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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by assessee is against order of CIT(A), Pune-5, Pune, dated 27.05.2016 relating to assessment year 2004-05 against penalty levied under section 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Act’).
The assessee has raised the following grounds of appeal:-
ITA No.1986/PUN/2016 2 Raju R.Thakwani
On the facts and circumstances of the case and in law the honorable CIT (Appeals) - 5, Pune erred in confirming the levy of penalty of Rs.9,96,024/- under section 271(1) (c) of the Income Tax Act, 1961 without appreciating the fact that the notice issued u/s 271(1)(c) of the I.T. Act is Vague and the Penalty Proceedings are initiated in a very casual manner. Further the learned AO did not record the satisfaction as to whether the appellant is guilty of concealment of particulars of income or furnishing of inaccurate particulars of income. The appellant hereby prays that the Penalty Order may please be quashed. 2. On the facts and circumstances of the case and in law the honorable CIT (Appeals) - 5, Pune erred in confirming the levy of penalty of Rs.9,96,024/- under section 271(1) (c) of the Income Tax Act, 1961 without appreciating the fact that the learned AO has levied the penalty on the "additions made in the assessment order only on the ground that the appellant has not preferred appeal against the additions made in the assessment order. The appellant hereby prays that the Penalty Order may please be quashed. 3. On the facts and circumstances of the case and in law the honorable CIT (Appeals) - 5, Pune erred in confirming the levy of penalty of Rs.9,96,024/- under section 271(1) (c) of the Income Tax Act, 1961 without appreciating the fact that the learned AO failed to demonstrate in the penalty order that the appellant has concealed income and has furnished inaccurate particulars of such income. The appellant hereby prays that the Penalty Order may please be quashed. 4. On the facts and circumstances of the case and in law the honorable CIT (Appeals) - 5, Pune erred in confirming the levy of penalty of Rs.9,96,024/- under section 271(1) (c) of the Income Tax Act, 1961 without appreciating the facts a) That the levy of penalty on the addition made Rs.12,19,000/- on account of difference between the capital balance as per appellant's books and as per firm's books is not justified as the balance as reflected in the appellant books was more than the balance as reflected in the books of firm. There cannot be any credits representing undisclosed income. b) That the account extract of the partnership firms does not show any entry of income which was not considered by the appellant in his books of accounts. c) That the appellant has reconciled the addition made in the assessment order i.e. difference of Rs.5,00,000/- between the capital balance as per appellant's books and as per firm's books i.e. Goel Patel Thakwani Associates & further difference in balance of Rs.2,00,000/- as per firm's books i.e. Sankalp Developers during the course of penalty proceedings and therefore the levy of penalty on such additions needs to be deleted. d) That the addition made of Rs.17,44,000/- on account of unexplained credit in the assessment order was on account of wrong credit entry passed by the accountant. 5. The appellant hereby prays that the penalty levied u/s 271(1)(c) may please be deleted.
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The issue arising in the present appeal is against levy of penalty under section 271(1)(c) of the Act.
Briefly, in the facts of the case, the case of assessee was picked up for scrutiny and certain additions were made in the hands of assessee. The first addition was on account of non-furnishing of confirmation relating to loans. The Assessing Officer after making the said additions, held the assessee liable for penal proceedings and the same were separately initiated. Another addition was made on account of non-explanation of credit to Capital Accounts and after making the said addition also, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act without mentioning limb under which the same was being initiated. The penalty order was passed under section 271(1)(c) of the Act and the assessee was held to have concealed and furnished inaccurate particulars of income within meaning of provisions of section 271(1)(c) of the Act. The Assessing Officer thus, held that the assessee has concealed the particulars of income and furnished inaccurate particulars of income and levied penalty of ₹ 9,96,024/-, which has been upheld by the CIT(A).
The assessee is in appeal against the order of CIT(A).
The first ground of appeal raised by assessee before us is that where the Assessing Officer had not recorded proper satisfaction as to which limb of said section has not been fulfilled by assessee, then the order levying penalty suffers from infirmity. The learned Authorized Representative for the assessee pointed out that the issue raised in the present appeal stands covered by various decisions of Pune Bench of Tribunal i.e. in the case of Kanhaiyalal D. Jain Vs. ACIT in ITA Nos.1201 to 1205/PN/2014, relating to assessment years
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2003-04 to 2007-08, order dated 30.11.2016. He also placed reliance on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Shri Samson Perinchery in Income Tax Appeal No.1154 of 2014 with other Income Tax Appeals Nos.953 of 2014, 1097 of 2014 and 1226 of 2014, judgment dated 05.01.2017.
The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below.
We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against levy of penalty under section 271(1)(c) of the Act, where, firstly the satisfaction recorded by Assessing Officer while initiating penalty proceedings is not proper and where it has not been specified to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee. The assessee is further aggrieved by the order levying penalty under section 271(1)(c) of the Act, where the assessee has been held to have concealed its income and furnished inaccurate particulars of income.
We find that the present issue has been addressed by us in series of cases. The Hon’ble Bombay High Court in CIT Vs. Shri Samson Perinchery (supra) held that where there is no proper satisfaction for levy of penalty and in the absence of proper show cause notice to the assessee, there is no merit in levy of penalty.
Applying the said proposition to the facts of present case, where the Assessing Officer has failed to record satisfaction properly and has not show caused the assessee as to which limb of section 271(1)(c) of the Act has not
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been fulfilled, then non recording of such satisfaction levying penalty makes the order invalid. Further, even in the order levying penalty, the Assessing Officer has failed to come to a finding whether the assessee has concealed its income or furnished inaccurate particulars of income and penalty has been levied for both the limbs of section 271(1)(c) of the Act, which cannot be upheld, in view of the ratio laid down in series of decisions. Accordingly, we direct the Assessing Officer to delete penalty levied under section 271(1)(c) of the Act. The grounds of appeal raised by assessee are thus, allowed.
In the result, the appeal of assessee is allowed.
Order pronounced on this 16th day of October, 2018.
Sd/- Sd/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 16th October, 2018. GCVSR आदेश की प्रयतलऱपप अग्रेपषत/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A), Pune-5, Pune; 4. The Pr.CIT, Pune-4, Pune; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे “ए” / DR 5. ‘A’, ITAT, Pune; 6. गार्ड पाईऱ / Guard file. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune