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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA , & SHRI SAKTIJIT DEY
Aforesaid appeal filed by assessee is against the order dated 2nd September 2016, passed by the learned Commissioner of Income Tax (Appeals)–52, Mumbai, partly confirming the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 (for short "the Act") for the assessment year 2006–07.
2 Kasturben V. Faria
Brief facts are, the assessee is an individual. A survey under section 133A of the Act followed by a search and seizure operation under section 132(1) of the Act was conducted in the business and residential premises of Vinod Faria and Milan Dalal Group on 30th May 2008. On the basis of information gathered during the survey and search operation, proceeding under section 153C of the Act was initiated against the assessee. The assessee filed her return of income declaring total income of ` 1,07,265. Since, the return of income was filed belatedly, the Assessing Officer declared it invalid. Further, since the assessee did not comply to the notices issued under section 142(1) of the Act and did not furnish various informations called for, the Assessing Officer proceeded to complete the assessment to the best of his judgment under section 144 r/w section 153C of the Act. While doing so, the Assessing Officer estimated the business income at ` 2 lakh. Further, from the material on record, he found that the assessee has shown unsecured loan of ` 2,38,000. In the absence of any supporting evidence to prove the identity and creditworthiness of the creditors as well as the genuineness of the loan, the Assessing Officer treated the unsecured loan as unexplained cash credit and added back to the income of the assessee. The additions made by the Assessing Officer were confirmed by learned first appellate authority and the assessee did not contest the decision of learned Commissioner
3 Kasturben V. Faria (Appeals). On the basis of such additions, the Assessing Officer initiated proceeding for imposition of penalty under section 271(1)(c) of the Act alleging concealment of income and issued a show cause notice under section 274 of the Act. As alleged by the Assessing Officer, except filing a submission relying upon certain judicial precedents the assessee did not furnish any valid explanation against imposition of penalty. Thus, ultimately, the Assessing Officer proceeded to impose penalty @ 200% of the tax computed on the additions made, which worked out to ` 2,68,056. Challenging the levy of penalty under section 271(1)(c) of the Act, the assessee preferred appeal before the first appellate authority.
After considering the submissions of the assessee, learned Commissioner (Appeals) deleted penalty on the estimated addition of ` 2 lakh on account of business income. However, he sustained levy of penalty in respect of the addition made of ` 2,38,000, on account of unexplained cash credit. Besides the grounds raised on merits, the assessee has filed additional ground challenging the validity of the penalty order passed under section 271(1)(c) of the Act on the issue of non–mentioning of specific limb of section 271(1)(c) of the Act in the show cause notice for which the Assessing Officer intended to levy penalty.
4 Kasturben V. Faria
The learned Authorised Representative submitted, before the first appellate authority assessee had furnished an exhaustive written submission both on legal issue of validity of penalty order as well as on merit. She submitted, learned Commissioner (Appeals) has completely ignored assessee’s submissions on the legal issue of non–mentioning the specific limb of section 271(1)(c) of the Act in the show cause notice while disposing of assessee’s appeal. Further, she submitted, various submissions made by the assessee on merits also were not properly considered by learned Commissioner (Appeals). Thus, she submitted, imposition of penalty under section 271(1)(c) of the Act is not justified.
The learned Departmental Representative submitted, if assessee’s submissions on various issue have not been properly considered by learned Commissioner (Appeals), the better course would be to restore the issue to learned Commissioner (Appeals) for fresh adjudication.
We have considered rival submissions and perused material on record. As could be seen from the facts on record, in the penalty order passed under section 271(1)(c) of the Act, the Assessing Officer has made a specific allegation that the assessee had not furnished proper explanation before him to prove the fact that she has neither
5 Kasturben V. Faria concealed the income nor furnished inaccurate particulars of income. However, it is the contention of the learned Authorised Representative that before the Assessing Officer the assessee did furnish her explanation against levy of penalty. Further, on a perusal of the material on record, it is noticed that though the assessee had not raised specific ground before learned Commissioner (Appeals) regarding non mentioning of specific charge in the show cause notice issued under section 274 of the Act with regard to the exact offence committed by the assessee, however, in the written submissions filed before learned Commissioner (Appeals), the assessee has made submissions in this regard. It is further observed, learned Commissioner (Appeals) has not at all dealt with the aforesaid submission of the assessee. However, when called upon by the Bench to furnish the original notice issued under section 274 r/w section 271(1)(c) of the Act to the factually verify the claim of the assessee, both, learned Counsel for the assessee as well as learned Departmental Representative expressed their inability to furnish the original notice issued under section 274 r/w section 271(1)(c) of the Act. Thus, in the absence of original show cause notice, we are not in a position to render any conclusive finding on the issue as it requires factual verification. Moreover, it is also the contention of the learned Authorised Representative that learned Commissioner (Appeals) has 6 Kasturben V. Faria also failed to consider in proper perspective various submissions made by the assessee on merit as well. Thus, in the aforesaid premises, we are of the considered opinion that the issues relating to levy of penalty on the addition of ` 2.38 lakh made on account of unexplained cash credit needs to be restored back to the file of learned Commissioner (Appeals) for de novo adjudication after due opportunity of being heard to the assessee. Therefore, though, we admit the additional ground raised by the assessee, however, the issues are restored back to the file of learned Commissioner (Appeals) for fresh adjudication in the terms indicated above. Grounds are allowed for statistical purposes.