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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal of assessee is arising out of the order of the Commissioner of Income Tax (Appeals)]-16, Mumbai, in short CIT(A), in appeal No. CIT(A)-16/IT-09/ITO 9(3)(3)/2017-18 vide order dated
27.12.2017. The penalty was levied by Income Tax Officer, Ward 9(3)(3), Mumbai vide order dated 31.03.2017 under section 271(1)(c) of the Act.
At the outset, the learned Counsel for the assessee took us through the additional ground raised in regard to the issue of jurisdiction that the AO has initiated penalty for both the limbs i.e. for concealment of particulars of income as well as for furnishing of inaccurate particulars of income. This appeal relates to levy of penalty by the AO under section 271(1)(c) of the Act in respect of claim of advertisement expenditure disallowed by AO under section 69C of the Act amounting to ₹ 2,32,58,826/-. The AO levied the penalty and CIT(A) confirmed the penalty. The additional ground raised by assessee read as under: -
“The Ld. CIT(A) erred in not holding that the notice issued by Ld. Assessing Officer under section 274 read with section. 271(1)(c) was bad in law as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income.”
We noted that the above ground raised by assessee is purely jurisdictional and goes to the root of the mater and hence in view of the decision of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383 (SC), we admit this ground and will adjudicate the same.
The learned Counsel for the assessee first of all took us through the notice issued under section 274 read with section 271 of the Act dated 28.02.2014, which is enclosed at assessee’s paper book No. 2 No.
The learned Counsel for the assessee drew our attention and stated that this notice is on printed form wherein both limbs of section 271(1)(c) of the Act are mentioned but none is strike off by the Assessing Officer. Further, the learned Counsel for the assessee took us through the assessment order and the penalty order levying the penalty under section 271(1)(c) of the Act. The learned Counsel for the assessee stated that the very initiation of penalty is on both limbs and even levied by the AO is on both limbs. The learned Counsel for the assessee took us through the penalty order dated 31.03.2017 and stated that the AO made up his mind that the assessee has furnished inaccurate particulars of income as well as concealed the particulars of income. For this he referred to Para 6 of the penalty order which read as under: -
“6. The explanation offered by the assessee with regard to the above wrong claims is not bonafide and unsubstantiated. The details supplied in the return of income are thus proved to be not accurate, not exact or correct, not according to truth or erroneous. It is an attempt on the part of the assessee to conceal taxable income and evade legitimate taxes due to the Revenue and clearly falls within the ambit of furnishing of inaccurate particulars of income leading to concealment of particulars of income. The assessee has not been able to substantiate as to how its claim was bonafide.”
Further, he referred to Para 9 of the penalty order which read as under: -
“9. As discussed in foregoing paragraphs, the assessee failed to substantiate its claim and due to this failure on the part of the assessee the AO had made the aforesaid addition to the total income of the assessee. The default committed by the assessee is therefore covered by part B of Explanation-1 to Sec 271(1)(c). Therefore, according to the provisions of explanation 1 to section 271(1)(c), the assessee has to be deemed to have concealed it’s income by filing inaccurate particulars of its income, for the purpose of section 271(1)(c). the assessee is therefore deemed to have concealed the particulars of its income.” and finally, he narrated that the final conclusion of the AO was that the assessee has concealed the particulars of income and also filed inaccurate particulars of income which is mentioned in Para 11 final finding as under: -
“In such a situation, it is quite clear that the assessee has concealed the particulars of income and filed inaccurate particulars of his income which had been detected during the assessment proceedings.”
We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the AO in the assessment order has initiated the penalty proceedings for a specific charge i.e. for furnishing of inaccurate particulars of income, whereas he has levied the penalty for concealment of particulars of income while levying penalty
271(1)(c) of the Act vide order dated 31.03.2017. It means that the AO is not sure about the charge on which he his levying the penalty or initiating the penalty. We find that this issue is squarely covered by the decision of Hon’ble Bombay High Court in the case of CIT vs Samson Perinchery (2013) 392 ITR 4 (Bom),. We noted that at the time of hearing the learned Sr. DR has not doubted the facts of the case but pointed out that there is due application of mind by the AO which can be demonstrated from the discussion in the assessment order and the order of CIT(A), wherein if discussed the reasons for the disallowance of depreciation, he has recorded the satisfaction that the penalty proceedings are initiated under section 271(1)(c) of the Act for concealing of particulars of income as well as for furnishing of inaccurate particulars of income. We are of the view, that the Sr. DR has admitted to demonstrate the application of mind by the AO but it is no difference in as much as that the AO in assessment order as initiated the penalty proceedings for both the charges i.e. for furnishing of inaccurate particulars of income as well as concealment of particulars of income. We find that this issue is squarely covered by the decision of Hon’ble Bombay High Court in the case of Samson Perinchery (supra) wherein it is held as under: -
“The impugned order of the Tribunal deleted the penalty imposed upon the Respondent Assessee. This by holding that the initiation of penalty under Section 271(1)(c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing inaccurate particulars of income carry different connotations. Therefore, the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non application of mind on the part of the Assessing Officer while issuing the penalty notice.”
Respectfully, following the Hon’ble High Court, we delete the penalty on this jurisdictional issue. Hence, we need not to go into the merits of the case.
In the result, the appeal assessee is allowed.