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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश/ ORDER
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the assessee against the order of CIT(A)-2, Aurangabad dated 19.05.2016 for the Assessment Year 2007-08.
The grounds raised by the assessee are as under :- “1) The Revenue Authorities i.e., A.O. as well as the First Appellate Authority i.e., CIT(A)-2, Aurangabad failed to bring out the shortcoming or fact of not furnishing inaccurate particulars and concealing the Income by Appellant. 2) The A.O. as well as the First Appellate Authority (FAA) has simply gone one summaries of declaration made during 133A proceedings which is not collaborated by the A.O. inspite of accepting the factual error and mistakes in the working of Inventory of stock. 3) The Appeal is in time and order. 4) The Appellant craves leave to add, alter or amend any of the grounds on or before the final date of hearing.”
ITA No.1713/PUN/2016
Briefly stated the relevant facts are that the assessee is engaged in
the business of retail trading in Sarees. Assessee filed the return of income
on 31.10.2007 declaring income of Rs.7,34,090/-. The Assessing Officer
made various additions on account of disallowance of expenses and excess
stock and determined the total income of Rs.8,28,583/-. Subsequently, the
Assessing Officer levied the penalty u/s 271(1)(c) of the Act and passed
penalty order on 25.06.2010. The Assessing Officer initiated the penalty
proceedings by giving his satisfaction that revolves around the default
furnishing of inaccurate particular of income. While levying the penalty
u/s 271(1)(c) of the Act, the Assessing Officer invoked both the limits i.e.
furnishing of inaccurate particulars of income as well as the concealment of
particulars of income.
The CIT(A) confirmed the penalty. However, the issue relates to the
satisfaction of the Assessing Officer qua the limbs of clause (c) of section
271(1) of the Act was not raised.
Before us, there is none represent on the behalf of the assessee
despite the service of notice. However, ld. DR for the Revenue fairly
narrated the above facts of the case and submitted that this is the case
where the satisfaction of the Assessing Officer is not giving in accordance
with settled legal proposition of the Hon’ble Bombay High Court 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.
On hearing the ld. DR for the Revenue, we perused the order of the
Assessing Officer. It is noticed from the contents of para 7.3 of the order of
ITA No.1713/PUN/2016
Assessing Officer that the satisfaction for initiating the penalty u/s
271(1)(c) of the Act is given mentioning the following. The relevant lines are
extracted hereunder :-
“7.3 The assessee has submitted inaccurate particulars of income, therefore, penalty proceedings U/S 271(1)(c) of the Act initiated are separately.”
Absence, any specific limb of the said clause (c) is obvious.
Further, we also perused the penalty order and find para 3 is relevant
to extract and the same is as under :-
“3. ………. Hence, I have therefore, reason to believe that the assessee has concealed the particulars of his income and furnished inaccurate particular of his income, therefore, levy a penalty u/s 271(1)(c) of the Income-tax Act, 1961 of Rs.25,889/- which is 100% of tax sought to be evaded.”
From the above, it is evident that the satisfaction given by the
Assessing Officer suffers from the ambiguity in the mind of the Assessing
Officer while recording the satisfaction at the time of initiating the penalty
proceedings u/s 271(1)(c) of the Act. Therefore, considering the above
binding judgement at para 5 (supra) on the issue, we are of the opinion that
such penalty order is unsustainable in law legally. The binding judgments
include the Apex Court judgement in the case of Shri Samson Perinchery
(supra) and Manjunatha Cotton and Ginning Factory (supra). It is a settled
legal proposition from the said judgements, the Assessing Officer is under
obligation to specify the appropriate limb of clause (c) of section 271(1) of
the Act at the 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
4 ITA No.1713/PUN/2016
direct the Assessing Officer to delete the penalty on legal ground. The grounds raised by the assessee on this issue are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on this 17th day of December, 2018.
Sd/- Sd/- (SUSHMA CHOWLA) (D. KARUNAKARA RAO) �या�यकसद�य/ JUDICIAL MEMBER लेखासद�य/ ACCOUNTANT MEMBER पुणे/ Pune; �दनांकDated : 17th December, 2018. Sujeet आदेशक���त�ल�पअ�े�षत/Copy of the Order is forwarded to : अपीलाथ�/ The Appellant; 1. ��यथ�/ The Respondent; 2. 3. The CIT(A)-2, Aurangabad; 4. The Pr.CIT-2, Aurangabad; �वभागीय��त�न�धआयकरअपील�यअ�धकरणपुणे �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, पुणे“A” / DR ‘A’, 5. 5. ITAT, Pune; गाड�फाईल/ Guard file. 6.
// True Copy // आदेशानुसार/ BY ORDER,
स�या�पत ��त//True Copy// Senior Private Secretary आयकरअपील�यअ�धकरण ,पुणे/ ITAT, Pune