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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI
Before: SHRI N.S.SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant, Sunita Agarwal, by filing the present appeal, sought to set aside the impugned order dated 18/02.2016 passed by Ld. CIT(A)- Moradabad qua the assessment year 2007-08 confirming the penalty levied u/s 271(1)(c) on the grounds inter alia that :- “1. That the Ld. CIT(Appeals) has erred in upholding the penalty of Rs. 25,000/-, imposed by the AO, invoking the provisions of sec. 271(1)(c) of the IT Act, 1961. 2. That the Ld. CIT (Appeal) has erred in upholding the penalty of Rs. 25,000/-, without looking into facts and circumstances of the case and relying on irrelevant judicial pronouncements. 3. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.” 2. Briefly stated that facts necessary for adjudication of the controversy at hand are : on the basis of completed assessment u/s 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) a total income of Rs. 17,15,945/- was assessed by making addition of Rs. 2,12,000/- u/s 56(vi) . During assessment proceeding it was noticed by Assessing Officer that the assessee has shown credit of Rs. 2,12,000/- in her ledger on account of gift received on marriage anniversary. The Ld. CIT(A) in the quantum appeal allowed the relief of Rs. 1,38,000/- out of the addition of Rs. 2,12,000/-, however, confirmed the addition of Rs. 74,000/-. The AO initiated the penalty proceedings u/s 271(1)(c) on the ground that the assessee has concealed her income. Declining the submission raised by the assessee AO proceeded to the levy penalty of Rs. 25,000/- u/s 271(1)(c) of the Act.
Assessee challenge the penalty order by way of filing the appeal before Ld. CIT(A) who has confirmed the penalty of Rs. 25,000/- by dismissing the appeal. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly assessee has made categorical entry in her ledger account that she has received an amount of Rs. 2,12,000/- as a gift on her marriage anniversary. It is also not in dispute that the AO has made the addition by disallowing the claim of the assessee u/s 56(vi) of the Act. It is also not in dispute that during appellate proceedings the Ld. CIT(A) has restricted the addition to Rs. 74,000/- by allowing the relief of Rs. 1,38,000/- to the assessee.
In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower Revenue authorities and arguments addressed by the ld. AR to the parties, the sole question arises for determination in this case is :-
“as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings while interpreting the provisions contained u/s 271(1)(c) of the Act.”
First of all, We have noticed that AO has not recorded valid satisfaction in order to initiate the penalty proceedings u/s 271(1)(c). Perusal of para 4.1 on page 3 of the assessment order shows that the Assessing Officer has merely recorded that “action u/s 271(1)(c) is initiated on this score”.
From the entire assessment order it is not discernible as to under which of the limb of Section 271(1)(c) the penalty is being initiated. Even in the penalty order the Assessing Officer has failed to point out “as to whether the penalty has been levied for concealment of particular of income or for furnishing inaccurate particulars of income” by the assessee.
It is settled principle of law that in order to initiate the penalty proceedings the Assessing Officer is required to make the assessee aware as to whether there is a concealment of income or furnishing of inaccurate particulars of income on her part, which is entirely missing in this case.
Hon’ble Karnataka High Court in a case cited as CIT vs. Manjunatha Cotton and Ginning Factory & Ors. 359 ITR 565 (Karn.) confirmed by the Hon’ble Supreme Court, held that when the assessee has not been specifically charged as to whether there is concealment of income or furnishing inaccurate particulars of income on her part, the penalty u/s 271(1)(c) is not sustainable.
Further more merely making inaccurate claim does not amount to furnishing of inaccurate particulars. When the assessee has categorically claimed that the amount of Rs. 2,12,000/- has been received by her as a gift on her marriage anniversary, which has been disallowed by the AO but subsequently partly accepted by Ld. CIT(A) who has given relief to the extent of Rs. 1,38,000/-, it cannot be said that it is furnishing of inaccurate particulars of income. Reliance in this regard is placed on decision rendered by Hon’ble Apex Court cited as Reliance Petro Pvt. Ltd. 322 ITR 158 (SC).
So, following the law laid down by Hon'ble High Court, we are of the considered view that when the assessee has not been specifically made aware of the charges leveled against her as to whether there is a concealment of income or furnishing of inaccurate particulars of income on her part, the penalty u/s 271(1)(c) of the Act is not sustainable.
In view of what has been discussed above AO has failed to make out of the case of concealment of income or furnishing of inaccurate particulars of such income by the Assessee so as to attract the provisions contained u/s. 271(1)(c) of the Act, hence penalty levied by the AO and confirmed by CIT(A) is hereby deleted. Consequently appeal filed by the assessee is hereby allowed.
Order pronounced in open court on this 18th day of December, 2018.