RADHEY SHYAM,REWARI vs. ITO, WARD-2, REWARI

The only grievance of the assessee is that the CIT(A) erred in upholding the penalty levied u/s 271 (1) (c) of the Act.

The roots for the levy of penalty lie in the assessment order dated 18.02.2016 framed u/s 143 (3) of the Act. In the assessment proceedings the Assessing Officer found that some cash has been deposited in the bank account of the assessee. The Assessing Officer was of the opinion that the cash deposit of Rs.28.85 lacs in savings bank account with PNB Bank, Gurgaon remained unexplained. The Assessing Officer treated the same as unexplained cash deposit and initiated the penalty proceedings for concealment of the particulars of income and furnishing of inaccurate particulars of income.

Accordingly notice u/s 274 r/w section 271 of the Act was issued and served upon the assessee it was a proforma notice without specifically mentioning whether the proposed penalty is for concealment of income or for filing inaccurate particulars of income. Penalty of Rs.819231/- was accordingly levied. Even in the penalty order the Assessing Officer has observed that the assessee has concealed particulars of income and furnished inaccurate particulars of income. This means that even at the time of levying the penalty the Assessing Officer was not sure whether it is a case of concealment of income or furnishing of inaccurate particulars of income. The Hon’ble Supreme Court in the case of CIT Vs. SSA Emerald Meadows vide order dated 05.08.2016 has held “Omission by the Assessing Officer to explicitly specify in the penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate particulars or for concealment of income makes the penalty order liable for cancellation”. Respectfully following the decision of Hon’ble Supreme Court (supra) the penalty so levied is directed to be deleted.

In the result, the appeal filed by the assessee is allowed.