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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 21.06.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.
The only issue raised by the assessee is against the order of Ld. CIT(A) upholding the levy of penalty of Rs.18,54,000/- by the AO under section 271(1)(c) of the Act.
The facts in brief are that the assessee filed the return of income on 28.09.2011 declaring income of Rs.5,69,37,620/-.
2 Shri Nikhil P. Gandhi The assessment was framed under section 143(3) read with section 153A of the Act on 27.03.2014 assessing the income at Rs.6,30,70,825/- by making addition of Rs.60 lakhs. In the original return, the assessee declared the income from other sources of Rs.1,64,705/- whereas in the return filed in response under section 153A of the Act ,the income from other sources has been declared at Rs.61,64,705/- and thus there was a difference of Rs.60 lakhs and accordingly penalty proceedings under section 271(1)(c) of the Act were initiated in the assessment order for furnishing of inaccurate particulars of income. The notice dated 28.03.2014 was issued under section 271(1)(c) of the Act without striking off the irrelevant part of the notice. In other words, the notice was issued by mentioning both the limbs i.e. concealment of income as well as for furnishing of inaccurate particulars of income and finally after considering the reply of the assessee the AO imposed a penalty of Rs.18,54,000/- being 100% of tax sought to be evaded by observing that assessee has concealed the income and furnished the inaccurate particulars of income.
In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by upholding the order of AO on the ground of levy of penalty and hence the assessee is in appeal before us.
After hearing both the parties and perusing the material on record, we observe that the penalty proceedings were initiated in the assessment order passed under section 143(3) read with section 153A of the Act dated 27.03.2014. The penalty proceedings were initiated towards Rs.60 lakhs declared by the 3 Shri Nikhil P. Gandhi assessee in the return filed under section 153A of the Act under the head income from other sources which was not declared in the original return of income. The assessee has filed the copy of the notice dated 28.03.2014 wherein we observe that AO has not indicated one of the two limbs of the penalty on which the penalty is proposed to be levied and thus we find that assessee has not been confronted with the particular charge on which the penalty was proposed to be levied thereby denying the assessee an opportunity to respond to the penalty. In such a scenario the penalty as levied by the AO and affirmed by ld CIT(A) can not be sustained. The case of the assessee is squarely covered by the following decisions: a) CIT Vs SSA’s Emerald Meadows(SC) (2016) 73 Taxmann.com 241 Karnataka – SLP dismissed as reported in (2016) 73 Taxmann.com 248 (SC) b) CIT vs. Manjunath Cotton and Ginning Factory (2013) 359 ITR 565 (Kar.) c) CIT vs. Shri Samson Perinchery (2017) 392 ITR 4 (Bom.) d) CIT vs. Mrs. Piedade Perinchery ITXA No.1310 of 2014 order dated 10.01.2017 (Bom. – HC)
The Hon’ble Bombay High Court in the Case CIT Vs Shri Samson Perinchery & CIT vs. Mrs. Piedade Perinchery (supra) has held that penalty can not be levied where the AO has issued notice in a machanical manner without striking off the redundant limb or without mentioning the limb on which the penalty was proposed to be levied. In view of the above discussion and in the light of the ratio laid down by the Hon’ble Bombay High Court, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the penalty.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 08.11.2019.