income or…… Furnished inaccurate particulars of such income”, which itself indicates that the assessee in the notice has not specified whether the penalty is being levied for concealment of particulars of income or for furnishing inaccurate particulars of income, which itself indicates that the AO is not sure about the specific guilt/offence committed by the assessee. In the case of Sachin Arora Vs. ITO (ITAT Agra) in ITA No. 118/Agra/2015, the Tribunal has held that concealment of income & furnishing of inaccurate particulars are distinct and separate charges. In view of the above, we are of the considered view, that since the notice initiating penalty proceedings itself does not contain a specific charge, in view of the decisions of the honourable Supreme Court in the case of SSA'S Emerald Meadows supra and the decision of the Gujarat High Court in the case of New Sorathia Engineering Company supra and various other decision cited above, the penalty proceedings are liable hereby to be set aside in the absence of specific charge. Further, even on merits, in respect of addition under section 68 of the Act on account of cash deposited in the bank, we note that the AO in the assessment order (at para 8) has made a specific noting that the amount in question was received on 04-04- 2014, which falls outside the purview of this assessment year under consideration. Further, in respect of addition of � 7000/-, the assessee has submitted that this was an inadvertent mistake in mentioning the incorrect salary figure, which was rectified before the AO during the course of
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assessment proceedings. It is well-settled proposition that penalty cannot be imposed merely because assessee accepted assessment order levying tax and interest, unless it is discernible from assessment order that addition was on account of concealment (CIT v. Manjunatha Cotton & Ginning Factory[2013] 35 taxmann.com 250 (Karnataka). Therefore, in view of the above facts and the legal position discussed above, we are of the considered view that in the instant set of facts, penalty proceedings are liable to be set aside.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 24-06-2022
Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 24/06/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद