GUPTA STEEL CORPORATION P.LTD,RAIPUR vs. ACIT CC 45, KALYAN

1. On the facts and circumstances of the case and in law, the learned CIT (A) has erred in upholding the penalty levied under section 271(1)(c) of the Income Tax Act, 1961.

We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record. At the outset of hearing, the ld. AR of the assessee submits that the ground of appeal raised by assessee is covered in assessee’s group case in Radhakrishna Roadways Pvt. Ltd. vs. ACIT in dated 14.03.2019, wherein similar penalty was deleted. On merit, the ld. AR of the assessee submits that the loss has been lapsed and the assessee has not claimed set off of such loss.

In other alternative submission, the ld. AR of the assessee submits that no specific charge was specified in the notice dated 28.03.2014, issue under section 274 r.w.s. 271(1)(c). The Assessing Officer while passing the assessment order has not specified under which limb of Clause (c) of section 271(1) the penalty was initiated. Accordingly, the ld. AR of the assessee submits that in absence of specific charge, the penalty levied by Assessing Officer is not sustainable in support of his submissions relied on the decision in assessee’s group case in Radhakrishna Vs ACIT (ITA No.3728/M/2017 dated 14.03.2019) , Bombay High Court in Samson Perinchary (ITA No. 1154 of 2014), Karnataka High Court in CIT Vs Manjunatha Cotton and Ginning Factory (359ITR 565 Kar) and Andhra Pradesh High Court in PCIT Vs Smt Baisetty Revathi [2017] 398 ITR 88 T& AP). 4. On the other hand, the ld. Departmental Representative (DR) for the revenue submits that the assessee has shown a non-genuine transaction for sale and purchase of share. It is a clear case of inaccurate particulars. 5. We have heard the rival submissions of both the parties and perused the material on record. We have also deliberated on the various decisions cited by learned AR. There is no dispute that the AO while passing the assessment order made disallowance of long term capital loss and treated the capital gain for the said year as Nil. No further appeal against such action/ treatment was 3 Mum 2017-M/s Gupta Steel Corporation Pvt. Ltd. filed by the assessee. The assessee before us has filed the copy of the ITR for AY 2018-19 wherein the assessee has shown the loss on account of long term capital loss has not been set off the assessee. Therefore, the assertion of the ld. AR for the assessee that there is no tax evasion on the part of the assessee as the disallowed loss has not been set off, which has been lapsed, is a convincible force. No contrary fact is brought by ld. DR for the revenue to our notice that the alleged disallowance of loss was set off by the assessee.

The undisputed facts are that the Assessing Officer while framing assessment u/s. 143(3) of the Act initiated penalty proceedings u/s. 271(1)(c) of the Act without mentioning whether the same relates to concealment of income or filing of inaccurate particulars of income. Similarly, the notice u/s. 271(1)(c) dated 28.03.2013 was also issued without striking off the inappropriate portion of the notice.

Even on legal issue raised by the assessee, we have noted that on similar case in assessee’s group case the coordinate bench of the Tribunal on similar set of facts in Radhakrishna Roadway Pvt Ltd Vs ACT (supra) deleted the penalty holding as under:

The Hon’ble Telangana & Andhra Pradesh in PCIT Vs Smt. Baisetty Revathi (supra) also held that when penalty proceedings are sought to be initiated by the revenue under section 271(1)(c), the specific ground which forms the foundation ,therefore, has to be spelt out in clear terms. Otherwise, an assessee would not have proper opportunity to put forth his defense. When the proceedings are penal in nature, resulting in imposition of penalty ranging from 100 per cent to 300 per cent of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into 5 Mum 2017-M/s Gupta Steel Corporation Pvt. Ltd. service and cannot be permitted to club both by interjecting one or between the two.

Considering the above factual and legal discussions narrated above, in our view the penalty order levied by assessing officer and confirmed by ld CIT(A) is not sustainable on factual as well as on legal aspect. Therefore, we direct the assessing officer to delete the entire penalty levied under section 271(1) (c) of the Act. In the result the grounds of appeal