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Facts
The assessee appealed against a penalty of Rs.3,03,03,876/- levied under section 271(1)(c) for alleged concealment and furnishing of inaccurate particulars of income. The quantum issue concerning bank account credits offered to tax under section 68 had already attained finality.
Held
The Tribunal held that the penalty was not sustainable in law as the penalty notice failed to specify whether it was for concealment or inaccurate particulars, which is a mandatory requirement. Additionally, the subjective nature of the section 68 issue and the acceptance of the assessee's return income further weakened the penalty.
Key Issues
Validity of penalty under section 271(1)(c) when the show cause notice lacks specificity regarding concealment or inaccurate particulars, and the underlying issue is subjective.
Sections Cited
271(1)(c), 68, 153A
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Income Tax Appellate Tribunal, DELHI BENCH: ‘F NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA
ORDER
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2008-09, arises against the Commissioner of Income Tax (Appeals)-IV [in short, the “CIT(A)”], Kanpur’s order dated 12.04.2018 passed in case no. CIT(A)-IV/KNP/10371/DCIT-CC/Noida/2016-17/58, involving proceedings under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
It transpires during the course of hearing that the assessee/appellant is aggrieved against both the learned lower authorities’ action holding him to have concealed and furnished inaccurate particulars of taxable income whilst levying the impugned section 271(1)(c) penalty of Rs.3,03,03,876/- in the Assessing Officer’s order dated 31.03.2016 as upheld in the lower appellate discussion.
That being the case, we first of all make it clear that the impugned quantum issue of the assessee’s credits in the bank account which stood offered to tax under section 68 under the head “income from other sources” in his return as well as computation submitted on 22nd March, 2016 in response to section 153A notice issued after the departmental search action dated 09.10.2013. There is thus no dispute that the quantum proceedings in the assessee’s case have attained finality.
We now advert to the impugned penalty proceedings. The Revenue could hardly dispute that even at para 4 (page 5) of the lower appellate discussion, the learned CIT(A) has not rebutted the assessee’s stand that the Assessing Officer’s penalty notice nowhere specified as to whether it was an instance of concealment
2 | P a g e or furnishing of inaccurate particulars of income; as the case may be, which has been held as mandatory limb in the penalty show- cause notice as per the case laws PCIT Vs. Sahara India Life Insurance Co. Ltd. (2021) 432 ITR 84 (Del.) and PCIT Vs. Gopal Kumar Goyal (2023) 153 taxmann.com 534 (Del.). This is indeed coupled with the fact that not only the assessee’s return income itself stood accepted but also such an issue of section 68 unexplained cash credits is highly a subjective one requiring appreciation of the entire evidence tendered before the departmental authorities thereby not attracting section 271(1)(c) of the Act stipulating the foregoing twin limbs as per the CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) 5. Faced with this situation, we are of the considered view that both the learned lower authorities’ action levying the impugned section 271(1)(c) penalty in the assessee’s case is not sustainable in law. The same stands deleted in very terms therefore.