NARESH J. KARDA,,NASHIK vs. INCOME-TAX OFFICER,,

The assessee has raised the following grounds of appeal:-

The only issue raised in the present appeal is against levy of penalty under section 271(1)(c) of the Act.

Briefly, in the facts of the case, consequent to search and seizure action under section 132(1) of the Act on the premises of assessee, assessment was completed under section 143(3) r.w.s. 153A of the Act. During the course of search, certain documents were found and on the basis of seized documents, the assessee had offered certain additional income. However, the Assessing Officer worked out the additional income at ₹ 2,08,165/-. Penalty proceedings under Explanation 5A of section 271(1)(c) of the Act were separately initiated for concealment of this income. The Assessing Officer also made another

The CIT(A) confirmed the said levy of penalty under section 271(1)(c) of the Act and the assessee is in appeal against the same.

The learned Authorized Representative for the assessee pointed out that he does not wish to press the ground of appeal relating to levy of penalty on addition of ₹ 25,100/-. However, in respect of second addition of ₹ 10,21,708/-, the learned Authorized Representative for the assessee stressed that Assessing Officer while recording satisfaction for initiating penalty has not come to a finding as to which limb of section 271(1)(c) of the Act has not been fulfilled, though Explanation 5A of section 271(1)(c) of the Act was held to have attracted. He further pointed out that penalty was levied for concealment of income by Assessing Officer while passing the order under section 271(1)(c) of the Act. However, since, while initiating penalty proceedings, proper satisfaction has not been recorded, hence order suffers from infirmity. In this regard, he placed reliance on the decision of Pune Bench of Tribunal in Kanhaiyalal D. Jain Vs. ACIT (2017) 185 TTJ (Pune) 553.

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 present appeal has been filed after the delay of 26 days. The assessee has filed an affidavit in this regard. On perusal of contents of said affidavit, we find merit in the plea of assessee and delay of 26 days is condoned.

Now, coming to the merits of case, where the assessee has filed an appeal against levy of penalty under section 271(1)(c) of the Act. We find that the Assessing Officer while recording satisfaction for initiating penalty proceedings has not come to a finding as to which limb of said section has not been fulfilled by assessee. Penalty proceedings have been initiated under Explanation 5A of section 271(1)(c) of the Act. However, the perusal of Explanation 5A of said section clearly reflects that penalty can be levied either for concealment of income or for furnishing inaccurate particulars of income. Where the Assessing Officer has failed to record such satisfaction and show cause the assessee, accordingly, we find that initiation of penalty proceedings stands vitiated. In this regard, we find support from the ratio laid down by Pune Bench of Tribunal in Kanhaiyalal D. Jain Vs. ACIT (supra). No doubt, penalty has been levied for concealment of income i.e. one of the limbs of section 271(1)(c) of the Act but since for initiation, satisfaction has not been correctly recorded in respect of one of the limbs of section 271(1)(c) of the Act by the Assessing Officer, order passed by him suffers from infirmity. Hence the same

In the result, the appeal of assessee is partly allowed.