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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER आदेश आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the Assessee against the order of CIT(A)-5, Pune, dated 11-07-2016 for the Assessment Year 2001-02.
Grounds raised by the assessee are extracted as under :
“On facts and in law, 1. The Ld.CIT(A) erred in confirming the levy of penalty u/s.271(1)(c) of Rs.8,23,000/-. 2. The Ld.CIT(A) erred in holding that the penalty order passed by the Ld. AO was valid in law without appreciating that notice issued by the Ld. AO was bad in law and accordingly, the penalty order passed by the Ld. AO was null and void. 3. The Ld.CIT(A) erred in confirming the levy of penalty in respect of addition of Rs.21,00,000/- on the ground that the assessee had concealed its income without appreciating that the addition made itself was not warranted and accordingly, the penalty levied should be deleted. 4. The Ld.CIT(A) failed to appreciate that there was no concrete evidence that the assessee had actually paid Rs.21,00,000/- for purchase of land
ITA No.2405/PUN/2016 M/s. Radiant Constructions
therefore, no penalty can be levied in respect of such an addition made on presumptions and surmises. 5. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
Briefly stated relevant facts include that the assessee is a firm
engaged in the business of Builders and Developers. There was search
u/s.132 of the Act at the business premises of the assessee. Search
resulted in seizure of Bundle No.2 numbers 221 pages. The said bundle
contained various agreements, society documents, memorandum of
understanding etc. in respect of land admeasuring 18,217 sq.mtrs situated
at Andheri, West Mumbai. At the end of the assessment u/s.143(3) of the
Act, the AO proceeded to make addition of Rs.21 lakhs on this issue. In the
First Appellate proceedings, the Ld.CIT(A) upheld the view taken by the AO.
Contents of Para No.4.3 of the order of CIT(A) are relevant. Aggrieved with
the order of CIT(A), the assessee filed the present appeal with the aforesaid
grounds.
At the outset, in the proceedings before us, Ld. Counsel for the
assessee referring to Ground No.2 submitted that this is a case where the
AO failed to record valid and legally sustainable satisfaction in the
assessment order while initiating the penalty proceedings. Highlighting the
legal requirement of making a specific reference to the specific limb of
clause (c) of section 271(1) of the Act and relying on various binding
judgments in the case CIT Vs. Shri Samson Perinchery (2017) 392 ITR 4
(Bom.) as well as the judgment of Hon’ble Karnataka High Court in the case
of CIT Vs. Manjunatha Cotton and Ginning Factory 359 ITR 565, Ld.
Counsel demonstrated that the penalty levied by the AO is unsustainable in
law. In this regard, he brought our attention to the assessment order as
well as the penalty order highlighting the above legal deficiencies.
ITA No.2405/PUN/2016 M/s. Radiant Constructions
Per Contra, Ld. DR for the Revenue relied on the orders of AO/CIT(A).
We heard both the parties and perused the orders of the Revenue.
We proceed to adjudicate the issue relating to recording of proper
satisfaction by the AO. In this connection, we perused the assessment
order dated 31-12-2008 and find the satisfaction recorded by the AO for
initiating the penalty proceedings u/s.271(1)(c) of the Act is relevant for
extraction. Therefore, the same is reproduced as under :
“5............. ................... I have therefore no hesitation to conclude that the payment of Rs.21 lakhs has been made out of the undisclosed sources and added to the total income of the assessee for A.Y. 2001-2002. The penalty proceedings under section 271(1)(c) of the IT Act, 1961, for concealing the particulars of income and furnishing inaccurate particulars of such income are separately initiated.
6.1 We also perused the penalty order dated 30-03-2012 and find the
satisfaction recorded by the AO for levying the penalty u/s.271(1)(c) of the
Act is relevant for extraction. The said satisfaction reads as under:
“7. I am, therefore, satisfied that the assessee has without any reasonable cause committed the default within the meaning of section 271(1)(c) and made itself liable for penalty u/s.271(1)(c) for concealing the particulars of income and furnishing inaccurate particulars of such income.....”
From the above, it is evident that at the time of initiation of penalty
proceedings in the assessment, AO mentioned both the limbs “concealing
the particulars of income and furnishing inaccurate particulars of
income”. This manner of recording of satisfaction suggests the existence
of ambiguity with reference to applicability of specific limb. Therefore, we
are of the opinion that considering the above referred binding judgments
such penalty order is unsustainable in law legally. It is a settled legal
proposition that the AO is under obligation to specify the correct limb at the
ITA No.2405/PUN/2016 M/s. Radiant Constructions
time of initiation as well as at the time of levy of penalty. In view of the
above deliberation on this issue, without going into the merits of the
penalty, we are of the opinion that the penalty order is liable to be quashed
on this legal issue. Thus, the order of CIT(A) is set-aside and direct the
AO to delete the penalty on technical grounds.
In the result, appeal of the assessee is allowed on technicalities.
Order pronounced on this 14th day of November, 2018.
Sd/- Sd/- (िवकास अव�थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �ाियक सद�/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER
पुणे / Pune; िदनांक / Dated : 14th November, 2018. Satish
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-5, Pune. 3. आयकर आयु� / The Pr.CIT-4, Pune. 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “ए” / DR ‘A’, 5. ITAT, Pune; गाड� फाईल / Guard file. 6. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune.