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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
ORDER
PER VIKAS AWASTHY, JM:
This appeal has been filed by the assessee against order of the Commissioner of Income Tax (Appeals)-30, Mumbai ( in short ‘the CIT(A) ) dated 14/03/2016 confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 ( in short ‘the Act’).
Shri R.C. Jain appearing on behalf of assessee submitted that this is a recalled mater. The Tribunal had earlier vide order dated 10/10/2018 dismissed the appeal of the assessee on merits without adjudicating legal ground challenging validity of penalty proceedings raised as additional ground of appeal on 19/03/2018.
The ld.Authorized Representative of the assessee submitted that in the assessment proceedings disallowance of STT on speculative transactions was made. The penalty proceedings under section 271(1)(c) of the Act were initiated in respect of above said addition. The ld.Authorized Representative of the assessee submitted that a perusal of assessment order would show that penalty proceedings were initiated for filing inaccurate particulars of income. However, while levying penalty under section 271(1)(c) of the Act vide order dated 27/06/2014, the Assessing Officer mentioned both the charges of section 271(1)(c) of the Act i.e. furnishing of ‘inaccurate particulars’ and ‘concealment’. The Hon’ble Bombay High Court in the case of Samson Perinchery,392 ITR 04 has held that penalty is to be made only on ground for which penalty proceedings have been initiated. Penalty cannot be on a fresh ground of which the assessee has no notice.
On the other hand, Ms.Samatha Mullamudi, representing the Department defended validity of penaltyt proceedings. The ld.Departmental Representative submitted that the Tribunal has already confirmed the addition.
We have heard the submissions made by rival sides and have perused the orders of authorities below. The assessee in additional grounds of appeal
has challenged validity of penalty proceedings under section 271(1)(c) of the Act on the legal issue of recording of satisfaction.
6. A perusal of the assessment order shows that penalty under section 271(1)(c) of the Act has been levied by Assessing Officer by observing as under:-
“Also, the penalty proceedings u/s.271(1)(c) of the Act are hereby initiated for filing inaccurate particulars of income by way of incorrect deduction from non- speculative business income.” At the time of passing order under section 271(1)(c) of the Act the Assessing Officer observes as under:-
“The assessee is obliged to furnish the true particulars of his income and if he conceals the income, then the law prescribes levy of penalty. By furnishing the inaccurate particulars, the assessee has shown false result in the accounts. The falsity in the account thus has the element of concealment. In view of the above, I am satisfied that this is a fit case for levy of penalty under section. 271(1)(c) of the Income Tax act, 1961.” A bare perusal of satisfaction recorded for initiating penalty at the time of passing assessment order and the order levying penalty shows incoherence of charges invoked under section 271(1)(c) of the Act .
At the time of recording satisfaction the Assessing Officer has initiated penalty for furnishing ‘inaccurate particulars’. However, at the time of levy of penalty, the Assessing Officer mentioned both the charges of section 271(1)(c) of the Act i.e. furnishing ‘inaccurate particulars’ and ‘concealment’. The ambiguity in the mind of Assessing Officer with regard to charging for levy of penalty is apparent from the order dated 27/06/2014 passed under section 271(1)(c) of the Act. The Hon’ble Bombay High Court in the case of Samson Perinchery(supra) has held that penalty cannot be levied on a charge other than for which the satisfaction has been recorded. The relevant extract of the judgment reads 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 Pal v. CIT[20Q7] 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 light of above decision of Hon’ble Bombay High Court and the facts and circumstances of the case we find merit in the additional legal grounds raised by the assessee. The order passed under section 271(1)(c) of the Act dated 27/06/2014 suffers legal infirmity and, hence, is void. The subsequent proceedings arising therefrom are also vitiated. The additional grounds of appeal raised by the assessee are thus, allowed.
8. Since we have decided appeal of the assessee on the legal issue, the grounds raised by assessee on merits have become academic and hence, not deliberated upon.