SUBHASH SAKHARAM JADHAV,,PUNE vs. INCOME-TAX OFFICER,,

आदेश / ORDER आदेश आदेश आदेश

PER VIKAS AWASTHY, JM :

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-9, Pune dated 07-06-2016 for the assessment year 2011-12 confirming levy of penalty under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

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submitted, at the outset, that the penalty levied u/s.271(1)(c) suffers

from defect in recording satisfaction. The Assessing Officer while

recording satisfaction for levy of penalty u/s.271(1)(c) has mentioned

both the limbs of section 271(1)(c) of the Act. Thus, ambiguity in not

mentioning specific charge for which penalty is to be levied is

conspicuous writ large. While passing the order levying penalty,

Assessing Officer invoked only one charge, i.e. concealment of income.

Department vehemently defended the order confirming levy of penalty.

The ld. Departmental Representative submitted that penalty

u/s.271(1)(c) of the Act is levied in respect of non-disclosure of long

term capital gain in the return of income. The ld. DR submitted that,

while levying penalty u/s.271(1)(c), the Assessing Officer has

categorically mentioned that the penalty is being levied for

concealment. There is no ambiguity or vagueness in the mind of

Assessing Officer while levy of penalty.

Assessing Officer made addition on account of long term capital gains

not shown in the return of income. Consequently, penalty proceedings

u/s.271(1)(c) of the Act were initiated. The AO while recording

satisfaction for initiation of penalty observed as under :

“Since the income derived from LTCG not shown in the original return filed, penal proceedings u/s.271(1)(c) initiated separately for furnishing inaccurate particulars/concealing income.”

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A perusal of the satisfaction recorded clearly shows that there was

ambiguity in the mind of Assessing Officer with regard to the charge

for levy of penalty u/s.271(1)(c). The Hon’ble Supreme Court of India

in the case of T. Ashok Pai Vs. CIT reported as 292 ITR 11 has held

that “concealment of income” and “furnishing inaccurate particulars”

carry different connotations. The Hon’ble Karnataka High Court in the

case of CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565

has held that if the specific charge on which penalty is being levied is

not communicated to the assessee, principles of natural justice are

offended as the assessee would not be in a position to defend the case

properly.

In the present case, the Assessing Officer while recording

satisfaction mentioned both the charges of section 271(1)(c) for levy of

penalty. In the facts of the case and the decisions discussed above, we

are of considered opinion that recording of satisfaction by the

Assessing Officer for initiating penalty proceedings falls short of legal

requirement and hence, the penalty proceedings arising therefrom are

vitiated. The order levying penalty is therefore, quashed and the

appeal of assessee is allowed.

Order pronounced on Monday, the 31st day of December, 2018.

Sd/- Sd/- (D. KARUNAKARA RAO) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 31st December, 2018 Satish

4 ITA No. 2153/PUN/2016 Subhash Sakharam Jadhav

आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. आयकर आयु� (अपील) / The CIT(A)-9, Pune 3. आयकर आयु� / The Pr.CIT-5, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

//स�यािपत �ित // आदेशानुसार / BY ORDER,

// True Copy // Senior Private Secretary, आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune

5 ITA No. 2153/PUN/2016 Subhash Sakharam Jadhav

Date 1. Draft dictated on 27-12-18 Sr.PS 2. Draft placed before author 28-12-18 Sr.PS 3. Draft proposed & placed before the AM second member 4. Draft discussed/approved by Second AM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.